It is well known that an unbiased forecast of the terminal value of a portfolio requires compounding at the arithmetic mean return over the investment horizon. However, the maximum-likelihood practice, common with academics, of compounding at the estimator of mean return results in upward biased...

This paper uses an option valuation model of the firm to answer the question, quot;What magnitude tax advantage to debt is consistent with the range of observed corporate debt ratios?quot; We incorporate into the model differential personal tax rates on capital gains and ordinary income. We...

It is well known that an unbiased forecast of the terminal value of a portfolio requires compounding at the arithmetic mean rate of return over the investment horizon. Yet, the procedure applied to the standard unbiased estimator of the mean return, while maximum likelihood, produces very biased...