In studying the economic growth of Latin America, historians of widely divergent viewpoints have tended to emphasize the role of foreigners in the developmental process. As a result, they have often overlooked the efforts of Central and South American entrepreneurs in mobilizing capital and adopting technology to foster the growth of their countries. Chile is a case in point. Like their counterparts throughout Latin America, mid-nineteenth-century Chilean businessmen have been generally portrayed as the followers of foreign interests that dominated the nation's economy. This interpretation, however, has ignored the activity of Chileans in building railroads and promoting various other sectors of their economy. In this essay, Dr. Oppenheimer offers conclusive evidence that Chilean businessmen, closely linked to government—but not foreigners—dominated the two firms that brought the iron horse into Chile's Central Valley.

The concept of immunization is currently one of the most widely discussed innovations in bond portfolio management. The interest in immunization, which allows one to nearly guarantee a minimum return performance over a specified investment horizon, is due in large measure to the desire on the part of bond managers to reduce the risk which has accompanied the recent swings in interest rates.

Recent developments in the finance literature dealing with the valuation of contingent claims have been triggered by Black and Scholes [2] with their valuation of European options on corporate stocks. The type of valuation model derived by Black and Scholes is attractive because it is independent of preferences. This independence is possible due to the fact that the contingent claims are usually assumed to be contingent on traded assets or traded state variables. For example, a European call option is a claim contingent on the value of the corresponding stock. To maintain the independence of the claim from preferences, however, some variables have to be discarded and considered as constants. For example, the rate of interest, which is not a traded state variable, is considered a constant in most of the literature (see Black and Scholes [2], Merton [11], and Ingersoll [9]). Though this approximation might not cause important discrepancies in the case of corporate liabilities and options on corporate liabilities, the effect of such an approximation on the value of default-free bonds and options on default-free bonds is more important since these liabilities depend only on the rate of interest.

In a paper published in 1978, Levy [5] proposed a general capital asset pricing model (GCAPM), which he obtained by maximizing investors' utility when the number of securities held in each investor's portfolio is constrained. Although Levy's resultant asset pricing model is somewhat different in appearance than the asset pricing model proposed by Mao [8] in 1971, it can be shown that both models are not only quite comparable in content but that both result in some very promising theoretical and empirical implications. Thus, the purpose of this paper is twofold. First, these two important contributions to the literature on asset pricing in imperfect markets will be compared and contrasted. Second, it will be shown that both models can yield a “clinical” form of the traditional CAPM, which appears to be more desirable for empirical testing purposes.

Forecasts of financial prices, calculated from the present and past values, are never substantially more accurate than the prediction that future prices will equal the most recently observed price. This conclusion has been summarized by two hypotheses. First, the random walk hypothesis, states that daily returns are uncorrelated. Few people believe that this is exactly correct; indeed, the hypothesis has been refuted both for small stock markets [13] and for American commodity futures markets [3]. Second, the weak-form efficient market hypothesis, as defined by Jensen [15], states that investors cannot make profits from any correlation between returns, after deducting all the costs of trading and adjusting for risk. Strict efficiency, is a special case that occurs when prices fully reflect all information available in the past prices [7], [8].