An empirical investigation of the level effect in Australian interest rates

An extensive literature examines the dynamics of interest rates, with particular attention given to the positive relationship between interest-rate volatility and the level of interest rates—the so-called level effect. This paper examines the interaction between the estimated level effect and competing parameterisations of interest-rate volatility for the Australian yield curve. We adopt a new methodology that estimates elasticity in a multivariate setting that explicitly accommodates the correlations that exist between various yield factors. Results show that significant correlations exist between the residuals of yield factors and that such correlations do indeed impact on model estimates. Within the multivariate setting, the level of the short rate is shown to be a crucial determinant of the conditional volatility of all three yield factors. Measures of model fit suggest that, in addition to the usual level effect, the incorporation of GARCH effects and possible regime shifts is important

Can venous occlusion plethysmography be used to measure high rates of arterial inflow?

To investigate whether venous occlusion plethysmography (VOP) may be used to measure high rates of arterial inflow associated with exercise, venous occlusions were performed at rest, and following dynamic handgrip exercise at 15, 30, 45, and 60 % of maximum voluntary contraction (MVC) in seven healthy males. The effect of including more than one cardiac cycle in the calculation of blood flow was assessed by comparing the cumulative blood flow over one, two, three, or four cardiac cycles. The inclusion of more than one cardiac cycle at 30 and 60 % MVC, and more than two cardiac cycles at 15 and 45 % MVC resulted in a lower blood flow compared to using only the first cardiac cycle (P < 0.05). Despite the small time interval over which arterial inflow was measured (~1 second), this did not affect the reproducibility of the technique. Reproducibility (coefficient of variation for arterial inflow over three trials) tended to be poorer at the higher workloads, although this was not significant (12.7 ± 6.6 %, 16.2 ± 7.3 %, and 22.9 ± 9.9 % for the 15, 30, and 45 % MVC workloads; P=0.102). There was also a tendency for greater reproducibility with the inclusion of more cardiac cycles at the highest workload, but this did not reach significance (P=0.070). In conclusion, when calculated over the first cardiac cycle only during venous occlusion, high rates of FBF can be measured using VOP, and this can be achieved without a significant decrease in the reproducibility of the measurement.

Can students with low vision maintain sustained reading rates?

Purpose: Students with low vision may be disadvantaged when compared with their normally sighted peers, as they frequently work at very short working distances and need to use low vision devices. The aim of this study was to examine the sustained reading rates of students with low vision and compare them with their peers with normal vision. The effects of visual acuity, acuity reserve and age on reading rate were also examined. Method: Fifty-six students (10 to 16 years of age), 26 with low vision and 30 with normal vision were required to read text continuously for 30 minutes. Their position in the text was recorded at two-minute intervals. Distance and near visual acuity, working distance, cause of low vision, reading rates and reading habits were recorded. Results: A total of 80.7 per cent of the students with low vision maintained a constant reading rate during the 30 minutes of reading, although they read at approximately half the rate (104 wpm) compared with their normally sighted peers (195 wpm). Only four of the low vision subjects could not complete the reading task. Reading rates increased significantly with acuity reserve and distance and near visual acuity but there was no significant relationship between age and sustained reading rate. Conclusions: The majority of students with low vision were able to maintain appropriate reading rates to cope in integrated educational settings. Surprisingly only relatively few subjects (16 per cent) used their prescribed low vision devices even though the average accommodative demand was 9 D and generally, they revealed a greater dislike of reading compared to students with normal vision.

Some critical legal issues affecting insurance transaction globally

Increasingly, major insurers and reinsurers are operating on a global basis. For example, General Re Corporation and Cologne Re operate in almost 150 countries : see "General Re Corporation 1999 Annual Report". This is also true for the world's major brokers, and the emergence of large broking conglomerates such as Aon and Marsh are good examples of global service providers. Against the background of this increasingly global insurance market with global participants, there are a range of common legal issues in this article but a selection of certain critical matters are canvassed in the secitons below. First there are a range of regulatory issues that must be addressed. Secondly globalisation of the industry does create added incentive for a common legal regime to cover the formation of insurance transactions and the resolution of disputes about claims, coverage and termination. In this contect codifcation of insurance laws is a critical issue. Thirdly, major advances in genetic research and biotechnology over recent years have resulted in a dramatic increase in the availability of genetic testing. These developments have given rise to concerns worldwide about the potential for misuse of genetic information by third parties such as insurers and employers. Fourthly, the essence of an insurance transaction is the transference of risk from one person to anther. It is generally accepted that this transference should occur in informed circumstances and without undue advantage being bestowed upon either party. Finally this article will consider some legal matter in relation to transacting insurance on the internet

Fraudulent insurance claims : recent legal developments

Insurance fraud continues to be a major problem worldwide. This article will canvass recent legal developments in relation to selected issues and matters of particular concern to the insurance industry. This article is confined to fraudulent claims. Fraud may arise at various points in the insurance relationship, including initial fraud on placement and fraudulent breach of contract by the assured. Fraud at the outset by the assured is treated differently from innocent or negligent conduct. "Fraud" in the context of this paper embraces all claims where an insured intednds to deceive an insurer by getting out i money to which the insured knew he had no right. This article will examine fraudulent insurance claims.

Respecting contractual intentions : balancing consumer expectations with the sanctity of contract in the context of standard form insurance contracts

It is the purpose of this article to examine the means curently available to judges to achieve a workable balance between providing appropriate consumer protection to signatories of standard form contractors while still retaining adequate respect for the sanctity of contract, and, based on this analysis, to determine whether a significantly greater scope of contract (re)construction is likely to become the norm in most common law jurisdictions in the coming decades.

Disclosure in insurance law : contemporary and historical economic considerations

This article examines the importance of accurate classification and identification of risk with particular reference to the problem of adverse selection. It is argued that, historically, this concern was the paramount consideration influencing standard form contract formation and disclosure laws. The scope of its relevance today however is less apparent in that contemporary insurance contracting is conducted in a vastly different environment from that which prevailed at the time Lloyd's was better known as a coffee house. Accordingly, the second part of this article looks at the contemporary framework of information disclosure and those dynamics within it designed to elicit information weighing on risk forecasting : specifically, (a) direct inquiry and testing requirements; (b) signaling - or incentive based structuring of insurance contractual and (c) bargaining in the shadow of the utmost good faith doctrine. Finally, certain conclusions arising out of contemporary and historical economic considerations underpinning disclosure in insurance law are outlined.

Utmost good faith in insurance : reform overdue?

Considerable attention has been devoted to the duty or doctrine of utmost good faith in the academic literature and in the courts. This attention ranges from an analysis of the precise legal basis for the duty through a consideration of the continuing nature of that duty in the post-contract environment.It is quite clear that all contracts of insurance are subject to this duty of utmost good faith. What is less clear and certain are the incidents attendant upon such a duty and the scope of the obligations that such a duty imposes. This article examines the relative positions that have been reached in England and Australia and concludes with some recommendations for legislative reform to this area of the law.

Regulatory approaches to genetic testing in insurance

Rapid advancements in the field of genetic science have engendered considerable debate, speculation, misinformation and legislative action worldwide. While programs such as the Human Genome Project bring the prospect of seemingly miraculous medical advancements within imminent reach, they also create the potential for significant invasions of traditional areas of privacy and human dignity through laying the potential foundation for new forms of discrimination in insurance, employment and immigration regulation. The insurance industry, which has of course, traditionally been premised on discrimination as part of its underwriting process, is proving to be the frontline of this regulatory battle with extensive legislation, guidelines and debate marking its progress.

Disclosure under the prescribed insurance contracts regime : Section 35 of the Insurance Contracts Act 1984 and consumer protection revisited

Section 35 of the Insurance Contracts Act 1984 requires insurers offering insurance policies in six prescribed areas "to clearly inform" prospective insureds of any departure their policies may constitute from the standard covers established by the Act and its accompanying Regulations. This prescribed insurance contracts regime was designed to remedy comprehension problems generated by the length and complexity of insurance documents and to alleviate misunderstanding over the terms and conditions of individual policies. This article examines the rationale underpinning s 35 and the prescribed insurance contracts regime and looks at the operation of the legislation with particular reference to home contents insurance in Australia. It is argued that the means whereby disclosure of derogation from standard cover may be effected largely negates the thrust of the prescribed insurance contract reform. Recommendations to address these operational deficiencies are made.

The insured's non-disclosure in the formation of insurance contracts : a comparative perspective

The requirements that an insured disclose all facts material to a transaction as well as not misrepresent material facts in the formation of an insurance contract are universal requirements of insurance law. The nature and extent of these obligations varies from one jurisdiction to the next. Disclosure in the insurance context is distinct from the general approach in commercial contracts, and in others between persons dealing at arm's length. It is the purpose of this article therefore to examine, on a comparative basis, the approaches adopted in the Anglo-Commonwealth context of England, Australia New Zealand and Singapore to the resolution of disclose issues in the formation of insurance contracts. Particular attention is focused on the Insurance Contracts Act 1984 (Australia) as this statue effects the most significant overhaul of the common law and the National Consumer Council in the United Kingdom has advocated that similar reforms be adopted.

Disclosure and concealment in consumer insurance contracts

This book provides an in-depth examination of the theoretical,legal, social and economic foundations to disclosure and concealment of information in relation to the formation of consumer insurance contracts. A comparative treatment of this issue is undertaken with particular attention given to the judicial and legislative approaches adopted in the United Kingdom, the United States of America, Australia and New Zealand.

Discount rates in disarray : evidence on flawed goodwill impairment testing

Carlin and Finch, this issue, compare goodwill impairment discount rates used by a sample of large Australian firms with ‘independently’ generated discount rates. Their objective is to empirically determine whether managers opportunistically select goodwill discount rates subsequent to the 2005 introduction of International Financial Reporting Standards (IFRS) in Australia. This is a worthwhile objective given that IFRS introduced an impairment regime, and within this regime, discount rate selection plays a key role in goodwill valuation decisions. It is also timely to consider the goodwill valuation issue. Following the recent downturn in the economy, there is a high probability that many firms will be forced to write down impaired goodwill arising from boom period acquisitions. Hence, evidence of bias in rate selection is likely to be of major concern to investors, policymakers and corporate regulators. Carlin and Finch claim their findings provide evidence of such bias. In this commentary I review the validity of their claims.

An examination of the base rates of post-concussion symptoms : the influence of demographics and depression

Post-concussion syndrome (PCS) is a controversial constellation of cognitive, emotional, and physical symptoms that some patients experience following a mild traumatic brain injury or concussion. PCS-like symptoms are commonly found in individuals with depression, pain, and stress, as well as healthy individuals. This study investigated the base rate of PCS symptoms in a healthy sample of 96 participants and examined the relationship between these symptoms, depression, and sample demographics. PCS symptoms were assessed using the British-Columbia Post-Concussion Symptom Inventory. Depression was measured using the Beck Depression Inventory II. Results demonstrated that: The base rate of PCS was very high; there was a strong positive relationship between depression and PCS; and demographic characteristics were not related to PCS in this sample. These findings are broadly consistent with literature suggesting a significant role for non-neurological factors in the expression of PCS symptomatology. This study adds to the growing body of literature that calls for caution in the clinical interpretation of results from PCS symptom inventories.

Implicit discount rates and fisheries management : is there a relationship?

Fishers are faced with multiple risks, including unpredictability of future catch rates, prices and costs. While the latter are largely beyond the control of fisheries managers, effective fisheries management should reduce uncertainty about future catches. Different management instruments are likely to have different impacts on the risk perception of fishers, and this should manifest itself in their implicit discount rate. Assuming licence and quota values represent the net present value of the flow of expected future profits, then a proxy for the implicit discount rate of vessels in a fishery can be derived by the ratio of the average level of profits to the average licence/quota value. From this, an indication of the risk perception can be derived, assuming higher discount rates reflect higher levels of systematic risk. In this paper, we apply the capital asset pricing model (CAPM) to determine the risk premium implicit in the discount rates for a range of Australian fisheries, and compare this with the set of management instruments in place. We test the assumption that rights based management instruments lower perceptions of risk in fisheries. We find little evidence to support this assumption. although the analysis was based on only limited data.