What Makes Balance Sheet Effects Detrimental for the Country Risk Premium?

Preliminary draft BALANCE SHEET EFFECTS AND THE COUNTRY RISK PREMIUM : AN EMPIRICAL INVESTIGATION

Juan Carlos Berganza, Roberto Chang and Alicia García Herrero October 15 2003 Abstract This paper investigates empirically whether there is a negative relationship between a country’s risk premium and its net worth, as implied by recent theories emphasizing financial imperfections, balance sheet effects, and liability dollarization. We find evidence that balance sheet effects, given by the incr...

What Risk Premium Is “Normal”?

The goal of this article is an estimate of the objective forward-looking U.S. equity risk premium relative to bonds through history—specifically, since 1802. For correct evaluation, such a complex topic requires several careful steps: To gauge the risk premium for stocks relative to bonds, we need an expected real stock return and an expected real bond return. To gauge the expected real bond re...

What Makes Mice Fat? How the Brain Controls Energy Balance

Background: To discover prostate cancer biomarkers, we profiled gene expression in benign and malignant cells laser capture microdissected (LCM) from prostate tissues and metastatic prostatic adenocarcinomas. Here we present methods developed, optimized, and validated to obtain high quality gene expression data. Results: RNase inhibitor was included in solutions used to stain frozen tissue sect...

Balance Sheet Effects on Option Pricing

A balance sheet structure including fixed assets, net working capital and risky long-term debt leads to a model for option pricing of the firm’s equity. Each of the financial components constitutes a source of risk. A hedge based on three distinct options and the stock enables risk neutral valuation and avoids the problems of lack of tradability of the assets and market incompleteness reflected...

The Size Premium: What Role Does Macroeconomic Risk Play?