Dear colleagues, You are kindly invited to attend the following VGSF research seminars: ***Seminar 1: Real Investment and Risk Dynamics ***Speaker: Ilan Cooper (Tel Aviv University) ***Time: 2008-04-18, Friday, 14:00-15:30 ***Location: 1190, Heiligenstädter Strasse 46-48, seminar room 1 (ground floor) (WU-H46) ***Seminar 2: The Levered Equity Risk Premium and Credit Spreads: A Unified Framework ***Speaker: Harjoat Bhamra (University of British Columbia) ***Time: 2008-04-18, Friday, 16:00-17:30 ***Location: 1190, Heiligenstädter Strasse 46-48, seminar room 1 (ground floor) (WU-H46) The papers to be presented can be downloaded from the VGSF website (http://www.vgsf.ac.at/activities/seminars.htm). The abstracts are attached below. If you would like to arrange an individual meeting with the speakers, please contact me as soon as possible. Best regards, Youchang Wu Abstract 1: We show that systematic risk falls sharply following firm investment and rises after disin- vestment. The risk dynamics we uncover are driven by real investment and not by changes in firm characteristics and are strongest among firms with valuable investment opportunities, high adjustment costs of investment and low operating leverage. Consistent with rational pricing, firms with poor investment opportunities, those most likely to be overinvesting, ex- perience an increase in average returns and systematic risk following investment. For firms with valuable growth opportunities the bulk of the negative investment (asset growth)-future returns relationship stems from differences in risk factor loadings between high and low in- vesting firms. Abstract 2: We embed a structural model of credit risk inside a consumption-based model, which allows us to price equity and corporate debt in a single framework. Our key economic assumptions are that the first and second moments of earnings and consumption growth depend on the state of the economy which switches randomly, creating intertemporal risk, which agents prefer to resolve quickly because they have Epstein- Zin-Weil preferences; agents choose capital structure and default times. Our model generates co-movement between aggregate stock return volatility and credit spreads, consistent with the data and potentially resolves the equity risk premium and credit spread puzzles.