Monte Carlo Simulations for Real Estate Valuation

We use the Adjusted Present Value (APV) method with Monte Carlo simulations for real estate valuation purposes. Monte Carlo simulations make it possible to incorporate the uncertainty of valuation parameters, in particular of future cash flows, of discount rates and of terminal values. We use empirical data to extract information about the probability distributions of the various parameters and suggest a simple model to compute the discount rate. We forecast the term structure of interest rates using a Cox et al. (1985) model, and then add a premium that is related to both the real estate market and selected property-specific characteristics. Our empirical results suggest that the central values of our simulations are in most cases slightly less than the hedonic values. The confidence intervals are found to be most sensitive to the long-term equilibrium interest rate being used and to the expected growth rate of the terminal value.Real estate valuation; Monte Carlo simulations; Adjusted Present Value (APV)

Further Evidence on Debt-Equity Choice

Using a large sample of 5,365 European firms,we document the driving factors of debt-equity choices. Adjustments to a target debt level play a modest role except when debt exceeds an upper barrier, a result that underlines the importance of debt capacity. Preference for internal financing, leverage deficit prior to equity issues, as well as a high level of slack of firms seeking to reduce equity constitute further evidence in favor of pecking order models. It is also found that managers try to time the market by issuing shares when returns are high, but that there is a link between financing and investment activities as predicted by agency models.Dynamic capital structure; Debt-equity choice; Tradeoff models; Pecking order models

Insertion Sort is O(n log n)

Traditional Insertion Sort runs in O(n^2) time because each insertion takes O(n) time. When people run Insertion Sort in the physical world, they leave gaps between items to accelerate insertions. Gaps help in computers as well. This paper shows that Gapped Insertion Sort has insertion times of O(log n) with high probability, yielding a total running time of O(n log n) with high probability.Comment: 6 pages, Latex. In Proceedings of the Third International Conference on Fun With Algorithms, FUN 200

Multiple Meixner-Pollaczek polynomials and the six-vertex model

We study multiple orthogonal polynomials of Meixner-Pollaczek type with respect to a symmetric system of two orthogonality measures. Our main result is that the limiting distribution of the zeros of these polynomials is one component of the solution to a constrained vector equilibrium problem. We also provide a Rodrigues formula and closed expressions for the recurrence coefficients. The proof of the main result follows from a connection with the eigenvalues of block Toeplitz matrices, for which we provide some general results of independent interest. The motivation for this paper is the study of a model in statistical mechanics, the so-called six-vertex model with domain wall boundary conditions, in a particular regime known as the free fermion line. We show how the multiple Meixner-Pollaczek polynomials arise in an inhomogeneous version of this model.Comment: 32 pages, 4 figures. References adde

The capital structure of Swiss companies: an empirical analysis using dynamic panel data

In this paper, we analyze the determinants of the capital structure for a panel of 106 Swiss companies listed in the Swiss stock exchange. Both static and dynamic tests are performed for the period 1991-2000. It is found that the size of companies, the importance of tangible assets and business risk are positively related to leverage, while growth and profitability are negatively associated with leverage. The sign of these relations suggest that both the pecking order theory and trade off hypothesis are at work in explaining the capital structure of Swiss companies, although more evidence exists to validate the latter theory. Our analysis also shows that Swiss firms adjust toward a target debt ratio, but the adjustment process is much slower than in most other countries. It is argued that reasons for this can be found in the inst itutional context.Capital structure; dynamic panel data; trade-off theory; pecking order theory

A Fresh Look at Energy, Materials, and Labor in Agriculture

An understanding of agriculture's energy, material, and labor requirements is essential for achieving economic and ecological sustainability, and for assessing the effectiveness of relevant policy decisions (biofuel subsidies, regulations, labeling, etc.). Previous studies of energy, materials, and labor use in farming have been based on either unverified voluntary reporting or test plots, rather than on the high-resolution measurements of mass and energy flows. Here we present a recursive analysis of 1.25 million data points describing in unprecedented detail the resource transactions on a 60 ha farm functioning for over 6 years. This analysis highlights the importance of accounting for all types of materials, as well as capital equipment, non-field labor, and commuting. The superior energy efficiency of the farm's energy-saving methods, including green manure, crop rotation, composting, and short-duration grazing -- compared with conventional methods -- persists even when the higher labor requirements are taken into account. One of the farm's methods, however -- the use of horses for traction -- is shown to be highly inefficient compared with mechanical tractors