The paper analyses foreign investment and asset prices in a context of uncertainty over future government policy. The model endogenizes the process of learning by foreign investors facing a potentially opportunistic government, which chooses strategically the timing of a policy reversal in order...

The Black-Scholes formula is the quot;industry standardquot; for pricing options on a variety of instruments. This paper shows that even when markets are incomplete, the Black- Scholes option pricing formula can arise in an equilibrium merely from self-fulfilling beliefs that it is the correct...

The purpose of this paper is twofold. First, we review the market manipulation literature in the context of corporate finance and study its implications for financial management. Second, we provide a new perspective on corporate finance theory, viewing the corporation as a "manipulator" of its...

The convenience yield differential between on- and off-the-run Treasury securities with identical maturities has two components. A non-cyclical component may arise due to the higher illiquidity of off-the-run bonds. Also, trading in the market for the next issue often causes cyclical shortages...