Sensitivity measures for equity investments

By differentiating a discounted cash flow valuation formula(expressed in real terms), with respect to the underlying fundamentalreal variables, we derive ‘sensitivity measures’for equity investments. These show how the present value ofexpected future dividends will vary as the real discount ratechanges and the long-term real dividend growth rate changes.In both cases, sensitivity depends on dividend yield: the lowerthe dividend yield, the more sensitive the stock to changesin both the real discount rate and the real growth rate. Wealso derive a total differential model which allows for simultaneouschanges in both the real discount rate and the real growth rate,and briefly compare this model with the model of Leibowitz etal. for equity duration.     

Molten salts near a charged surface: integral equation approximation for a model of KCl

A study has been made of the electrical ‘double layer’ structure of molten salts, in particular a model of molten potassium chloride, using an integral equation approximation. This is in contrast to most statistical mechanical treatments of the double layer, which have concentrated on aqueous elecrolyte solutions. The results are compared with the output of computer simulations. In addition to the structural information contained in the density profiles, the calculations yielded charge profiles, the mean electrostatic potential and the double layer capacitance.     

The statistical analysis of standard-cost deviations

Very little is known about the theoretical statistical propertiesof accounting numbers. In this papera probability modellingtechnique is used to analyse the volume, efficiency, and pricedeviation—more usually known in the accounting literatureas ‘variances’—of standard costing. Standard-costdeviations are defined asdifferences between certain types ofconditional and unconditional expected costs. The basic statisticsrequired to construct theoretical confidence intervals for thesedifferences are identified, and it is shown how the formulaenormally used in their calculation may sometimes be correlated.The modelling technique adopted is based on a theory of accountingmeasurement which interprets accounting numbers as specializedtypes of statistics. It illustrates the potential of the theoryfor the development of a better understanding of the statisticalproperties of accounting numbers.