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Probabilistic Estate Planning
No full textProbabilistic estateplanning is based on the principle of maximizing expected net present value commensurate with the riskassumed. Rather than assuming that death occurs at life expectancy, probabilistic estate planning treats death as a random variable. Compounded to randomly chosen ages of death, estate assets are taxed and distributed to heirs. The purpose of probabilistic estate planning is to find the estate plan and asset/liability combination that maximizes the expected net present value of assets passing to heirs and to convey some idea of the risk associated with that estate plan
The Long-Run Performance of Initial Public Offerings,
No full textThe underpricing of initial public offerings (IPOs) that has been widely docu- mented appears to be a short-run phenomenon. Issuing firms during 1975-1984 substantially underperformed a sample of matching firms from the closing price on the first day of public trading to their three-year anniversaries. There is substantial variation in the underperformance year-to-year and across industries, with compan- ies that went public in high-volume years faring the worst. The patterns are consist- ent with an IPO market in which (1) investors are periodically overoptimistic about the earnings potential of young growth companies, and (2) firms take advantage of these “windows of opportunity. ” TheJournaZofFinance, Vol. XLVI, No. 1 (March 199 1)) pp. 3-27. (Reprinted with permission of The Journal of Finance.