The FTC reported 22,517 corporate acquisitions during the 1960s compared with 7200 for the period, 1940–1959. The increased employment of this method of corporate growth has generated a number of studies explaining certain segments of the merger movement. Attempts have been made to explain why firms merge, how firms merge, and how mergers have affected subsequent performance of firms. Mergers have been described as consummated to avoid bankruptcy (for the acquired firm), to capitalize upon managerial inefficiencies, to gain from valuation discrepancies, to achieve portfolio diversification, and for synergistic purposes and many other reasons.

This study deals with behavioral assumptions that necessarily underlie the theory of asset valuation. Recognized logical and empirical implausibilities associated with the particular set of assumptions that provides the underpinnings of much currently espoused asset theory are reviewed. A valuation model based on a more realistic set of behavioral assumptions is then proposed and tested empirically.

In their present paper. Professors Cheng and Deets (hereafter C-D) attempt to derive a measure of instantaneous systematic risk for securities and portfolios which is consistent with the Sharpe-Lintner-Mossin capital asset pricing model when the true market horizon is infinitesimally short. In so doing, they assert that Jensen's resolution of the horizon problem for such a market horizon is incorrect. In the comments which follow, I shall attempt first to indicate explicitly the causes for the differences in the Jensen and C–D results, and second, to evaluate their relative merits.

Professors Simkowitz and Logue (S-L) remind us that capital asset pricing is a simultaneous process. Their approach differs from traditional capital market models [3 and 6 ], where an investment's risk and return characteristics depend solely on a structural relationship between asset and market portfolio returns. Simkowitz and Logue argue that, within groups of homogeneous securities, investment returns are determined simultaneously and that market portfolio return as well as certain firm-related factors are exogeneous determinants of investment returns. This comment will, first, examine their basis for a simultaneous model and, then, look at presented empirical results.

The recent wave of revaluations has again brought to the fore the foreign exchange risks with which most multinational corporations have to live constantly. While these latest parity changes have tended to increase the value of foreign currencies relative to the dollar, most exchange risks arise from pending devaluations.

In a recent article, Professors Stoll and Curley (hereinafter referred to as S–C) examined results for new issues during a short-run period and over long-run periods. The authors concluded that, “investors in new small issues floated under Regulation A in 1957, 1959, and 1963 experienced lower long-run rates of return than if they had invested in a portfolio of large stocks represented by the Standard and Poor's Industrial Average.” It was pointed out that these long-run results were consistent with the results of similar studies. Alternatively, regarding short-run results it was concluded that “in the short run, the stocks in the sample showed a remarkable price appreciation.” In fact, “short-run price appreciation was, however, considerably greater than the index appreciation.” They refer to this short-run performance as “.… perhaps the most interesting and certainly the most puzzling phenomenon encountered in the study.”

The basic model of this paper is that of a transactor who is to receive at a specified time t in the future a fixed quantity of domestic funds Ad and a fixed quantity of foreign funds Af. It is further assumed that there exists a forward market in foreign exchange in which one unit of foreign currency can be bought and sold at a given and known forward rate rf, the domestic currency price of one unit of foreign currency. Let X be the net forward purchases of foreign exchange that the transactor undertakes at the market rate rf; a negative value of X indicates net sales of forward exchange. It is assumed that at time t the foreign currency will be convertible for the transactor at a fixed but unknown spot exchange rate and that the transactor can assess or derive a probability distribution on this spot exchange rate f(rt) for rt > 0. Finally, it is assumed that the transactor can express a utility function u on the domestic currency equivalent of his ending currency holdings. This paper considers the problem of determining the optimal level of forward exchange purchases X0.

The za was a leading medieval Japanese economic institution, often likened to the European guild. Professor Yamamura analyzes the rise and subsequent decline of za from the eleventh through the sixteenth centuries, paying special attention to their influence on the development of commercial activity.