Effects of Callable Feature on Early Exercise Policy

Convertible bonds and American warrants commonly contain the provision of the callable feature which allows the issuer to buy back the derivative at a predetermined recall price. Upon recall, by virtue of the early exercise privilege embedded in an American style derivative, the holder may choose either to exercise his derivative or to sell it back to the issuer. Normally, there is a notice period requirement on the recall, that is, the decision of the holder to exercise or to receive the cash is made at the end of the notice period. Also, the period of recall provision may cover only part of option's life. In this article, we examine the effect of the callable feature (with the notice period requirement) on the early exercise policy of a callable American call option. The optimal calling policy for the issuer is explored where the value of the American option is minimized among all possible recall policies. Without the notice period requirement, the critical asset price boundary of the callable American call is identical to that of the American capped call. When the notice period requirementis imposed, the critical asset price (considered as a function of time to expiry τ) first increases with τ,reaches some maximum value, then decreases with τ. Several approaches of designing numerical algorithms for the valuation of the callable American option are also presented. This revised version was published online in November 2006 with corrections to the Cover Date.     

Cost minimization analysis of capecitabine versus 5-fluorouracil-based treatment for gastric cancer patients in Hong Kong

Background: EOX (epirubicin, oxaliplatin, Xeloda; capecitabine) and FOLFOX4 (5-fluorouracil (5-FU), leucovorin, oxaliplatin) are the common chemotherapy regimens used in the treatment of advanced gastric cancer (aGC) in Hong Kong. This study aimed to compare the costs of these therapies for aGC patients from both the healthcare and societal perspectives. It should be noted that, while FOLFOX4 is routinely administered in an outpatient setting in North America and Europe, inpatient setting is adopted in Hong Kong instead, incurring hospitalization cost as a result.

Methods: Fifty-eight patients were identified from the electronic records in two public tertiary hospitals, with 45 and 13 receiving EOX and FOLFOX4 regimens, respectively. Healthcare cost was direct medical costs including drugs, clinic follow-up, hospitalization, diagnostic laboratories, and radiographs. Societal cost refers to indirect costs such as patient time and travel costs. Cost items were further classified as “expected” or “unexpected”. All cost data was expressed in US dollars.

Results: Patients in the EOX and FOLFOX4 arm received an average of 5.3 and 7.8 cycles of treatment, respectively. The capecitabine-based regimen group had a higher expected medication cost per cycle when compared to the 5-FU-based treatment group (US$290.3 vs US$66.9, p?p?p?p?=?.001), respectively, in the capecitabine-based regimen group. Sensitivity analyses based on full cycle regimen costs and net capecitabine or 5-FU/leucovorin costs still showed EOX to be less costly than FOLFOX4.

Conclusion: The capecitabine-based regimen, EOX, was found to generate significant cost saving from both the healthcare and societal perspectives in regions in which FOLFOX4 is given in an inpatient setting.     

Learning goal orientation and creative performance: The differential mediating roles of challenge and enjoyment intrinsic motivations

We develop a theoretical model to account for the effect of learning goal orientation on creative performance by distinguishing two dimensions of intrinsic motivation as mediators. Challenge intrinsic motivation is concerned with the interest in and excitement of solving problems and tackling complex tasks, whereas enjoyment intrinsic motivation is concerned with the enjoyment of task activities for self-expression and self-entertainment. Results from a sample of 189 Chinese employees support this model and show that learning goal orientation had significant positive relationships with both dimensions of intrinsic motivation, but only challenge intrinsic motivation was significantly related to creative performance and mediated the positive relationship between learning goal orientation and creative performance. As predicted, intellectual stimulation, a dimension of transformational leadership, showed a moderating effect, such that learning goal orientation was less strongly related to challenge intrinsic motivation when intellectual stimulation was high. In addition, a moderated mediation effect was found, such that the mediating effect of challenge intrinsic motivation for the relationship between learning goal orientation and creative performance was weaker when intellectual stimulation was high. No such moderation effect was found for enjoyment intrinsic motivation, providing further support for the differential roles of these two dimensions of intrinsic motivation.     

Real options game analysis of sleeping patents

Using the real options game approach, we analyze the two-stage preemptive patent-investment race between an incumbent and a challenger (new entrant) in a product market with profit flow uncertainty. The challenger can gain entry into the monopolized product market dominated by the incumbent by patenting related technologies for a substitute product. To maintain its monopolized advantage, the incumbent has an incentive to block challenger’s entry by patenting the substitute product before the challenger. Either firm can pay an upfront fee to gain an immediate acquisition of the patent and subsequently holding the real option to develop the new substitute product. Under our simplified real options game model, there is no potential patent litgation risk. Also, the costs of holding the patent, like the payment of annual fees, are taken to be zero. We provide a full characterization of the optimal strategies adopted by the incumbent and challenger firm in this asymmetric patent-investment race. In particular, we examine the phenomena of sleeping patent, where the patented product is not launched immediately into the product market.     

International business education of the United States in the 1990s: Accredited vs. nonaccredited schools

This article reports the status of the international business education in the United States as of the 1990s and examines the differences between AACSB accredited and nonaccredited business schools regarding the various aspects of internationalization. The overall conclusions are that along all dimensions significant progress has been made regarding internationalization. Accredited schools have progressed further than nonaccredited schools. Nevertheless, many of the schools have not aimed very high or made major changes in structures, operations, incentives, or requirements of their college to accommodate internationalization. © 1995 John Wiley & Sons, Inc.     

Past inflation variability and the stability of the demand-for-money function in Nigeria

Conclusions The view that the demand-for-money function is characterized by a stable relationship is subjected to four objective statistical tests. The results suggest that for the period 1961–62 through 1981–82, the demand-for-money function became unstable around 1970–71. The past variability of the rate of inflation was found to be an important variable in the money-demand function of Nigeria.     

Tourism in the PRC-five years after China opens its gates

The ‘tourism industry’ in China, since its recognition as such in 1978, has grown rapidly. This has entailed both ideological and planning problems. The authors, both with extensive first hand experience of the industry in China, illustrate the pragmatism of the Chinese approach in providing solutions and planning the way ahead.