Synopses & Reviews
Synopsis
Excerpt from Scheduling Stock Issues: In the Presence of Transaction Costs
These costs contain a fixed cost and variable cost and can be closely modeled as a convex function of the size of the transaction, with time dependent parameters. Underwriting fees (which form more than 80% of the 6.l7% average mentioned above) can also be expressed as fixed and variable cost. The fixed and variable parameters in each period will depend on the demand function for equity in each period and the cost to the investment bank. Their determination is a problem of two part tariffs (for discussion of this problem see and will not be discussed here The point to be made is that their changes over time are not just a matter of adjustment for inflation. The stochastic process describing the behavior of these cost components is complex and not yet understood, however, it seems plausible to assume that the covariance with the market return is zero. This assumption will be used throughout the rest of this article, where future transaction costs are discounted at the risk free rate.
About the Publisher
Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com
This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.