This paper argues that in an uncertain world options written on existing assets can improve efficiency by permitting an expansion of the contingencies that are covered by the market. The two major results obtained are, first, that complex contracts can be "built up" as portfolios of simple options and, second, that there exists a single portfolio of the assets, the efficient fund, on which all options can be written with no loss of efficiency.

International capital market equilibrium is characterized for a world economy in which consumption preferences are defined multiplicatively over many commodities. It is shown that the set of relative asset prices under pure exchange in international capital markets depends on the real purchasing power of nominal payoffs under uncertainty and does not depend on the currency in which the nominal payoffs are denominated. A Sharpe-Lintner type international capital asset pricing model is derived as a special case. Proportional ad valorem commodity taxes and transportation costs are incorporated in the valuation model, interest rate parity and purchasing power parity are reinterpreted under uncertainty, and international differences in borrowing and lending are shown to reflect, in part, differences in risk aversion across countries.

This paper examines the structure of option valuation problems and develops a new technique for their solution. It also introduces several jump and diffusion processes which have not been used in previous models. The technique is applied to these processes to find explicit option valuation formulas, and solutions to some previously unsolved problems involving the pricing of securities with payouts and potential bankruptcy.

Abstract The article presents an analysis of attitudes of a sample of the American Accounting Association (AAA) members towards the periodical "The Accounting Review." Some conclusions suggested from the above analysis are respondents appeared basically to be satisfied with the research published in the periodical, which is similar to the conclusion of scholars Edwin H. Caplan and Charles H. Griffin cited earlier. Responding practitioners seemed to be concerned about the read ability of the published research. Although their attitudes were in general agreement with using multiple research methods as deemed appropriate, the analysis suggested a stronger interest in publishing abstracts. Responding academicians were not as much interested in publishing abstracts as in reporting the detailed construction of the techniques used. Responding practitioners appeared to favor publishing research which is different from that of the other two journals, the "Journal of Accounting Research" and "Journal of Accountancy." Responding academicians appeared to favor differentiating the type of research publishable in the periodical only from what is published in the Journal of Accountancy.

[A regression model in which the disturbances exhibit a certain type of heteroscedasticity is considered. Maximum likelihood methods of estimation are developed and compared with the two-step estimation procedure. A likelihood ratio test for heteroscedasticity is suggested.]

OVER the course of the last decade, economists have made increased use of the effective protection framework when analyzing the impact of various restrictions to international trade. A key feature of this measure is that it estimates the protection for value added in a production process rather than for product price.' Thus, while the nominal rate of protection relates solely to the final output, the effective rate accounts for the joint influence of trade restrictions on production inputs as well as on the final product. A primary requirement for estimating effective protection is accurate information on the nature and shares of production process inputs. National input-output tables have frequently served as a source for these data, but due to problems in compilation and processing these tables are generally not available until a considerable period after the date to which they apply. As such, effective protection studies which draw upon this information are frequently based on production coefficients over a decade old.2 If production processes have changed considerably in this interval, there exists the possibility that the effective protection rates may be seriously in error. This paper evaluates the direction and magnitude of bias in effective protection estimates due to the use of production data pertaining to a previous period. A separate analysis also investigates the relative importance of two sources of error (i.e., shifts in factor inputs and changes in the value added coefficient). Further, an attempt is made to assess the effect of variances in the age of the production information on the effective rates. While the analysis is confined to U.S. data, it is expected that the results apply equally to other industrial nations.

IN the postbellum United States a number of mechanisms existed which promoted the interregional transfer of short-term capital. For example, the correspondent banking system linked country banks with city banks in a pervasive network, as indicated by the fact that in 1913 10 selected New York banks alone held over 15,000 accounts of out-of-state banks (Beckhart and Smith, 1932, p. 156). Slightly later, in 1925, 600 out of 655 Georgia banks maintained accounts in New York; while as far away as CaliforRia, 515 out of 644 banks did (Watkins, 1929, pp. 408-411). These city correspondents purchased commercial paper for country banks, giving even remote banks access to national funds markets, and also transferred funds to them through interbank lending and rediscounting. Although interbank borrowing amounted to only about 112 % of total national bank loans and discounts in 1892-1897, it was an important source of funds for a region like the South, where it constituted at least around 10% of total loans and discounts (Breckenridge, 1898, p. 137). Other methods of interregional funds transfer existed outside of the correspondent banking system, such as direct interregional lending. In 1915 almost 30% of the loans of eastern reserve city banks were made interregionally; almost one-half of all loans in the South made by reserve city banks in 1915 were made by banks outside the South (U.S. Comptroller of the Currency, 1915, pp. 18-19). Interregional holdings of bank stock also represented important sources of funds in some areas; for example, over the late nineteenth century between 25% and 40% of total national bank shares in the Great Plains and western states were held by investors outside the state. Finally, the commercial paper market facilitated the transfer of funds from lenders to borrowers in different regions. Although there were transfers of funds among regions,1 nevertheless substantial interregional interest rate differentials in realized as well as in quoted rates existed.2 These differences were taken as evidence of an imperfect national short-term capital market and of the existence of local monopoly power in southern, midwestern, and western states. Explanations of the movement toward a national capital market over this period have all assumed the existence of barriers to interregional capital mobility. To Lance Davis the westward spread of the commercial paper market facilitated interregional transfers of funds; Richard Sylla, on the other hand, has emphasized the role of high minimum capital requirements and other legal barriers to entry as supports of local bank monopoly power before the more liberalized requirements of the Gold Standard Act of 1900 took effect.3 Risk, however, has to be taken into account explicitly; even in a perfect capital market local interest rates may diverge if differences in risk across regions exist. Were the existing institutions for the interregional transfer of short-term capital in the postbellum period adequate for the operation of a well-functioning national money market? In other words, did a perfect national capital market exist at that time? In order to separate Received for publication June 30, 1975. Revision accepted for publication February 3, 1976. * I am greatly indebted to Peter Temin and Richard West for their many helpful suggestions and comments and to R. M. Hartwell for his diction. This article originally constituted part of a much more lengthy paper presented at the Cliometrics Conference, Madison, Wisconsin, April 1975, and at the economic history workshop of the University of Chicago. Comments from participants at these sessions are also gratefully acknowledged. Responsibility for any remaining errors lies with the author. 1 For a rough estimate of the magnitudes of long-term and short-term interregional capital flows over the 1900-1910 decade, see James (1974), pp. 200-212. 2 For a contemporary discussion of this phenomenon, see Breckenridge (1898). 3 See especially Sylla (1969) and Davis (1965).