Pricing Eurodollar Futures Options with the Heath—Jarrow—Morton Model

This article uses the algorithm developed by Ritchken and Sankarasubramanian (1995) to make comparisons among the Heath—Jarrow—Morton (HJM) models (Heath, Jarrow, & Morton, 1992) with different volatility structures in pricing the Eurodollar futures options. We show that the differences among the HJM models as well as the difference between the HJM models and Black's model can be insignificant when the volatility of the forward rate is relatively small. Moreover, our findings imply that the difference between the American‐style and European‐style options is insignificant for options with a life of less than 1 year. However, the difference can be significant for options with a 1‐year maturity, the difference depending on the exercise price. Finally, our tests indicate that the difference between the forward price and the futures price is insignificant if the volatility parameter is low enough and when the volatility of the spot rate is proportional to the spot rate. A higher volatility parameter can lead to a significant difference between the forward price and the futures price, although its impact on the price of the options will still be trivial. © 2001 John Wiley & Sons, Inc. Jrl Fut Mark 21: 655–680, 2001     

Consumer Credit Risk and Pricing

Previous academic studies viewed borrower rejection as a sign of market imperfections in the consumer credit markets, but this view was based upon the assumption that differences in the levels of borrower creditworthiness could not be accurately identified. Today, it is possible to differentiate between types of borrowers, and riskier borrowers can participate in credit markets if they are willing to pay relatively higher borrowing costs. Hence, a more critical issue concerning the performance of these markets should be whether loan prices correctly reflect the level of borrower credit risk. This paper reexamines consumer participation in credit markets looking specifically at issues related to the pricing of borrowers of different credit risk.     

Consumer Perceptions and Pricing Practices for Weddings

Journal of Consumer Policy - Weddings represent a specific consumption experience with unusual pressures (financial and emotional). Societal pressures of perfection and the experience itself,...     

Consumer Research and Programs for the Elderly—The Forgotten Dimension

Older Americans are the most victimized and disadvantaged group in the marketplace, yet few consumer research, education, and action programs have focused on their needs and concerns. This study, by attempting to summarize existing knowledge of the consumer problems and needs of older persons, reveals the lack of reliable data and research. The study also suggests that inflation has a far worse impact upon the elderly than previously thought, affecting not only their retirement financial condition but also their psychological and social condition. The study concludes that traditional consumer education programs focusing only upon persons' poverty of means will be ineffective unless they include an additional focus on the poverty of meaning in the lives of older consumers.     

Using the Capital Assets Pricing Model for risk management—A tool for multinational corporation managers

In this article, using a theoretical model and empirical analysis, we show how multinational corporations (MNCs) can utilize the fundamentals of the Capital Assets Pricing Model (CAPM) to formulate a strategic risk management in a global economy. We show that MNCs with branches all over the world, specifically those that specialize in nontradable goods (e.g., McDonald's), should consider each country's beta as the appropriate measure of the relevant risk attached to the location in the country. Finally, using data from the most recent world economic crisis (the subprime crisis), we show that during a world economic crisis the loss of growth will be significantly higher in countries with higher betas, and lower in those with lower betas. © 2011 Wiley Periodicals, Inc.     

Unequal Pricing in the Information Economy: Implications for Consumer Welfare

This article presents an economic analysis of information good pricing and consumer welfare, and discusses the implications of price discrimination in the information economy. It argues that network externalities, coupled with information asymmetry, enable a dominant marketer to price unequally, extracting late adopters surplus to compensate for the loss from early adopters. In the short term, the minority early adopters benefit by paying less, but in the long term, the majority late adopters suffer by paying more. Considering that late adopters are likely to be at a disadvantage in resources, this discriminatory pricing amounts to the poor subsidizing the rich. Based on this analysis, implications for consumer welfare are discussed.     

Consumer Welfare Implications of Changes in Interstate Telephone Pricing

Past practice in regulating telephone prices has encouraged telephone companies to incur excessive costs. The Federal Communications Commission has recently changed some of these practices. In this paper the consumer welfare implications of some of these changes are examined, primarily the institution of interstate subscriber line charges and changes in the procedures for allocating costs among jurisdictions. The conclusion is that these changes serve consumer interests.     

Consumer Concerns Relating to Food Labeling and Trust—Australian Governance Actors Respond

This study aims to report and critically analyze the responses of governance actors to a set of consumers' concerns relating to food labeling, and by doing so describe how these actors construct both consumer perspectives and the food policy environment in which they work. Fifteen food‐labeling governance actors in Australia and New Zealand were asked to view an online presentation of the findings from a previous study exploring consumer perspectives on food labeling and trust before completing a one‐hour, in‐depth, semi‐structured interview. Colebatch's social constructionist perspective on policy was adopted in the analysis. Participants used their own constructions of Australian food policy, the role of labeling and consumer trust as a means to minimize the consumer concerns. Inadequate critical engagement with the moral dimension of consumer concerns is a core driver of the inertia demonstrated in the Australian government's approach to addressing consumer concerns regarding food matters.     

网上支付中的消费者保护问题——美国立法规定及其对我国的启示

电子商务作为一种全新的商业运作模式,将成为21世纪国际商务往来的主流和各国经济活动的核心。而完整的电子商务要求做到物流、信息流和资金流都尽可能在网上进行,这有赖于网络银行与网上支付制度的建立。本文介绍了美国现行网上支付体系的种类及在责任限制、错误更正和披露三个方面对消费者的保护规定,对中美银行卡消费者保护规定作了比较研究,并对我国网上支付法律制度中的消费者保护立法提出了建议。     

A Problem Ignored: Dilution and Negation of Consumer Information by Antifactual Content

Current conceptions of consumer information do not consider types that may dilute or detract from facts available to consumers about products and services. The article discusses the nature and incidence of such antifactual content, identifies research and public policy that ignores the content but could benefit from recognizing it, and describes a role for the content in conceptualizing and better assessing consumer information, in order to provide researchers, regulators, advertisers, and consumers with more accurate evaluations.     

Economic Considerations in Forming Consumer Cooperatives and Establishing Pricing and Financing Policies

This study identifies structural features of markets which provide inducements for consumers to form cooperatives, and derives conditions under which consumer welfare is enhanced through cooperation. Market-failure conditions are discussed which may provide consumers with an economic incentive to form cooperatives. Also addressed, through application of a simple game theory model, are issues concerning optimal pricing, financing arrangements and cooperative stability. In this regard, it is shown that prevailing cooperative pricing and financial methods often tend to needlessly restrict output and membership and, consequently, cause unit costs to be higher than necessary in an increasing-returns-to-scale environment, which it is argued, is the typical environment for most consumer cooperatives. Instability, in turn, tends to occur when cooperatives attempt to operate at outputs beyond those associated with minimum average cost because some members may reduce their patronage costs through formation of a new, smaller cooperative.