Empirical research has played an important role in recent theoretical developments in the theory of finance, particularly in the formulation and testing of various theories of capital asset pricing. A common procedure in much of that empirical research is to use historical price and dividend data to estimate the parameters of a characteristic line which relates the return on an asset or portfolio to the return on the market. While several possible limitations of such procedures have been explored, one recurring question is the appropriate length of each interval used in the estimation. The purpose of this study is to investigate intervaling in greater detail so as to better understand its impact on the results of empirical research and hence of further developments in the field of finance. This is accomplished by examining the effect of different intervals on the return distributions and estimated characteristic lines of 200 common stocks over the two decades 1950–1969. Section II reviews the relevant literature and attempts to place the intervaling effect in perspective. Research design for the investigation is described in Section III, and findings are presented in Section IV. A brief conclusion appears as Section V.

Several titles reflecting different approaches to our subject matter were considered for the paper. An historical but somewhat pedantic approach to the teaching of investments might have been titled “Pedagogical Developments in Investments: Past, Present, and Future.” Another possibility was “Sex and the Single Investor,” a title which probably would have attracted a larger audience. “Beat the Dealer Versus Beat the Market” might well have been an appropriate title in view of our presence here in Las Vegas and also because of recent experience in the securities markets. We finally decided on simply “A Portfolio Analysis of the Teaching of Investments,” because this seems to better capture the essence of our viewpoint.

Professors Nielsen and Melicher (N-M) have conducted well an interesting study of merger premiums as related to various measures of synergy connected with those mergers. Their study is another in a growing body of literature concerned with the merger phenomenon which increased substantially during the sixties and has continued into this decade. In order to provide an evaluation of their study, I shall consider their choice of research design and their analysis of research findings.

Risk continues to be a widely discussed topic within the field of finance. Academicians add risk variables to their quantitative models, while financial practitioners include risk considerations in their qualitative deliberations. In both contexts, risk — together with some measure of profit or return — generally comprise a dual or composite criteria for investment decision-making purposes. Whereas the decisionmaking situation can be described as ex ante, this article deals with risk in an ex post context. In particular, it reports an investigation of alternative risk-return measures which are designed to rank and evaluate the ex post performance of investment portfolios. Section I reviews three composite measures of performance and examines their interrelationships. A fourth alternative measure is also suggested. In Section II, the measures are used to rank the portfolio performance of a sample of mutual funds. Some difficulties in making performance comparisons of these funds against the market are discussed in Section III. The final section briefly explores the implications of the study and suggests areas for subsequent research.

Investment management is a decision-making process which ranges from an individual managing his own small portfolio of securities to institutional investors who manage portfolios valued in millions of dollars. The importance of investment management is readily observed in the increased activity of the securities markets, the close scrutiny given by regulatory agencies to various institutional investors and professional investment managers, the growing market value of pension funds, trust funds, and investment companies, and finally, the increasing number of related research studies which are reported in the financial literature.