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A fuzzy symmetric threshold (ST) function is defined to be a fuzzy set over the set of functions. All ST functions have full memberships in this fuzzy set. For n variables, there are (2n+2) ST functions. A distance measure between a nonsymmetric threshold function and the set of all ST functions is defined and investigated. An explicit expression for the membership function of a fuzzy ST function is defined through the use of this distance measure. An algorithm for obtaining this distance measure is presented with illustrative examples. It is also shown that any function and its complement always have the same grade of membership in the class of fuzzy ST functions. Applications to concise function representation and simple function implementation are also presented with examples. In addition, most inseparable unsymmetric functions are defined and investigated. Fuzzy ST functions are relevant to the development of practical applications of fuzzy methods and might contribute to the state of the art in the implementations of fuzzy methods in the areas requiring utilization of ST functions.

I survey applications of Markov switching models to the asset pricing and portfolio choice literatures. In particular, I discuss the potential that Markov switching models have to fit financial time series and at the same time provide powerful tools to test hypotheses formulated in the light of financial theories, and to generate positive economic value, as measured by risk-adjusted performances, in dynamic asset allocation applications. The chapter also reviews the role of Markov switching dynamics in modern asset pricing models in which the no-arbitrage principle is used to characterize the properties of the fundamental pricing measure in the presence of regimes.

Many economic and business problems require a set of random variates from the posterior density of the unknown parameters. The set of random variates can be used to integrate numerically many forms of functions. Since a closed form of the posterior density of models in time series analysis is not usually well known, it is not easy to generate a set of random variates. As a sampling scheme based on the probabilities proportional to sizes of the sample space, sampling importance resampling (SIR) method can be applied to generate a set of random variates from the posterior density. Application of SIR to signal extraction model of time series analysis is illustrated and given a set of random variates, the procedures to compute the Monte Carlo estimator of the component of signal extraction model are discussed. The procedures are illustrated with simulated data.