The FDA sets a uniform hypothesis test's approval standard at the end of Phase III clinical trials for new drugs. We study the impact of flexible approval standards on experimentation and social welfare when pharmaceutical companies (firms) are strategic, especially in terms of the level of...

Securitization is a difficult topic to teach. Most students have preconceived ideas about it. Some of them are quite wrong. And frequently many students feel that there is almost something like “black magic” behind the concept that one can create AAA-securities out of risky assets....

Mexico and Chile have Defined Contributions (DC) pension systems. In both cases affliates are offered several investment funds with, allegedly, different risk-return profiles. Analyzing actual return data for the April 2008-March 2018 period, and using a number of risk (and return) related...

We derive closed-form expressions to price European calls and puts assuming the cash flows of the underlying asset or project are normally distributed. This approach has important advantages in the context of real options applied to infrastructure projects when compared to the Black-Scholes...

Banking systems are at the center of the financial infrastructure of any country. It has become apparent after the subprime crisis that such systems cannot be studied by looking at their components individually (that is, in isolation). Thus, an integrated approach is needed.In this paper we...

Credit ratings play an important role in the fixed income market as the entire regulatory framework of this market segment is based on them and a significant part of what investors can and cannot do is dictated by ratings. Also, a number of ratings-based metrics are employed globally to estimate...

We identify the three types of risks involved in an art-secured lending operation and present a framework to assess their combined effects via a Monte Carlo simulation. Also, we derive some useful closed-form expressions that are suitable when the collateral consists of only one painting. To...

We analyze the guarantees that art-auction houses offer from an options viewpoint. This approach allows us to derive analytical expressions to value the positions involved in such arrangements. We further validate these formulas with a Monte Carlo simulation applied to a realistic example....

We examine the annual returns based on auction data for two groups of artists (Surrealists and Impressionists) and two individual artists (Picasso and Renoir) using hedonic pricing models in combination with a wild bootstrap statistical technique. With this approach we estimate confidence...

The Capital Asset Pricing Model (CAPM) has been used in a number of studies to explore the features of the art market (or individual artists). We claim that such studies have been based on unsuitable estimates of art market returns in the context of the CAPM methodology. The CAPM calls for...