Consumer Advisory Bulletin, Iowans Urged to File for CD Payments, January 2003

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: Iowans Urged to File for CD Payments

A generalization of Hull and White formula and applications to option pricing approximation

By means of Malliavin Calculus we see that the classical Hull and White formulafor option pricing can be extended to the case where the noise driving thevolatility process is correlated with the noise driving the stock prices. Thisextension will allow us to construct option pricing approximation formulas.Numerical examples are presented.

A sharp concentration inequality with applications

We present a new general concentration-of-measure inequality and illustrate its power by applications in random combinatorics. The results find direct applications in some problems of learning theory.

Endogenous policy leads to inefficient risk sharing

We analyze risk sharing and fiscal spending in a two-region model withcomplete markets. Fiscal policy determines tax rates for each state ofnature. When fiscal policy is decentralized, it can be used to affect prices of securities. To manipulate prices to their beneffit, regionschoose pro-cyclical fiscal spending. This leads to incomplete risk sharing,despite the existence of complete markets and the absence of aggregaterisk. When a fiscal union centralizes fiscal policy, securities pricescan no longer be manipulated and complete risk sharing ensues. If regionsare homogeneous, median income residents of both regions prefer the fiscalunion. If they are heterogeneous, the median resident of the rich regionprefers the decentralized setting.

A decomposition formula for option prices in the Heston model and applications to option pricing approximation

By means of classical Itô's calculus we decompose option prices asthe sum of the classical Black-Scholes formula with volatility parameterequal to the root-mean-square future average volatility plus a term dueby correlation and a term due to the volatility of the volatility. Thisdecomposition allows us to develop first and second-order approximationformulas for option prices and implied volatilities in the Heston volatilityframework, as well as to study their accuracy. Numerical examples aregiven.

A Hull and White formula for a general stochastic volatility jump-diffusion model with applications to the study of the short-time behavior of the implied volatility

In this paper, generalizing results in Alòs, León and Vives (2007b), we see that the dependence of jumps in the volatility under a jump-diffusion stochastic volatility model, has no effect on the short-time behaviour of the at-the-money implied volatility skew, although the corresponding Hull and White formula depends on the jumps. Towards this end, we use Malliavin calculus techniques for Lévy processes based on Løkka (2004), Petrou (2006), and Solé, Utzet and Vives (2007).

Will the Convention on Biological Diversity put an end to biological control?

Will the Convention on Biological Diversity put an end to biological control? Under the Convention on Biological Diversity countries have sovereign rights over their genetic resources. Agreements governing the access to these resources and the sharing of the benefits arising from their use need to be established between involved parties. This also applies to species collected for potential use in biological control. Recent applications of access and benefit sharing principles have already made it difficult or impossible to collect and export natural enemies for biological control research in several countries. If such an approach is widely applied it would impede this very successful and environmentally safe pest management method based on the use of biological diversity. The International Organization for Biological Control of Noxious Animals and Plants has, therefore, created the "Commission on Biological Control and Access and Benefit Sharing". This commission is carrying out national and international activities to make clear how a benefit sharing regime might seriously frustrate the future of biological control. In addition, the IOBC Commission members published information on current regulations and perceptions concerning exploration for natural enemies and drafted some 30 case studies selected to illustrate a variety of points relevant to access and benefit sharing. In this article, we summarize our concern about the effects of access and benefit sharing systems on the future of biological control.

Report pursuant to House File 2782 (2007 Infrastructure Appropriations Act)

House File 2782 (2007 Infrastructure Appropriations Act) requires state agencies that receive Appropriations from specified funds to report that information. The Iowa Department of Transportation received funds from the Rebuild Iowa Infrastructure Fund, the State Recreational Trails Fund, Health Restricted Capitals, Rail Revolving Loan and Grant Program and the Tobacco settlement in FY 2008.

TIME-21 Funding Analysis A report to the Iowa Legislature, per Section 26, Senate File 2420, 82nd General Assembly

The 82nd General Assembly of the Iowa legislature, in Section 26 of Senate File 2420, required the Iowa Department of Transportation (Iowa DOT) to conduct an analysis of TIME-21 funding. Specifically the legislation requires the following: “The department of transportation shall conduct an analysis of the additional revenues necessary to provide at least two hundred million dollars annually to the TIME-21 fund by FY 2011-2012. The analysis shall include but is not limited to the amount of excise tax levied on motor fuel and adjustments that might be made to various fees collected by the department in order to create an appropriate balance of taxes and fees paid by Iowa drivers and out-of-state drivers. The department shall submit a report to the governor and the general assembly on or before December 31, 2008, regarding its analysis.” As a starting point to this analysis, a reassessment of long-range needs and revenues (including the estimated $200 million most critical annual unmet needs) was made. This was done by assessing changing trends in roadway conditions, revenue and construction costs since the original Study of Iowa’s Current Road Use Tax Funds (RUTF) and Future Road Maintenance and Construction Needs was completed December 2006.