This paper provides a closed-form, preference-free means of valuing a European call option written on a default-free pure discount bond. Investors may not agree upon a theory of the term structure, but they will necessarily agree on equilibrium option values. Further, these equilibrium option values may be obtained without recourse to numerical approximation.

Default-free pure discount bond prices were posited to follow a non-standardized transformed Brownian bridge process. This specification implicitly incorporates the terminal constraint that the price of a default-free pure discount bond equal its face value at maturity.

Contingent claim valuation necessarily involves consideration of terminal constraints on the value of financial securities. The Brownian bridge specification permits an appropriate means of incorporating a number of such constraints. Therefore, while this paper has considered only the application of the Brownian bridge process to the valuation of debt options, the introduction of this process may provide for many further financial applications.

Recently, the finance literature has included empirical analysis of consumption in asset pricing models based on the cross-equation restrictions implied by optimality of a representative agent's consumption and investment plan. These studies have required some specification of an aggregate utility function, and power (constant relative risk aversion) utility has been predominant. The present paper extends this body of research by including models with constant absolute, as well as constant relative, risk aversion.

This note has given results for the probability of committing a Type I error in first-order stochastic dominance when it is assumed that both options have been sampled from the same distribution of returns. The probabilities are based on known results in the stochastic processes and statistical goodness-of-fit literatures, but have not been recognized in connection with the problem of estimation of risk in stochastic dominance. Further work on FSD Type II error probabilities based on ideas in this paper is in progress.

Merger transactions involve differing degrees of change in capital structure and asset distribution. As a result, different forms of merger could have different effects on security values of the firms involved. Previous empirical studies primarily used samples that included all types of mergers. The present study examines the effect of one type of merger, pure stock exchange, on the values of the debt and equity of the firms involved.

From its inception in the 1940s the Advertising Council was part of a broad, loosely coordinated campaign by American business leaders to contain the anticorporate liberalism of the 1930s and to refashion the character of the New Deal State. In this campaign the Council generally aligned itself with the more liberal wing of the business community, usually identified with the newly organized Committee for Economic Development (CED), rather than with the older and more conservative National Association of Manufacturers (NAM). Like the CED, the Advertising Council often espoused a “corporatist” ideology which emphasized cooperation between business and government; and like the Business Advisory Council, the National Petroleum Council, and other quasi-public corporatist bodies, it sought to establish close, reciprocal relationships with the executive branch. The Council enthusiastically supported the new foreign and national security policies of the Truman Administration, but strongly opposed its domestic programs. By contrast, the Council supported both the foreign and domestic policies of the Eisenhower Administration, and helped promote the administration's economic programs in a series of major advertising campaigns. Through its millions of “public service” advertisements, the Council sought to promote an image of advertising as a responsible and civic-spirited industry, of the U.S. economy as a uniquely productive system of free enterprise, and of America as a dynamic, classless, and benignly consensual society.

Diplomatic historians have frequently cast American foreign policy from 1890 to 1915 as handmaiden to the expansion of American enterprise in foreign markets, but the relationship between government and business was neither one-sided nor simple. Government officials had their own agenda of objectives for which they wanted business support, sometimes even trying to use specific firms as their agent. Business itself did not speak with a single voice — policies which one firm might find beneficial, another found detrimental. Moreover, business was only one among various interest groups competing for attention and influence in the policymaking process. This case study of International Harvester's efforts to gain government assistance for the development of a Russian branch factory uncovers these intertwined threads of intersecting and conflicting objectives and interest groups, revealing the tangled complexity of business-government relations in this turbulent era.

As Secretary of the Interior and Petroleum Administrator for War, Harold Ickes played a significant, albeit hitherto largely overlooked, role in the formulation of United States foreign petroleum policy planning during World War II. As Petroleum Administrator for War, Ickes worked closely with oil company personnel who shared his commitment to planning and government-industry cooperation. In addition, as a firm believer in the need for a coherent national petroleum policy, Ickes played a major role in broadening the mandate of the ill-fated Petroleum Reserves Corporation. While business groups generally opposed this broadened mandate, business opposition was by no means monolithic and was, in fact, reinforced by considerable opposition from within the government itself.

Nineteenth century America witnessed the expansion of business enterprise as well as the extension of a system of higher education. Business philanthropy played a substantial role in higher education by filling the gap between the church-supported colleges of the colonial period and the state colleges and universities of later years. The philanthropy of American business leaders provided for scientific and polytechnical schools, opened colleges for women, extended new opportunities for black “freedmen,” and created the first undergraduate and graduate schools of business. Although nineteenth century law prohibited corporate philanthropy and offered no tax incentives, business leaders gave because they thought that they were stewards of wealth, they saw a need for practical education, they wished to create memorials for loved ones, and they desired to meet the needs of special groups of individuals.