Search results

From 2007, New Zealand firms must report the cost of granting employee stock options (ESOs). Market‐based option pricing models assume that option holders are unconstrained in their portfolio choices and thus are indifferent to the specific risk of any firm. By contrast, ESO holders are frequently required to hold portfolios that are over‐exposed to the firm that employs them and so adopt exercise policies that reflect their individual risk preferences. Applying the model of Ingersoll (2006) to hypothetical ESOs, we show that ESO cost can be extremely sensitive to employee characteristics of risk aversion and under‐diversification. This result casts doubt on the usefulness of any market‐based model for pricing ESOs, since such models, by definition, produce option values that are independent of employee characteristics. By limiting employee discretion over the choice of exercise date, vesting restrictions help reduce the magnitude of this problem.

A phase‐change temperature‐based formulation including general latent heat effects is presented. These effects are taken into account by means of an explicit “phase‐change function” (or liquid fraction‐temperature relationship in a more specific context) defined analytically or based on experimental measurements. The behaviour of different functions is studied and compared. The finite element equations of this formulation are also described. Finally, a numerical example is analysed to illustrate the performance of the proposed methodology.

The purpose of this paper is to discuss the Daisyworld “parable” advanced by James Lovelock to account for the origin of global homeostasis, and to relate it to another type of model advanced in a physiological context.

The relevance of the Daisyworld model is examined in more detail than in an earlier discussion, and the relationship to physiological rein control is considered.

Both types of model exhibit effective and robust control and there is good reason to believe they usefully model forms of biological regulation.

There are implications for theories of global homeostasis and for physiology. A computer program modelling Daisyworld is made available.

The Javascript program that can be accessed online is new, though based on the earlier work of Lovelock and Watson. Much of the treatment depends on the work of Saunders et al.

In our last ‘Notes and News’ we made an unfortunate mistake. In writing on the poetry section of the School Library Association's book list Fiction, Verse and Legend we referred to the Bodley Head series of poetry for the young as ‘now regrettably out of print’. Before making this categorical statement we had referred to the Bodley Head's current catalogue ‘with complete back‐list’, and had failed to find any reference to the series, but we had also failed to notice the comparatively insignificant sentence on page ii of the cover: ‘Children's books are listed in a separate catalogue.’