Potential Rates Of Return Research Articles

Comparative Study of Stock Exchanges in China, Hong Kong, and Taiwan

Equity exchanges are sprouting in developing countries due to the privatization of state-owned enterprises. China officially opened its first recognized stock exchange, the Shanghai Security Exchange in December, 1990 and a few months later the Shenzhen Stock Exchange opened. This paper compares the micro-structure of the equity markets in China, Hong Kong, and Taiwan.For a foreign investor, the markets in Hong Kong contain the least restriction and are the most accessible. Both China and Taiwan impose restrictions on foreign investment. China restricts foreign investment by only allowing the purchase of B shares Chinese exchanges, while Taiwan limits foreign investors to only four investment funds. China also allows for higher commissions on foreign investor purchases. In addition, Non-Chinese investors in A shares may be subject to a 20% withholding tax on that portion of dividend income that exceeds the People’s Bank of China’s one-year rate for the same period.These discriminatory measures can be expected to have a negative impact on foreign capital inflows and to reduce the liquidity of these markets. The impact on the prices of shares and potential rates of return cannot be positive from these restrictions since, all else constant, lower demand implies lower price. It may be, however, that the inherent potential in these growing markets from recent political and economic changes may create high rates of return, despite the restrictions on capital flows. There are also other alternatives for capital inflows to direct stock investment, such as Foreign Direct Investment (FDI). FDI, in turn, may well flow through to higher stock prices.

Optimal selection of project portfolios using reinvestment strategy within a flexible time horizon

Abstract In this paper, we address the issue of optimal selection of portfolio of projects using reinvestment strategy within a flexible time horizon. We assume that an investor intends to invest his/her initial capital on the implementation of some projects in a flexible time horizon. The investor’s motivation for considering a flexible time horizon is to maximize his/her gain by determining the optimal time horizon for investing on the selected portfolio of projects. Projects have different durations and their potential rates of return are also different. The profit yielded by the completed projects can be reinvested in the implementation of other projects. The implementation costs of projects can be allocated at equally spaced intervals with equal amounts during their life cycles or can be assigned to each project according to its estimated s-curve . We assume that the profit yielded by each project is accrued after the investment for the project ends. Therefore, in order to maximize gains, the investor needs to optimize three issues: combination of projects, schedule of the selected projects and the time horizon. An integer program is presented and discussed to address the given issues.

Accounting and economic returns in British coal mining: The Carlton Main colliery, 1872–1909

Various estimates, both ex ante and ex post, have been produced of the accounting rate of return on investments in the late nineteenth-century coal industry, with some ex post figures also being calculated for individual firms engaged therein, such as the Consett Iron Co. Ltd. No one, however, has previously tried to calculate the economic rate of return from investing in a single coal mine over the duration of its life. In this article we examine both accounting and economic rates of return for the Carlton Main colliery, from its sinking during the 1870s through to its closure in 1909. Our results enable us to judge the accuracy of previous estimates of returns for the late nineteenth-century coal industry, and of contemporary estimates of the potential rate of return in coal mining. We also offer insights into the efficacy of using accounting rates of return as an indicator of the economic rate of return during that period.

Tax incentives for innovation: time to restructure the R&E tax credit

The R&E tax credit has never been effective and subsequent attempts to restructure it have not addressed the major deficiencies. Moreover, in the 25 years since the R&E tax credit was enacted, a steadily increasing number of countries have implemented or expanded competing tax incentives, which in many cases are better structured and larger in size. As a result, the relative impact of the US credit is now negative in terms of incentives to conduct R&D within the domestic economy. The inadequacy of the credit stems largely from its small size and its incremental format. The impact of an R&D tax incentive is affected by its scope of coverage, the ability of industry to take advantage of it over the entire R&D cycle, the magnitude of the incentive relative to other nations’ tax policies, and its ease of implementation. In the end, a tax incentive must sufficiently lower the user’s cost of R&D to overcome barriers to allocation of private-sector resources commensurate with the potential rates of return on such investments. As a policy instrument, a tax incentive for R&D should be most effective if its form is a flat rate applied to all R&D.

Redistributive Tax and Growth in a Model with Discrete Occupational Choice

An optimal redistributive tax‐subsidy formula is derived for a growth model where income inequality is endogenously driven by an adult's choice of occupation between work and management. Investment in human capital is the engine of growth. The world's stock of exploitable knowledge as well as the economy's average human capital determine the potential rate of return from investment in human capital in an economy. How much available knowledge would be exploited in the economy depends on the proportion of innovators in our model. A redistributive tax reform impacts growth as well as income inequality via its influence over the occupational choice. The optimal redistributive tax rate is path‐dependent in the sense that it depends on the initial wealth distribution. The normative implication of the model is that the optimal capital income tax rate could very well be positive if the initial wealth inequality exceeds a threshold. The optimal capital income tax rate depends inversely on the initial wealth inequality.

Architecture of Equity Markets: The Abidjan Regional Bourse

Literature on financial market liberalization focuses heavily on state activity in allocating preferential credit. I consider state activity in promoting nascent equity markets by asking why a state would create and promote a market in which the transaction costs are high, the potential rate of return is low, and firms are reluctant to list shares. I examine the case of the West African regional stock exchange and propose that the central bank for the West African Monetary Union created it to mediate the relationship between this region and the world economy. I propose that states and domestic markets act as complements rather than as rivals in some instances of bourse creation. Moreover, bourses in developing economies present a different set of relationships among states, public and private lending authorities, and market participants than their counterparts in more developed financial environments. This illuminates a need for further research in this area.

Erroneous choice and foregone gains in hoarding gray jays ( Perisoreus canadensis )

Under the conventional assumption that natural selection favors choice behavior that maximizes some fitness-related currency, a forager making repeated binary choices should consistently choose the more valuable option. Under the alternative assumption that natural selection favors choice behavior that minimizes costly errors, erroneous choice is not only expected but is expected to be common when the cost of errors is low. This cost depends on the potential rate of return: the higher this rate, the smaller the cost of choosing the less valuable option. When this rate is very high, a forager may err frequently and yet forego no appreciable fitness gain. Errors should thus be more common when interruptions to foraging are shorter. Our experimental results supported this prediction: gray jays chose the less valuable option more frequently when subjected to shorter interruptions (experimentally imposed delays to access to food rewards). This tendency is consistent with the idea that an adaptive decision-making process may routinely produce errors, not because errors are in some way adaptive but because their fitness cost is minimal, particularly when delays are short. From a proximate perspective, this tendency to commit errors more frequently following shorter delays may be due to constraints on the jays’ information-processing capacity. In general, choice behavior should be viewed as the joint byproduct of adaptive decision making and cognitive constraints.