Knowledge that Transforms

Nearly one hundred years after Irving Fisher' persuasive argument that net present value is the fundamental criterion for appraising investment projects, businessmen and bankers continue to consider the internal rate of return. Business practice is justified in some circumstances. It has long been recognized that a firm will grow asymptotically at a rate equal to the largest real positive root of an individual project' rate of return equation if the net cash flows are continually reinvested in projects of the same type. That same root also controls the firm' asymptotic growth rate if any fixed proportion of the cash flows is reinvested. The other roots of the equation are important also, since the stability of the firm' growth path depends on them.

(NOTE: Section Ends with Review Questions and References.) 1. Public Budget in Context. 2. Toward Modern Budgeting. 3. Budget Behavior. 4. Budget Formats and Preparation. 5. Analysis Applied to Budgeting. 6. Analytical Processes. 7. Operating Budgets and Accounting. 8. Capital Budgeting and Debt Administration. 9. Revenue Systems. 10. Internal Service Functions. Glossary. Index.

Recently there has been a growing interest in the scenario model of covariance as an alternative to the one‐factor or many‐factor models. We show how the covariance matrix resulting from the scenario model can easily be made diagonal by adding new variables linearly related to the amounts invested; note the meanings of these new variables; note how portfolio variance divides itself into “within scenario” and “between scenario” variances; and extend the results to models in which scenarios and factors both appear where factor distributions and effects may or may not be scenario sensitive.

Donald J. Smith, Thomas F. Cargill, Robert A. Meyer, An Economic Theory of a Credit Union, The Journal of Finance, Vol. 36, No. 2, Papers and Proceedings of the Thirty Ninth Annual Meeting American Finance Association, Denver, September 5-7, 1980 (May, 1981), pp. 519-528

There are, of course, a number of