This paper presents new evidence that international investors are compensated for bearing currency risk. We present a new three-factor international capital asset pricing model, comprising a global equity factor denominated in local currencies, and two currency factors, dollar and carry. The...

[This item is a preserved copy. To view the original, visit http://econtheory.org/] The de Finetti Theorem is a cornerstone of the Bayesian approach. Bernardo (1996) writes that its "message is very clear: if a sequence of observations is judged to be exchangeable, then any subset of them must...