We examine the empirical relationship between estimates of ex ante cost of equity and risk for a sample of individual emerging market equities for the period 1990-2000. The ex ante cost of equity estimates are obtained using the residual income valuation model. As in studies that use mean...

Property and casualty (Pamp;C) claim reserves are financial statement liabilities that represent estimated future claims. An understanding of Pamp;C reserves is important to both risk managers and investment analysts, since this information is crucial in assessing solvency and value. We review...

I review and clarify the role of foreign exchange (FX) rates in international capital budgeting, showing how the outcome of the NPV analysis, from the perspective of the home currency, is affected by a misvalued current spot FX rate, or by a forecast of misvalued future spot FX rates

Recent Nobel Prizes to Akerlof, Spence, and Stiglitz motivate this review of basic concepts and empirical evidence on information asymmetry and the choice of debt vs. equity. We first review the literature that holds investment fixed. Then we review capital structure issues related to the...

We show how capital structure swaps can increase the wealth of a firm's long-term shareholders when a firm's debt or equity is misvalued. We review the conventional rule that a firm should issue equity and use the proceeds to retire outstanding debt (an equity-for-debt swap) when equity is...

Cost of equity estimates are compared for three pricing models: the traditional local CAPM, the single (market) factor global CAPM, and the two-factor global CAPM, with both market and currency index factors. For 2989 US stocks, the average difference in the cost of equity estimates is about 48...

I show how a company can estimate consistent costs of capital across currencies in integrated financial markets. I use two relatively ignored results: (1) If the global CAPM holds for unhedged returns in US dollars, a two-factor risk-return relationship (with FX risk) generally must hold in...

We estimate ex ante expected returns for a sample of Samp;P 500 firms over the period 1983-1998. The ex ante estimates show a better overall fit with the domestic version of the single-factor CAPM than with the global version, but the difference is small. This finding has no trend in time and is...

The growth-opportunities version of the Modigliani-Miller free cash flow model is used to develop a simple discounted cash flow formula for equity valuation that accommodates gradually diminishing NPVs of future growth opportunities at a constant rate. The model includes some fundamental drivers...

This study investigates, in a conceptual way, the intrinsic valuation of sports futures wagers and, given the absence of a viable secondary market, strategies for locking in pre-expiration value by hedging with the existing set of futures wagers, proposition wagers, and game wagers. An...