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THE WAY IN WHICH FINANCIAL claims on a firm are split between external and internal claim holders can affect the investment behavior of the firm. The internal claim holders will make decisions that maxiniize the values of their claims, which may not be the same as maxiniizing the total value of the firm. Because arbitrage of the Miller-Modigliani type involves using personal debt, which is just another form of external claim, such arbitrage is not, in general, a guarantee against behavior that does not maximize the total value of the firm. Jensen and Meckling (1976) provide a general analysis of these effects, which explains a number of phenomena in terms of the balance between the cost of such induced 'suboptimal' behavior and monitoring and bonding costs. The latter can be incurred to reduce the degree of divergence between actual and ideal policies. There are two important conclusions of their analysis. Rational external investors will not suffer losses from this type of moral hazard, since they will price their claims to take into account any induced behavior. All losses are, therefore, borne by the owner/manager. Thus, although the actual behavior of the firm is 'suboptimal' relative to an idealized world, there is every incentive for the owner/manager to make use of possible institutional arrangements to reduce the degree of this divergence. Other examples of this type of effect are the debt model of Myers (1977) where an external debt claim prevents the owner from taking advantage of growth opportunities and induced risk-taking caused by external debt claims (see e.g. Galai and Masuilis (1976)). In addition to its incentive effect, capital structure can also signal the owner/ manager's beliefs about his project. For instance, Leland and Pyle (1976) demonstrate a possible equilibrium when the proportion of the equity retained by the owner/manager is a signal of the quality of the firm. Ross (1977) gives some general results that apply to this type of incentive/signaling situation. He shows that simple mixtures of debt and equity or equity and wages can, in certain circumstances, give correct signalling and 'optimal' investment behavior. All the above analyses are constructed in a two-period world. This paper considers an investment process, venture capital investment, that is essentially multiperiod. The conditions that allow multiperiod models to be collapsed to twoperiod models (see Fama [1970]) do not apply here, since there is, for reasons

Sixty patients with acute promyelocytic leukemia were treated between 1973 and 1984. The overall median survival was 16 months with a five-year survival rate of 31 percent. The complete remission rate was 53 percent and was similar whether they received amsacrine- or anthracycline-based regimens (60 percent versus 51 percent). The median remission duration was 29 months. At five years, 43 percent of patients with responses to treatment had continuous remission and 57 percent were alive. Salvage therapy produced remissions in 53 percent of patients during first relapse, with two long-term survivors after further consolidation with bone marrow transplantation. Early fatal hemorrhage associated with disseminated intravascular coagulopathy during induction therapy occurred in 16 patients (26 percent). Multivariate analysis of the pretreatment patient characteristics significantly associated with an increased risk of fatal hemorrhage identified four that have primary prognostic importance: thrombocytopenia, elevated absolute blast and promyelocyte counts, old age, and anemia. Patients having up to two unfavorable features had a low risk of fatal hemorrhage compared with those who had more than two (5 percent versus 58 percent; p less than 0.0001). Overall, patients who received heparin had a lower incidence of fatal hemorrhage than those who did not (19 percent versus 32 percent). Heparin therapy was not beneficial to those at low risk but was associated with a trend towards decreased hemorrhagic deaths among high-risk patients (45 percent versus 67 percent). Cytogenetic studies demonstrated the characteristic 15;17 translocation in 73 percent of patients with analyzable metaphases, whereas 12 percent had other karyotypic abnormalities. Remission induction was often associated with a gradual atypical morphologic evolution into remission without intermediate hypoplasia with the interim marrows showing a high proportion of blasts. It is concluded that acute promyelocytic leukemia is a unique disease with a high potential for cure. Knowledge of its prognosis using present frontline and salvage therapy, of the factors related to fatal hemorrhage, and of the unusual patient marrow profiles during remission induction may improve the therapeutic approach.

EMPIRICAL STUDIES employing the term structure of interest rates have generally suffered from the defect that yield curves have been used as surrogate measures of the term structure. A number of scholars and professional bond analysts have, in the past decade, called attention to the problem (Malkiel [12], Buse [2], Weingartner [21], Homer and Leibowitz [81, and most recently Carr, Halpern and McCallum [4]) that only when the yield curve is flat can it be so used, legitimately. Only McCulloch [13] and Schaefer [18] have attempted to measure the term structure directly. In this paper we summarize briefly the analytical issues; suggest some of the uses to which term structure estimates could be put; propose an estimation method and describe some preliminary results; and finally, present an empirical application of term structure estimates in a stock valuation model. Most research papers conclude with a promise of more research. To a greater than usual degree the present paper is a promissory note because of the implications of our approach (and McCulloch's

Yersinia pestis requires 2.5 mM Ca(2+) for growth at 37 degrees C but not at 26 degrees C. After a shift from 26 to 37 degrees C in a Ca(2+)-deficient medium, an ordered series of metabolic alterations occur which result in transition from a growing cell to a viable but non-proliferating cell. The earliest known alteration in normal metabolism associated with this transition is a termination of net RNA synthesis. Competitive RNA/DNA hybridizations with uniformly labeled RNA and stable RNA competitor indicated identical mRNA to stable RNA ratios in growing cells and non-proliferating Ca(2+)-deprived cells. Similar hybridizations with pulse-labeled RNA demonstrated that growing cells synthesized 57% mRNA, 37% rRNA, and 5% tRNA, whereas Ca(2+)-deprived cells synthesized 95% mRNA, 4.7% rRNA, and 0.7% tRNA. After addition of radioactive uracil and rifampin to growing and Ca(2+)-deprived cells, decay of approximately 40 and 90% of the newly synthesized RNA was found for growing and Ca(2+)-deprived cells, respectively. The half-life of the mRNA was found to be 1.5 min for growing cells and 4.5 min for Ca(2+)-deprived cells. Y. pestis elicited increases in the levels of guanosine tetraphosphate and guanosine pentaphosphate in response to amino acid deprivation and yielded transient increases in the levels of these phosphorylated nucleotides after a shift from 26 to 37 degrees C. These increases were independent of Ca(2+) availability and preceded the alteration in RNA synthesis by more than 1 h. The levels of these phosphorylated nucleotides then stabilized at about 80 and 40 pmol for Ca(2+)-deprived and Ca(2+)-supplemented cultures, respectively, and did not increase further in the Ca(2+)-deprived culture at the time corresponding to the reduction in stable RNA synthesis. These findings indicate that the early lesion in RNA synthesis associated with the growth restriction of Ca(2+)-deprived Y. pestis reflects a block in stable RNA synthesis and that this effect is not mediated by guanosine tetraphosphate or guanosine pentaphosphate.

Twenty-six patients with inv(16)(p13q22) or del(16)(q22) in association with acute myelomonocytic leukemia (AMML-M4, FAB classification), and abnormal marrow eosinophils have been treated at this institute. Initial bone marrow eosinophilia (greater than or equal to 4%) was observed in 22 of 26 patients (85%), and abnormal eosinophil morphology, characterized by immature cells with some interspersed basophilic granules, was evident in 26 of 26 (100%). Giemsa-banded chromosome analysis performed in all patients revealed 16 cases with inv(16)(p13q22) alone, and ten cases with additional chromosome changes. Twenty-five patients received combination induction chemotherapy, and 23 (92%) achieved complete remission (CR). The median duration of remission was 18 months (range, six to 72 + months), and the median duration of survival was 34 months (range, 0.5 to 133 months). Nine patients (35%) relapsed in the CNS at a median time of 19 months (range, six to 133 months) from first marrow CR. All patients had leptomeningeal disease, and in addition, six of nine (66%) demonstrated two or more enhancing lesions on computed tomography brain scan, consistent with intracerebral myeloblastomas. Review of 384 Giemsa-banded patients with acute myeloid leukemia revealed no other morphologic or cytogenetic subgroup with either an equivalent incidence of CNS leukemia or documented intracerebral myeloblastomas. This series of inv(16)(p13q22)/del(16)(q22) AMML reports a favorable prognosis for such patients and associates a specific clonal cytogenetic subgroup of acute leukemia with a distinct propensity for CNS relapse, manifesting as leptomeningeal disease and intracerebral myeloblastomas.

In empirical studies of differences between firms which are acquired and those which are not, researchers typically divide firms into two groups-acquired and nonacquired. In this paper, we argue that cash takeovers may be sufficiently different from noncash acquisitions that failure to distinguish between them may lead to inappropriate generalizations. We provide evidence from the mid 1970s that three categories of firms can be distinguished: nonacquired, acquired in a cash takeover, and acquired in an exchange of securities. THERE IS A SUBSTANTIAL empirical literature exploring the differences between firms which are acquired and those which are not. Typically these studies divide firms into two groups-acquired and nonacquired-and analyze the differences in the characteristics of the two groups using binary dependent variable techniques such as discriminant analysis or probit analysis. A fundamental shortcoming of these studies is that no distinctions are made concerning the nature of the merger or the acquiring firm. That is, it is assumed that acquired firms fall into a single category that is distinguishable from nonacquired firms. In fact, individual acquisitions may be motivated by quite different features suggesting that more than a single category of acquired firms should be analyzed. In this paper, we argue that cash takeovers may be sufficiently different from noncash acquisitions that modeling the events as being the same (i.e., just mergers) may be inappropriate. We then provide evidence using data for the mid 1970s that three types of firms can be distinguished: nonacquired, acquired in a cash takeover, and acquired in an exchange of securities. The paper is organized as follows. In the next section, we suggest why firms acquired for cash may be quite different from firms acquired by an exchange of securities. Section II describes the empirical techniques which are used and

Several investigators have documented a rearrangement of the breakpoint cluster region (bcr) in selected patients with a morphologic diagnosis of chronic myelogenous leukemia (CML) but no abnormality of the Philadelphia chromosome (Ph) by cytogenetic studies. Our intention was to systematically investigate the incidence of the bcr rearrangement in such patients, and to correlate the findings with patient characteristics, response to therapy (especially alpha interferon treatment), and overall prognosis.Molecular analysis studies were performed in 40 patients with Ph-negative CML (23 patients) and myelomonocytic leukemia (CMML; 17 patients).Rearrangement of the breakpoint cluster region (bcr) was detected in 11 of the 23 patients with Ph-negative CML (48 percent), indicating the presence of the abnormal molecular events in Ph-positive CML without documentation of the Ph cytogenetic abnormality. None of the 17 patients with CMML had the bcr rearrangement. Patients with Ph-negative CML and the bcr rearrangement had characteristics similar to those of patients with Ph-positive disease. These included a younger age, higher white blood cell counts, a higher incidence of thrombocytosis and basophilia, and a lower occurrence of thrombocytopenia. The leukocyte alkaline phosphatase score was not a helpful distinguishing feature. Among 21 patients receiving alpha interferon-based regimens, response to therapy was significantly better among patients with Ph-negative disease and the bcr rearrangement (seven of seven, 100 percent), compared with those without the bcr rearrangement (one of six, 17 percent), or patients with CMML (two of eight, 25 percent) (p less than 0.01). At this time of follow-up, only one of the 11 patients with Ph-negative CML and the bcr rearrangement had died from complications of allogeneic bone marrow transplantation, compared with three deaths among the 12 patients with Ph-negative CML and no bcr rearrangement, and 11 deaths among the 19 patients with CMML.We conclude that molecular studies help in better understanding the nosology of Ph-negative CML, and define a subgroup of patients with clinical, therapeutic, and prognostic correlations similar to those of patients with Ph-positive CML.

We describe a patient with chronic myelomonocytic leukemia who showed trisomy 8 in 100% of his bone marrow metaphases. Of interest was the finding that 20% of the Giemsa-banded metaphases also showed t(15;17)(q22;q21), with breakpoints indistinguishable from those seen in cases of acute progranulocytic leukemia (APL). The patient showed no morphologic or clinical evidence of APL, and he died after 6 months, with no evidence that the disease had progressed to acute leukemia. Although cytogenetically the breakpoints appeared to be the same as those in APL, we suspect that this patient's translocation may have differed at the molecular level from the t(15;17) commonly seen in APL.

The leukemia from which the human cell line HL-60 was derived was classified in 1976 as acute progranulocytic leukemia (APL), although it was recognized to show a number of atypical features. In the ensuing 10 years, the concept of APL and its integral association with t(15;17) has evolved, and the concept of APL as a morphologically recognizable entity has become embodied in the term French-American-British classification M3 (FAB-M3). It is now recognized that not every case of leukemia with a high proportion of progranulocytes can be classified as FAB-M3. We reviewed the light and ultrastructural morphology of the original diagnostic material from this case, and we report that the leukemia from which HL-60 was derived does not conform to the currently recognized entity of FAB-M3 and is more appropriately classified as an acute myeloblastic leukemia with maturation, FAB-M2.

Spontaneous regression of end-stage acute nonlymphocytic leukemia (ANLL) complicated with chloroma (granulocytic sarcoma) was observed in a child after the patient had been sent home for terminal care. The patient was initially found to have the 8; 21 translocation and has survived without any evidence of disease 101 months after the initial diagnosis and 80 months after the discontinuation of all therapy. Spontaneous regression of a wide variety of tumors has been reported, but this observed case has no features in common with those cases. Special implications of this case are discussed. Cancer 58:1101-1105, 1986.

Rate of return regulation in principle suggests strong linkages betwen interest rates, utility return on book equity (ROE), and stock price/book equity ratios: ceteris paribus, changes in interest rates should be quickly transformed into changes in ROEs, and stock prices should tend toward book value. Absent lags in the process, it also suggests that utility investors are minimally exposed to the risks of unanticipated changes in interest rates, notably those associated with inflation. In this paper we examine the financial implications of electric utility regulation from 1971-1980. Over this period, which was characterized by inflation-related rises in interest rates, we flnd that the gap between allowed and earned ROEs, on the one hand, and interest rates, on the other hand, increased. Since this outcome is in contradiction of the conceptual model of regulation and investors' exposure to inflation risk, we test the hypothesis that investors respond to the reality of regulation by imposing risk premiums which are functionally related to interest rates. The basic idea is that an ROE shortfall leads to an expectation that regulation will respond in the future with a higher earnings level, but this "IOU" in the implicit social contract is risky. And the question addressed in this paper is whether the degree of riskiness is related to the level of interest rates. Using two valuation models we conclude that at least during the 1970s risk premiums were not related to the level of interest rates.

THE DEVISING of acceptable capital budgeting procedures for the decentralized firm has for some time remained an unmet challenge to finance theorists. Typical corporate practice involves both price and quantity rationing and interdivisional bargaining for funds, a mixture any theorist will find to be at best untidy and at worst non-economic. On the other hand, the academic suggestion that a single yardstick, the company's cost of capital, is a sufficient screening and control device for divisional capital allocation is dismissed by practitioners as irresponsible. The purpose of this article is to outline a mathematical programming approach to the decentralized firm's capital budgeting problem, under certainty, which could be acceptable in principle both to finance theorists and to students of organizational behavior.

While differentiation of leukemic cells in vitro is well established, the role of differentiation in vivo is not defined and is generally attributed to differentiation inducers. In five patients with acute promyelocytic leukemia (APL) an unusual pattern of a slow and progressive decrease of immature blasts with a concomitant increase in mature cellular elements was observed following intensive combination chemotherapy. All patients eventually achieved complete remission, four of them without an intermediate phase of marrow hypoplasia. This morphologic pattern of response suggests that leukemic cellular differentiation rather than cytotoxicity was one mechanism involved in remission induction. Cytogenetic studies of remission revealed disappearance of the cytogenetic marker, the balanced translocation between the long arms of chromosomes 15 and 17. This remission induction process appears to be due to the cellular biologic characteristic rather than the therapy used as it occurs in a substantial proportion of patients with APL. It should be considered for optimal diagnostic and therapeutic decisions.

Tourism can play a much more powerful role in stimulating rural development than it has in most regions. Achieving this objective will require more careful integration of visitor marketing and rural development strategies. High “quality” visitors and accommodations may not be the same in rural and urban areas. What may be good for the region as a whole may not be good for its rural periphery. In the case of Hawaii, the expansion of tourism was not planned as an integral part of the rural development process, even though most of the state's hotel rooms will eventually be located in non-metropolitan areas. Hawaii may not, therefore, serve as an ideal planning model for other island regions to follow.

Ribi, Edgar (National Institute of Allergy and Infectious Diseases, Rocky Mountain Laboratory, Hamilton, Mont.), Willard T. Haskins, Kelsey C. Milner, Robert L. Anacker, Daniel B. Ritter, Granville Goode, Robert-John Trapani, and Maurice Landy . Physicochemical changes in endotoxin associated with loss of biological potency. J. Bacteriol. 84: 803–814. 1962.—The preparation of endotoxins whose gross chemical composition approached that of refined polysaccharide haptenes raised anew the question of which features of composition and structure are essential for their characteristic host reactivity. Alterations in the physicochemical, immunochemical, and biological properties of Salmonella enteritidis endotoxin subjected to hydrolysis with 0.1 n acetic acid were therefore investigated to relate physical characteristics to biological attributes. As hydrolysis proceeded, the decline in biological potency was paralleled by dissociation of endotoxin into particles of the size of haptenic polysaccharide. The potency still present at various stages of hydrolysis could be accounted for by residual undissociated endotoxin. These findings are consistent with the hypothesis that a macromolecular complex of critical size is one of the major requirements for endotoxin to elicit its characteristic effects in the mammalian host.