Abstract: This timely book provides a wide-ranging and insightful discussion of how labor market institutions and policies influence the mechanisms of economic integration and how economic integration inturn is likely to influence key features of labor markets. It offers both a clear analysis of these issues and a wealth of comparative labor market data. Robert J. Flanagan, Stanford University A volume of the Integrating National Economies Series

Abstract: Recent advances in data gathering through checkout scanners have pro­duced vast amounts of data on the actual behavior of consumers in the mar­ketplace, creating new opportunities for managers and researchers to under­ stand competition and consumers' response to the marketing mix. Previous analyses of this data in the literature have focused either at the household (micro) or store (macro) level. The authors propose a method of enriching the analysis of competitive behavior by combining the in-depth consumer in­ formation obtained from a micro-level household scanner panel with the com­prehensive market data supplied by a macro-level retail-tracking panel. The approach offers the manager detailed information about consumers (e.g., identification of consumer segments in terms of brand preferences and socio­economic characteristics) along with strategic diagnostics of the product­ market (e.g., the sensitivity of the market to price promotions, impact of a brand's strategy on competitors, vulnerability of the brand to competitive actions).

Abstract: This paper explores the possibility of using market data to identify consumer preferences. A utility function composed of ‘homogeneous’ characteristics and goods-specific effects is used as a basic link between the goods space and the characteristics space. The functional form for the hedonic price equation, the data requirements and issues of measurement errors for estimating demand and supply of characteristics are discussed. We illustrate the methodology by considering the US automobile demand using 1969–86 data compiled from Consumer Reports and Ward's AutomotiveYearbook.

Abstract: Financial Engineering is about using financial instruments to reduce or eliminate risk, or to restructure a financial exposure to improve its characteristics. This book shows how to apply the latest techniques by managing financial risks of all kind. The book carefully explains the tools of financial engineering and defines each instrument in depth. It describes the markets on which they are traded, and clearly illustrates how each product is priced and hedged. All applications are illustrated with fully-worked practical examples, and recommended tactics and techniques are "tested" by demonstrating the results with recent historical data. The book provides a solid understanding of the underlying theory as well as a clear demonstration of effective practice. The book:* clearly defines all the tools used in financial engineering* caefully explains instruments such as FRAs, financial futures, options, currency and interest-rate swaps, caps, floors, collars, corridors, swaptions, IRGs, SAFE's and many others* covers advanced products like barrier options, diff swaps, multi-factor and path-dependent options, leveraged floaters and other structured products* considers exactly how each one is used in practice* shows ways in which financial engineering techniques can be applied to manage risks in currencies, interest rates,equities and commodities.

Abstract: At Bankers Trust, we spend a lot of time anticipating trends in the financial markets, not only those affecting short-term price movements but also those that are responsible for the long-term evolution of the system itself. Anticipating the longer term is especially compelling today considering the speed at which the financial system is changing. Even our inherent romanticism doesn't let us forget that we are straddling the 20th and 21st centuries, a period when more than ever the future seems just around the corner. But there's the future and the future. For the purpose of this paper, let's impose a stop-loss on our observations. I like the year 2020. For one thing, it is the year when the Jet Propulsion Laboratory predicts that Voyager will stop transmitting data back to Earth--a forecast that for some reason I find exciting. Twenty-seven years also is far enough away to allow trends to develop, yet near enough to be useful for long-range planning. And it doesn't hurt to know that 20/20 stands for perfect vision. Maybe that alone will improve the odds of my being correct. Thus this paper will focus on the period between now and the year 2ust 1993.u020, contemplating how the financial functions will evolve over that period and how quickly change will come. Anyone who deals in the financial markets knows that anticipating trends is difficult at best. But he or she also realizes that not to try is tantamount to accepting the most unlikely scenario of all: no change. So I will plunge ahead. CONSTANTS AND CHANGE Heraclitus said it best: "All is flux, nothing stays still. Nothing endures but change." That is true. Nonetheless, between now and 2020 two phenomena will remain constant. First, human nature will not change. Second, the basic financial functions, as I will define them, will not change, although how we perform these functions will change. First for human nature. A very basic element of that nature is a hunger for security--law and order, job security, retirement security, decent and affordable health care, and financial security. For a variety of reasons, people have begun to feel that organizations, especially governments, designed to provide their basic security no longer can be relied on. This societal change is having a profound impact on financial institutions' relationships with their clients and employees, who once automatically accepted an institution's promise that "We know what is best for you." By necessity, not by preference, people are becoming more involved in creating their own security by doing their own homework and making their own decisions. "One-way broadcasting" and "command and control" styles are no longer acceptable. This pervasive sense of vulnerability is putting risk management at the top of the agenda for many people and organizations. To the degree that financial institutions can better help their clients deal with risk, the clients are very ready for change. In any event, gaining their trust will be an essential challenge for financial institutions. In addition to the sense of individual vulnerability, two other facets of human nature will affect the pace of change: people's inherent thirst for knowledge and their frequent aversion to change. The first is the motivator behind financial innovation and the second is the greatest barrier to it. That barrier is deeply entrenched, as evidenced by a report from an observer at the Digital World Conference, which was held in Los Angeles in July 1993: "Given that this was a conference on digital technology for industry insiders, I saw very few laptop computer note takers; 99 percent used paper and pen. Very few had mobile telephones with them, and consequently the lines at the pay phones were lengthy." We see that even technologists have trouble adjusting to the new environment. I have no doubts, though, that their children, steeped in today's technology, will be far less likely to be lining up for pay phones by the time they dominate the work force-well before 2020. …

Abstract: The purpose of this paper is to analyse and model the determinants of the supply of international financial services, on the basis of the recent available data. The empirical results of this study for 13 OECD countries, in a cross-sectional analysis, indicate that national R&D, banks' international assets and physical and human capital are among the factors which provide the competitive edge for the financial institutions of the developed countries to deliver effective and efficient international financial services.

Abstract: Electronic financial markers use information technology to disseminate prices, quantities, and buyer and supplier identities. In spite of their recognized benefits, increased visibility and transparency may introduce imperfections, and create profitable opportunities to bypass markets. In the US, dissemination of market data has equipped several firms to develop competing, off-exchange trading mechanisms that rely on central market price data, but whose transactions bypass the established market. Significant trading away from the principal market may reduce market quality, and increase transaction costs. A simulation model of trading in a continuous auction market (similar to the market structure of the New York Stock Exchange) is used to examine the effects of increasing levels of trading activity through an off-exchange dealer. The results indicate that competition from an alternative trading venue reduces some trading costs borne by some investors. Contrary to regulatory goals however, off-market trading expands the role of profit-seeking dealers, and lowers the probability that some investors' orders will execute. >

Abstract: This is the second chapter of a book, Financial Regulation in the Global Economy, Herring is writing with Robert Litan. In this chapter they show how technological advances - dramatic reductions in transportation, telecommunications and computation costs - are creating an increasingly integrated financial market that ignores national boundaries. First they examine the effect of these technological advanceson users of financial services, providers of financial services and regulators of financial services. Then they document the increasing volume of international financial transactions and evaluate the extent to which financial prices are integrated across countries. They conclude by highlighting the risks that are the consequence of increasing international financial integration and pose a challenge to managers of financial institutions and regulators.

Abstract: The creation of an internal market for financial services by the European Union, along with technological changes in communications and data management, will have a strong impact on banking and financial markets in Europe. This paper presents a selective review of discussions concerning the resulting processes of adjustment and their outcomes. Topics covered include effects on cost efficiency, competition production and trade patterns, and the dynamics of financial regulation in the open, integrated economy.

Abstract: This is a history and technical overview of one of the major AI successes in securities trading. It incorporates only as much AI as the financial user community could deal with, integrating tightly with their electronic environment. Computational resources are used to make a simple, highly application-specific user interface, a small firm has succeeded in developing a system used by many of the largest institutional investors and money managers in the USA. The system is directly linked to the NYSE and other electronic equity-execution systems. This is not a prototype or a proposal. This is real and in wide use today, often generating transaction volumes exceeding 5 million shares per day. Traders use a special-purpose rule-based language to describe a wide variety of market conditions. The system keeps up with high-speed incoming market data in real-time and tells the traders when, and how strongly, their specified conditions match the current state of the market. It can also formulate trading recommendations based on those conditions. Finally, and most importantly, it provides direct access to electronic execution channels for quick action on these recommendations. The combination of tight integration with both market data and electronic executions, an appropriate, accessible user interface, and a high level of support have contributed to a major AI success story. The transactions flowing through these systems produce more revenue on a good day than many other AI applications will generate over their entire operational lifetimes.

Abstract: A standard approach to the valuation of petroleum properties and to project economics requires the calculation of present value of future cash flows. The technique is well-known and widely used in property evaluations, which are crucial to the acquisition activity in which independent producers recently have been so heavily engaged. But shortcomings of the standard approach also are well-known. Two significant problems are the choice of discount rate and the need to forecast prices. The appropriate discount rate depends upon the risk involved, and the correct relationship between risk and expected return may be difficult to determine. Oil price forecasts, meanwhile, are notoriously unreliable. These problems have led to adaptation of the option-valuation technique now widely and successfully used in the financial markets to the problem of valuing real assets, such as an oil field. In this context an option is the right, but not the obligation, to buy or sell an asset at some future time for a price (the exercise price) determined at the time the option is acquired. The important parameters are equilibrium price, volatility, and convenience yield, each of which can be projected on the basis of market data close at hand. Then the values canmore » be combined with the production profile of an oil field to mathematically estimate present value. The valuation method is described.« less

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Abstract: The major purpose of this study was to determine if there is any significant correlation between the selling price paid for small businesses computed on a going-concern basis and the income streams generated by them in the year of sale. This study was limited to one transaction data base of sales of small businesses, all asset purchases, from 1986 to 1992. No attempt was made to verify the data, since, the companies listed in the data base are private. Several estimates and assumptions were made to compensate for the limited availability of data. Information was not available as to historical earnings, projected earnings, growth rates or specific details of the financing agreements. The major findings of this study were: 1) there is a statistically significant correlation between the income streams and the selling prices of the businesses, 2) in order of strength of correlation, the variance in the selling price of the businesses were explained by Pretax Net Cash Flow to Invested Capital, Pretax Net Income to Invested Capital, Pretax Net Income to Equity, and Pretax Net Cash Flow to Equity. In general, as the income streams increased so did the selling prices. Variance in selling prices were most related to the ability to finance the acquisition, and least related to returns to owners. It was not the purpose of this study to determine the predictive value of the correlation coefficient. These correlations relate to small businesses only as a group, and thus do not address correlations either by industry, business type, size or by time period. Accordingly, the results of the study indicate only that some basic financial valuation theory is present in the small business market in which the businesses in this study exist. More extensive and reliable data should be obtained for use in small business transaction data bases. Future studies can then be focused on areas not addressed in this study, specifically individual company business and financial risk factors. Finally, information on small business valuations and comparative transaction data should be standardized and made readily available to the buyers and sellers of small businesses. ANALYSIS OF MARKET DATA ON SALES OF SMALL BUSINESSES by Steven Laing Ault A thesis submitted in partial fulfillment of the requirements for the degree of Master of Science in