The international diversification puzzle is worse than you think

Article Abstract:

Returns to human capital and physical capital resources were computed for four OECD countries, namely, Japan, Germany, the UK, and the US. The findings indicate that for each country, domestic human capital returns were significantly correlated with returns to domestic physical capital while labor income growth was not strongly correlated with return to capital. The results indicate that domestic marketable assets play a vital role in hedging risk related with nontraded human capital, suggesting that the typical investor portfolio when interpreted as a true diversified world portfolio, leaves much to be desired.

Portfolio Management, Asset & Risk Management, Models, Human capital

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Debt and seniority: an analysis of the role of hard claims in constraining management

Article Abstract:

The positive and negative aspects of a corporation's long-term debt were examined. Companies with high long-term debt will find it difficult to borrow new capital because older debt will have priority over newer debt. Long-term debt, however, may constraint management from entering into unprofitable investments. It was argued that management can arrive at an optimal debt-equity ratio irregardless of a firm's profitability and that firms can devise conditions and contracts which would influence investment behavior.

Financial management

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Excess volatility and closed-end funds

Article Abstract:

Closed-end funds demonstrate a higher volatility than indicated by efficient financial markets. Results indicate that the average fund exhibits a 64% increase in volatility in monthly returns over its assets which implies that prices are more volatile than fundamentals. Excess volatility seems to be a peculiar characteristic of the said fund, with 15% of the average fund's excess risk arising from market risk, small-firm risk, book-to-market risk, and other types of risk common to other closed-end funds.

Economics, Research and Development in the Social Sciences and Humanities, Other Financial Vehicles, Investment offices, not elsewhere classified, Mutual Funds (Closed End), Mutual funds, Closed end mutual funds

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