The risk-return trade-off in Europe: A temporal and cross-sectional analysis

This paper analyzes the risk-return trade-off in European equities considering both temporal and cross-sectional dimensions. In our analysis, we introduce not only the market portfolio but also 15 industry portfolios comprising the entire market. Several bivariate GARCH models are estimated to obtain the covariance matrix between excess market returns and the industrial portfolios and the existence of a risk-return trade-off is analyzed through a cross-sectional approach using the information in all portfolios. It is obtained evidence for a positive and significant risk-return trade-off in the European market. This conclusion is robust for different GARCH specifications and is even more evident after controlling for the main financial crisis during the sample period.

Intraplate seismicity across the Cape Verde swell: a contribution from a temporary seismic network

We present an analysis and characterization of the regional seismicity recorded by a temporary broadband seismic network deployed in the Cape Verde archipelago between November 2007 and September 2008. The detection of earthquakes was based on spectrograms, allowing the discrimination from low-frequency volcanic signals, resulting in 358 events of which 265 were located, the magnitudes usually being smaller than 3. For the location, a new 1-D P-velocity model was derived for the region showing a crust consistent with an oceanic crustal structure. The seismicity is located mostly offshore the westernmost and geologically youngest areas of the archipelago, near the islands of Santo Antao and Sao Vicente in the NW and Brava and Fogo in the SW. The SW cluster has a lower occurrence rate and corresponds to seismicity concentrated mainly along an alignment between Brava and the Cadamosto seamount presenting normal faulting mechanisms. The existence of the NW cluster, located offshore SW of Santo Antao, was so far unknown and concentrates around a recently recognized submarine cone field; this cluster presents focal depths extending from the crust to the upper mantle and suggests volcanic unrest No evident temporal behaviour could be perceived, although the events tend to occur in bursts of activity lasting a few days. In this recording period, no significant activity was detected at Fogo volcano, the most active volcanic edifice in Cape Verde. The seismicity characteristics point mainly to a volcanic origin. The correlation of the recorded seismicity with active volcanic structures agrees with the tendency for a westward migration of volcanic activity in the archipelago as indicated by the geologic record. (C) 2014 Elsevier B.V. All rights reserved.