Types Of Financial Assets Research Articles

Portfolio Composition Choice: A Behavioral Approach

This experimental study investigates portfolio composition choice for different types of financial assets and different levels of wealth. For a group of financially sophisticated executive MBA students with work experience in capital markets, the findings of this study indicate that the proportion of wealth invested in risky assets increases with wealth for all portfolio compositions examined, and increases with the degree of asset risk. This proportion is found to be as much as three times higher for common stocks than for options: For stock portfolios, it increases from 33% to 44% over the five wealth levels examined, and for options it increases from 11% to 17%. These results may imply a decreasing rel w proportions of their wealth in risky assets possess the following characteristics: they do not invest in options in real life; they sometimes buy lottery tickets; they assign a higher risk level to options than to common stocks; they are female; and they are employed.

Are assets fungible?: Testing the behavioral theory of life-cycle savings

This paper is an empirical investigation of the behavioral life-cycle savings model. This model posits that self-control problems causes individuals to depart substantially from rational behavior. I show that this model can explain how the consumption of individuals at or near retirement vary with changes in different types of financial assets. Specifically, consumption spending is sensitive to changes in income and in liquid assets, but not very sensitive to changes in the value of other types of assets such as houses and social security (even though the value of non-liquid assets is relatively large for most of the households in the sample). In general, the evidence presented here favors the Behavioral Life-Cycle Model over the conventional life-cycle model even when liquidity constraints are introduced.

Efficient Portfolios For Saving For College

This article uses 69 years of real rates of return for six types of financial assets to find efficient portfolios for saving for college, in terms of mean and minimum accumulations. Small stocks are in every efficient portfolio. For 10 and 15 year time frames, the portfolio that was the safest consisted of 89% intermediate term government bonds and 11% small stocks. A family willing to stay 100% invested in small stock mutual funds until each year's college costs must be met can greatly reduce the burden of saving for college, at relatively low risk.

CORPORATE APPLICATIONS OF CONTINGENT CLAIMS ANALYSIS: A SELECTIVE PERSPECTIVE

The purpose of this paper is to present a review of selected applications of contingent claims analysis in corporate finance. Contingent claims analysis is an approach to valuing payoffs which are contingent on other uncertain payoffs. The essential logic of the different applications reviewed is that we can value these derivative payoffs by replicating them with assets, whose prices are known. This simple logic is capable of providing one with insights into the pricing of new types of financial assets (e.g. optional bonds) as well as providing new insights into the valuation of strategic corporate investments.

Housing Finance

Purchasing a house is the single most important financial transaction made by most people during their lives and the housing market is the most important type of financial asset held by individuals. Ownership of a house provides multiple services. It is an investment asset. It provides direct convenience and service. And it can be a means of registering and acquiring social status. It is the classic inflation hedge. The price of a house tends to be determined by what people can afford to pay, and the cost of building them tends to reflect the general movements of labour and other costs. Both on the supply side and on the demand side prices and costs move naturally in line with inflation.

Ranking Errors in CAPM Capital Budgeting Applications

* The Sharpe-Lintner-Mossin Capital Asset Pricing Model (CAPM) provides a framework for valuing certain types of financial assets in a perfect and efficient capital market. Rubinstein [6], Weston [8], and others have applied the model to the firm's capital expansion decision to determine the equilibrium value of the financial claims that are used to finance a particular asset under consideration. If this value is

Dépenses de consommation, épargne et avoirs liquides

Consumer spending, saving and liquid assets Many, frequently divergent, theoretical explanations have been presented of the influence of liquid assets on consumer spending and saving habits. The author sets out to test some of these theories against empirical evidence drawn from American experience. It is found that liquid assets are highly concentrated in all income groups and that this distribution does not change much over time. As a result, only a few persons compared with all consumer units, hold most liquid assets. This being the case, the effect on overall spending of liquid assets cannot be considerable. Because they are distributed in roughly the same way, the same argument may be applied to holdings of other types of financial assets. Going even further, it may be said that, net worth itself being highly concentrated, the same conclusion holds. The second empirical test concerns the cyclical influence of price changes, via liquid assets, on the consumption function. In the 1930's there does not appear to have been any marked shift in the consumption function. From 1947 to 1948 the change observed is best considered as a once-for-all effect. It would seem that the Korean years do not furnish much support for liquid asset theories either.