Many assets derive their value not only from future cash flows but also from their ability to serve as collateral. In this paper, we investigate this collateral value and its impact on asset returns in an infinite-horizon general equilibrium model with heterogeneous agents facing collateral constraints for borrowing. We document that borrowing against collateral substantially increases the retu...

A classical problem, coming up frequently in practical business, is the valuation of future cash flows which are somewhat risky. By the term “risky” we mean that the payment is not of a deterministic nature; rather there is some uncertainty on the amount of the future cash flows. Of course, in real life virtually everything happening in the future contains some elements of riskiness. As a first...

We investigate relations among inside ownership, managerial expenses, risk sharing and equity valuations. Our engine of analysis—Real Estate Investment Trusts (REITs)—provides a unique and rich framework for analysis since we can calculate extremely accurate measures of asset replacement costs, and hence relative valuation (Tobin’s q). Further, the nature of the financial statements allows us t...

Current assets and cash in enterprise are maintained for risk reduction purposes. The basic financial purpose of an enterprise is maximization of its value. Cash and current assets management should also contribute to realization of this fundamental aim. The enterprise value maximization strategy is executed with a focus on risk and uncertainty. This article presents the consequences that can r...

An increase in the ability to timely meet commitments which will be due in the near future is a prerequisite for the survival of banks. Hence, the correct and optimal management of liquidity is an important affair that banks should perform. The present study aimed mainly to test the management of asset-liability and liquidity trap in the Credit Institute for Development. The research is applied...

As the chase for great assets in biopharma gets tighter, the decision to proceed with a merger, acquisition or strategic transaction usually comes down to price. It’s also likely that both parties to the deal will rely on the standard discounted cash ow (DCF) methodology as the basic criteria to set the value of the asset, reinforced by estimates of future sales growth and market share. Yet whi...

At a time when financial reporting is less than reliable, Behram Hansotia proposes that companies use a customer value scorecard to report statistics associated with customer lifetime value. These scorecards will clearly show if a company is making progress in increasing customer loyalty and share of wallet. C EOs, academicians and the financial community are all dissatisfied with the standard ...

T HE national survey of the resources of aged beneficiaries made by the Bureau of Old-Age and Survivors Insurance in 1951 included a study of their assets1 At the end of that year, it was found, threefourths of the aged beneficiaries included in the survey owned assets. Three-fifths held liquid assets, and half had nonliquid assets. Almost two-fifths reported both liquid and nonliquid assets. T...

An Information-Based Framework for Asset Pricing: X-Factor Theory and its Applications. This thesis presents a new framework for asset pricing based on modelling the information available to market participants. Each asset is characterised by the cash flows it generates. Each cash flow is expressed as a function of one or more independent random variables called market factors or “X-factors”. E...

Several frictions restrict the government’s ability to tax assets. First of all, it is very costly to monitor trades on international asset markets. Moreover, agents can resort to non-observable low-return assets such as cash, gold or foreign currencies if taxes on observable assets become too high. This paper shows that limitations in asset observability have important consequences for the tax...