The sphere of modern financial economics encompases finance, micro investment theory and much of the economics of uncertainty. As is evident from its influence on other branches of economics including public finance, industrial organization and monetary theory, the boundaries of this sphere are both permeable and flexible. The complex interactions of time and uncertainty guarantee intellectual challenge and intrinsic excitement to the study of financial economics. Indeed, the mathematics of the subject contain some of the most interesting applications of probability and optimization theory. But for all its mathematical refinement, the research has nevertheless had a direct and significant influence on practice. It was not always thus. Thirty years ago, finance theory was little more than a collection of anecdotes, rules of thumb, and manipulations of accounting data with an almost exclusive focus on corporate financial management. There is no need in this meeting of the guild to recount the subsequent evolution from this conceptual potpourri to a rigorous economic

In models where both investors and securities are subject to differential taxation, there may be no set of prices that rule out infinite gains to trade, or "tax arbitrage."This paper characterizes the joint restrictions on financial-asset returns and investors' tax schedules that preclude tax arbitrage in the absence of short-sale constraints.The authors show that, if there exists any configuration of marginal tax rates on investors' tax schedules that rule out infinite gains to trade, then "no-tax-arbitrage" prices will exist.They also show that the existence of "no-tax-arbitrage" prices ensures the existence of equilibrium prices. THE EFFECTS OF DIFFERENTIAL taxation on the equilibrium prices of financial assets have attracted much attention from financial economists in recent years.Otherwise identical securities that contribute to taxable income to different degrees will, in general, be valued differently by taxable investors.As a result, tax considerations have been useful in helping explain the effect of dividend yield on stock returns,' the effect of coupon levels and term to maturity on bond prices,2 the timing of investors' portfolio transactions,3 and the observed capital structures of firms.4While a rich set of observed behaviors can be better understood by reference to differential taxation, there are well-known difflculties in dealing with taxes in a general-equilibrium setting.To clear markets, relative prices must reflect the marginal rates of substitution of all agents simultaneously.When tax rates differ across investors, however, this condition can be impossible to achieve.To illustrate, consider a world of perfect certainty with two assets: a tax-exempt municipal bond and a taxable government bond.To equate marginal rates of substitution, the rate of return on the government bond, rg, must equal that on the municipal, rm, "grossed up" by one minus the investor's marginal tax rate, ti; that is, rg = rm/( 1 -ti).If there are investors in more than one tax bracket, this condition will obviously be impossible to satisfy for all of them simultaneously.

Little is known about what really makes ventures succeed or fail and therefore, what one should consider when deciding whether or not to back a corporate venture. What is required are many more systematic studies of the venturing process. In this study we look at one small part of the process; the way in which managers go about evaluating a venture and what importance they attach to the various criteria they use to assess corporate ventures as they decide whether or not to support them. The other issue of interest is whether, with venture decision-making experience, there is a shift in the importance of criteria. Do managers inexperienced in venturing, start off with one set of weightings on criteria and then learn by experience to weigh criteria differently? Nearly every venture decision will be reviewed or have to pass some form of limited approval by, or get logistical support from, at least some managers who may be inexperienced. The degree of their support and approval will depend on the inexperienced managers' model of what constitutes an appropriate venture. Therefore, it is important to study both the novice and the experienced venture manager. This study used conjoint measurement procedures to quantify the importance of several factors to managers making go/no-go decisions as to whether they would support a series of hypothetical corporate ventures. The results indicate that there is a very high correlation between the judgements of inexperienced managers and those that have had some involvement in venture decision making. In virtually every case the direction of the preference for levels is identical. The effect of experience is not to change the model that the manager uses, but rather to crystallize the preferences and tradeoffs involved. The most interesting result was the overriding importance attached to corporate fit. The message is clear: do not expect support from any managers, inexperienced or otherwise, if there is no perceived fit between the firm and the venture. There were also relatively high levels of importance attached to seven other variables: size of investment, presence of an experienced venture champion, corporate experience with product, low threat of competition, utilization of proprietary technology, rate of return, and gross margin. For the sample in this study an optimal venture proposal can be described via the following criteria: •High corporate fit•Low initial investment•Experienced venture champion•Experience with product/service•Low competitive threat•Proprietory technology•High gross margin•High rate of return

This paper studies the impact that margin requirements have on both the existence of arbitrage opportunities and the valuation of call options. In the context of the Black-Scholes economy, margin restrictions are shown to exclude continuous-trading arbitrage opportunities and, with two additional hypotheses, still to allow the Black-Scholes call model to apply. The Black-Scholes economy consists of a continuously traded stock with a price process that follows a geometric Brownian motion and a continuously traded bond with a price process that is deterministic.

This paper focuses on the role cognitive scripts, a unique type of knowledge schema, play in generating purposive behaviors in organizations. Three separate but complementary areas of research (Scheme Theory, Control Theory, and Goal Setting Theory) clarify the processes that link script-type structures to purposeful behavior. Finally, implications and extensions of this comprehensive framework based on previously identified content, structure, and process issues are considered.