This paper discusses how the stockholder-bondholder conflict can be analyzed using the binomial option pricing model. Although the potential conflicts between stockholders and bondholders are recognized and discussed in most intermediate corporate finance textbooks, these textbooks, generally do...

This paper tests whether portfolio managers can make reliable predictions of the portfolio variance with available risk measures. Using out-of-sample tests, we compare four sets of models for their ability to predict portfolio variance. The models are based on: (I) time series of returns, (ii)...