This paper deals with a novel problem of price search in a world where futures markets play an important role. In the absence of the futures market, customers are unable to tell whether a high spot quote reflects a fundamental change in market conditions or whether they have run into a...

The early work of Black and Scholes, and Merton, made the connection between conventional options and corporate liabilities. The standard textbooks now employ option-pricing arguments in discussing the valuation of stocks, bonds, convertible bonds and warrants; this discussion extends to the...

Customers carrying out a costly search among dealers for the best bid or offer are unable to tell whether an unfavorable quote reflects a change in market fundamentals or whether they have met a high margin dealer. The optimal search strategy in the presence of a futures market is shown to have...