We argue that the empirical evidence against the capital asset pricing model (CAPM) based on stock returns does not invalidate its use for estimating the cost of capital for projects in making capital budgeting decisions. Because stocks are backed not only by projects in place, but also by the...

Price momentum strategies have historically generated high positive returns with little systematic risk. However, these strategies also experience infrequent but severe losses. During 13 of the 978 months in our 1929-2010 sample, losses to a US-equity momentum strategy exceed 20 percent per...

Statement of Financial Accounting Standards No. 123 recommends that reload options be valued at the time the reload feature is activated and not at the time of the initial grant. We demonstrate that ignoring the reload feature at the time of the initial grant can substantially understate the...