Regulators charged with monitoring systemic risk need to focus on sentiment as well as narrowly defined measures of systemic risk. This chapter describes techniques for jointly monitoring the co-evolution of sentiment and systemic risk. To measure systemic risk, we use Marginal Expected...

This paper presents a characterization of callable bond pricing and call decision when there are transactions costs. When a capital structure is kept constant a firm that has outstanding callable bonds refinances them with similarly structured callable bonds. Since refinancing is costly, firms...