the left side or top must equal or balance the total of all numbers on the
right side or bottom. A balance sheet balances according to this equation:
Assets = Liabilities + Capital. Bond a written record of a debt payable
more than a year in the future. T

exchange markets. The early empirical studies of return and volatility
transmission concentrated on interdependence between different assets
or markets across countries. Engle et al. (1990), for example, apply
univariate GARCH model6 to examine volatility

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name=1340943430.0993&key=&dir=PAPER&subtype=&viewname=07
%B0%AD%BB%F3%C8%C 6%C0%B1%BC%BA%B9%CE.pdf Kang
H.S., Yoon S. (2013) Revisited Return and Volatility Spillover Effect in
Korea, Korea and the World Economy, 14 (1), pp. 121145.
http:/www.akes.or

methodology is to specify the mean equation. Thus, the mean equation
for return series is specified as follows: H R R / , t t t t i i t i t 1 2 f h n i f
= = + - + (1) where: R R t t ,RS t = E l _ i is a vector of returns of the
stock and foreign exchange

probability that the policy holder will chose the pay per use product.
The odds ratio is 0.976 which means that the probability that a person
chose the pay per use product decreases by 2.4% per year. In the case
that the difference adds up to 10 years thi

demonstrated in Table 6 the test is highly significant. 3.5. Results This
means that the null hypotheses needs to be rejected as there is a
difference in the mean of the traditional policy-holder mileage and the
mileage of the pay per use policy-holder. I

exchange rate changes have less direct effect on future stock returns.
Morales and ODonnell (2007) examine the volatility spillovers between
stock market returns and exchange rate changes for Spain, Portugal, and
Italy using an EGARCH model. They find no

passenger-cars in Austria. Consequently the mandatory third-party
liability insurance is one of the most important insurance products in
Austria. The gross volume of 1.8 billion, which is about 11.3% of all
insurances contracted over all classes (Statisti

matrices can be represented as follows: h h h a a a a h h h h b b b b c c c
c c c a a a a b b b 0 0 b , , , 1, 1 2, 1 , , * * * * * * * * , , , , * * * * * * * *
, , t t t t t t t t t t t t t 11 12 22 1 1 2 1 11 21 12 22 11 21 12 22 11 1 21 1
12 1 22 1 11

between pay per use policy-holders and traditional policy-holders,
has to be rejected for all variables except for minimum guarantee sum.
3.3. Quality criteria of the statistical method 3.3.1. The interpretation of
the quality criteria of the logistic reg

changes in six industrialized countries, namely, the US, the UK, Japan,
Germany, France, and Canada. He finds evidence of spillovers from
stock market returns 6 The uni-variate GARCH model has two major
shortcomings. First, it ignores the possibility of h

(Karten, 1994). Since 1994, the meritrating system is no longer laid
down in Austrian law (Verordnung des BMF, 1994). However most
insurance companies still use this system, but as mentioned, they are
often very generous in the classification of new clien

Financial Economics 1(1)2014, 5972 ISSN 2353-6845. Faculty of
Management University of Warsaw. All rights reserved. DOI:
10.7172/2353-6845.jbfe.2014.1.4 63 in the post-crisis period. They
conclude that financial crisis improves linkages between the two
ma

volatility during the global financial crises is obvious in both series,
though in different directions and other high and low volatility can be
seen. Figure 1 also displays the mean reversion tendency of stock returns
and change in exchange rates. Figure

of the KPSS test is that a time series is stationary. As shown in Table 2,
the calculated values of the ADF test statistics indicate that the level
series contain a unit root at the 1% significance level, implying that the
level series are non-stationary.

capital movements have made the exchange rates the main determinants
of business profitability and equity prices. The stock market, on the
other hand, plays a vital role in stimulating industrial and 3 The ARCH
model was introduced by Engle (1982) and gen

with a great many items flowing through, the cost of sales or cost of
goods sold is often computed by this formula: Cost of Sales = Beginning
Inventory + Purchases During the Period Ending Inventory.
Credit an accounting entry on the right or bottom of a

between the two markets. The parameters are estimated using the
maximum likelihood estimation method optimized with the Broyden,
Fletcher, Goldfarb, and Shanno (BFGS) algorithm. The conditional
likelihood function L() is expressed thus: L T ln 2 ln h H 2

calculation. Stefan Trappl, Karl Zehetner, Robert Pichler Journal of
Banking and Financial Economics 1(1)2014, 7387 ISSN 2353-6845.
Faculty of Management University of Warsaw. All rights reserved. DOI:
10.7172/2353-6845.jbfe.2014.1.5 81 The authors carri

The mean exchange rate for the study period is N129.04/USD1 and the
standard deviation is 25.93. The stock returns exhibit negative skewness
and changes in the exchange rate show positive skewness, suggesting
that there are more negative (positive) observ

(ICT) in the Nigerian financial markets. It is thus very easy for
information to flow between the two markets. This finding provides new
insight into the interaction of volatility shocks among stock and foreign
exchange markets in Nigeria. The results of

look is taken on each individual variable. 3.1.1. Engine power of the
insured car (KW) The regression-coefficient is 0.010. The odds ratio
therefore is e0.010 = 1.01. As the regression coefficient is positive, an
increase in engine power leads to an incre

sum have significant regression-coefficient-values. Stefan Trappl, Karl
Zehetner, Robert Pichler Journal of Banking and Financial Economics
1(1)2014, 7387 ISSN 2353-6845. Faculty of Management University
of Warsaw. All rights reserved. DOI: 10.7172/2353-6

31.62 (0.00) 131.45 (0.00) 69.30 (0.00) Rt 0.910 6.708 -0.642 (0.00)
6.942 (0.00) 427.91 (0.00) 35.45 (0.00) 55.51 (0.00) 59.26 (0.00) Note:
P-values are displayed as (.). The ARCH LM tests are conducted under
null hypothesis of no ARCH effect and at 95%

and minimum guarantee sum are examined. For these risk factors data
from all policy-holders are considered. As mentioned above the authors
examine whether people with certain characteristics (= parameter values
of the risk factors) typically prefer one or

the past. Especially in the third-party liability insurance markets,
competition increased and the pressure to premium differentiation on
insurance companies has been in evidence for the last few decades
(Cohen 2005; Karten, 1994). Stefan Trappl, Karl Zeh

1.2. Premium differentiation 1.2.1. Traditional third party liability
insurance products The question about the fair premium of insurance
products is as old as insurance itself. According to the principle of
individual equivalence, every insured should pa

companies to find risk factors for third-party motor-vehicle liability
insurance policies defining the individual risk of their policy holders. At
the beginning of the automobile-era the insurance-premium depended
only on the braking distance of the insur

-value by 1 increases the odds ratio (in favor of the event y = 1) by e .
2.1.2. One-sample t-test Another focus is to examine whether there is a
difference between average mileage of traditional policy-holders and
pay per use policy-holders. As only the

10.7172/2353-6845.jbfe.2014.1.4 61 economic growth. More
importantly, from the financial stability perspective, shock and volatility
transmission among stock and foreign exchange markets warrant closer
scrutiny. Accordingly, this paper evaluates the natur

I. Introduction
A. Details youll include in your introduction paragraph (bullet points or sentence)
B. The Great Gatsby is a historic fiction novel by F. Scott Fitzgerald that defines the American
Dream through Gatsbys failure to achieve the American Drea

http:/arrow.dit.ie/buschaccon/6 Nelson D. (1991) Conditional
Heteroscedasticity in Asset Returns: A New Approach, Econometrica, 59
(2), pp. 347370. http:/www.jstor.org/stable/2938260 Nnachi A. (2008),
Financial Linkages of the Nigerian Stock Market, Unpub

work. 10 Figure 2 is shown in appendix. Notes: A denotes the log-level
of the NSE monthly All-share index; B denotes the NSE monthly
market returns; C denotes the log-level of the Naira(N)/USD exchange
rate; D denotes the change in the Naira(N)/USD exchan

compatible. Due to linearity the model could deliver parameter values
beyond the defined area. That means although only parameter values
between 0 and 1 are reasonable, the model could deliver values between
and +. To handle this problem the logistic-reg

the import-dependent and mono-production nature of the economy. As
highlighted in section one, the majority of the goods and services
consumed in Nigeria are imported from different parts of the world and
the major currency of importation is the USD. Emen