helpful discussions and to three anonymous referees for helpful comments. Also, I am indebted to the assistance of Sonia Laszlo. RUNNING TITLE: Money with Idiosyncratic Returns. 2 ABSTRACT This paper extends the income fluctuations problem to an economy with endogenous growth. Individuals, instead of owning an stream of endowments, accumulate capital with an investment irreversibility constrain...

The Black–Scholes* option pricing model is commonly applied to value a wide range of option contracts. However, the model often inconsistently prices deep in-the-money and deep out-of-the-money options. Options professionals refer to this well-known phenomenon as a volatility ‘skew’ or ‘smile’. In this paper, we examine an extension of the Black–Scholes model developed by Corrado and Su‡ that s...

This study examines the company internal factors and macro-economic variables affecting stock prices in the Karachi Stock Exchange of Pakistan. Internal factors are earnings per share and dividend per share. The macro-economic variables are represented by the money supply, consumer price index, interest rates, and gross domestic product. A sample of 15 companies is selected from the financial s...

The million-dollar question for stock investors is if the price of a stock will rise or not. The fluctuation of stock market is violent and there are many complicated financial indicators. Only people with extensive experience and knowledge can understand the meaning of the indicators, use them to make good prediction to get fortune. Most of other people can only rely on lucky to earn money fro...

We test the hypothesis that, when thinking about allocating money to a stock, investors mentally represent the stock by the distribution of its past returns and then evaluate this distribution in the way described by prospect theory. In a simple model of asset prices in which some investors think in this way, a stock whose past return distribution has a high (low) prospect theory value earns a ...

ILTON FRIEDMAN AND ANNA SCHWARTZ' Monetary Trends reports a great many findings—53 are enumerated in the introduction—but paramount is the stability of the demand for money in the US and Britain over the past century. The money stock controls money income. This proposition more than anything else is the point of their painstaking investigation. Friedman and Schwartz argue against what might neu...

With recession lingering and interest rates remaining high, one hears increasingly that the Fed should abandon its money growth targets and move to a policy of lowering interest rates to full employment levels. All would be well, we are told, if only the Fed would set a fixed low interest rate target consistent with full employment and then let the money stock adjust to money demand to achieve ...

We consider the evolution of the euro economies of the northern (creditor) and southern (debtor) countries during the euro crisis in terms of an idealized stocks-and-flows, two-country (North-South) model based on four key actors (banks, firms, households and governments) in each country. Each actor is characterized by a stock of money (box) and money flows (hour glases) to neighbouring actors....