Risk Aversion‚ Performance Pay‚ and the Principal-Agent Problem Author(s): Joseph G. Haubrich Source: The Journal of Political Economy‚ Vol. 102‚ No. 2 (Apr.‚ 1994)‚ pp. 258-276 Published by: The University of Chicago Press Stable URL: http://www.jstor.org/stable/2138661 Accessed: 14/12/2010 04:55 Your use of the JSTOR archive indicates your acceptance of JSTOR’s Terms and Conditions of Use‚ available at http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR’s Terms and Conditions of Use
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Country 4 2.5. Information availability and ease to trade 6 2.6. Market trust 6 2.7. Age 7 2.8. Marital status 7 2.9. Sociability (social interaction) 8 2.10. Personal values 9 2.11. Life satisfaction 9 2.12. Health 10 2.13. Risk aversion 10 3. CONCLUSIONS 12 4. REFERENCES 13 1. INTRODUCTION There are a lot of researches made to investigate the reasons why households participation in the stock market is relatively low. According to the numbers‚ only 21% of EU households participate
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In the short story “A Matter of Taste” by Alex La Guma‚ several political issues are addressed. Race‚ socioeconomic status‚ education and experience‚ are all factors that are somehow brought up throughout this story. The thing that stands out the most‚ and really brings all of these factors together‚ is the idea that “more is left unsaid than said.” More is left unsaid than said; what does the statement really mean? To begin with‚ this idea is the theme to the structure of a lot of fictional writing
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Taste of Buffalo On Tuesday‚ March 29th‚ Buffalo‚ New York natives‚ Jason and Dennis invite guests to enjoy their hometown’s legendary culinary flair as Family Elder Law presents‚ “The Taste of Buffalo.” This exclusive Chamber of Commerce Business-After-Hours event will showcase a selection of the legendary foods‚ beverages and music from upstate New York. A Food Town: • Truly a “Food Town!” There are close to 1‚000 restaurants in Buffalo. • Ranked third best food town city in the world! • The
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Investment Decisions Under Uncertainty 7.1 Investor preferences and expected utility -If there is no uncertainty then we just need to determine how much we want to consume now and how much later i.e. assets are risk free with return certain across all states of the world -A risky asset is one whose cash flows are not certain across all possible states of the world. In finance it is commonly assumed that investors are risk averse‚ rational and have unlimited demand for wealth (nonsatiated) -This
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reaction is due to the loss of aversion– an effect where humans are more sensitive in losing an object than in gaining the same object. The concept of loss of aversion is present in gambling‚ which explains why most individuals would reject gambles that offer a fifty-fifty chance of losses or gains. Researchers questioned whether neural responses are similar to a human’s response towards negative and positive attributions. As anticipated‚ an individual’s response to loss aversion correlates to how one’s
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LOP Volatility Bounds Volatility bounds were first derived by Shiller (1982) to help diagnose and test a particular set of asset pricing models. He found that to price a set of assets‚ the consumption model must have a high value for the risk aversion coefficient or have a high level of volatility. Hansen and Jagannathan (1991) expanded on Shiller’s paper to show the duality between mean-variance frontiers of asset portfolios and mean-variance frontier of stochastic discount factors. Law of one
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Our Lady of Perpetual Succor College Marikina City A Taste of Asia: Different Cultures with Different Taste Buds By: Luzong‚ Danna Melissa A. III – Amazing Grace A Research Paper In English III Presented to: Ms. Emma B. Monton March 15‚ 2012 Outline……………………………………………………………………………………………… 1-2 I. Introduction A. Background of the Study………………………………………………………………... 3-4 B. Significance of the Study………………………………………………………..………. 4-5 C. Definition of Terms………………………………………………………………
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Moreover‚ international investing involves securities denominated in foreign currencies (currency exchange risk)‚ therefore‚ invest in UK market maybe the good choice. My risk tolerance level of 22 is moderate to aggressive (coefficient of risk aversion A=2.5) (Bodie‚ Kane‚ Marcus‚ 2001) and I am looking for safety of principal and growth of capital and accept moderate amount of risk. The expected high returns for this portfolio at least 6% or more. I have decided to allocate my assets among stocks;
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characteristics: E(rA ) = 20% σA = 20% E(rB ) = 12% σB = 22% E(rC ) = 15% σC = 28% (a) Which portfolio would every investor pick and why? (b) What utility would an investor with a risk aversion parameter‚ A‚ of 1 get from the three portfolios? (c) What must be the risk aversion of an investor that is indifferent between picking portfolio B and portfolio C? 1 3) Consider an investment universe consisting of three assets with the following characteristics: E(r1 ) = 12%
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