Replacement Investment: Optimal Economic Life Under Uncertainty

Replacement investment is essentially a regenerative optimal stopping problem; that is, the key decision concerns when to terminate the life of existing plant – and hence when to start over again. This paper examines this optimisation problem within a continuous time framework and studies the qualitative and quantitative impact of uncertainty on the timing of new investment (and the criteria that should be used for terminating the life of existing plant).     

A RE-EXAMINATION OF THE RELATIONSHIP BETWEEN CLOSED-END FUND DISCOUNTS AND EXPENSES

In this paper the role of expenses in explaining closed-end fund discounts is re-examined. A present value model is developed to illustrate the relationship between expenses and discounts. Earlier studies find that discounts are not related to management fees. In this paper, using a larger sample over a longer and different period and a better specification of the expense variable consistent with the model developed, discounts are found to be significantly related to expenses. The relationship between expenses and discounts holds in the presence of other control variables.     

The effects of an advertising retrieval cue on young children's memory and brand evaluations

Young children's memory for television advertising is important in order for children to recognize brands in stores and/or to recall the brand name in making a purchase request. Two experiments showed that the use of visual advertising retrieval cue (a green frog as the brand character) improved memory performance and brand evaluations. Study 1 (n = 40) showed promise in the cue's assistance in children's recalling the brand name (cued recall) from the ad memory trace. Study 2 (n = 40) contained multiple exposures to the ad, which resulted in greater free recall and in support for the cue's assistance in better access of the brand name from the ad memory trace (cued recall). Affected ad memory resulted in more favorable brand evaluations and intent to request the brand's purchase. © 1994 John Wiley & Sons, Inc.     

The Debt/Equity Swap in Latin America– In Whose Interest?

This paper presents the basic analytics of a debt/equity swap and illustrates the concept with a detailed example of American Express Bank's swap transactions that began in 1986 and have resulted in construction of seven hotels in Mexico during the course of the swap agreement. The economics of the swap are presented from the lending bank's view, from the foreign direct investor's view, and from the borrowing country's view. It is concluded that: swaps offer net benefits to the borrower country when additional investment is generated (from the swap transaction itself and/or from encouraging further investment as a result of the swap policy); they offer net benefits to the lender when future loan servicing prospects are poor and viable investment opportunities exist; and they offer net benefits to the direct investor when the cost of financing the investment through the swap is less than for alternative financing sources.
The analytical framework presented here allows the bank lender to formally compare alternatives of holding impaired LDC loans on its books, selling the loans in the secondary market, trading the loans for loans from another country, and swapping the loans for equity investments in the borrowing country. It similarly allows the government policymaker to compare the relevant economic costs and benefits of swaps, so that better swap policies can be developed.     

A Conceptual Model of the Household's Housing Decision–Making Process: The Economic Perspective

At some stage in every household's family life cycle, the household is likely to make certain decisions with regard to its housing environment. Although the household's housing decisions essentially comprise the decision to move, and the selection of a new residence, the process from which these decisions are derived is very complex because varying circumstances could produce a multitude of different housing decisions. Due to the sheer complexity of the household's housing decision–making process, researchers have generally focused on individual decision–making stages rather than on the process as a whole. This paper therefore attempts to conceptualize the entire household housing decision–making process using theoretical concepts from the economic perspective, and then tests the conceptual model with empirical evidence drawn from the moving population within the multi–racial society in Singapore.