Crispness is one of the most desirable textural characteristics of breaded fried foods. Consumers often judge the quality of breaded fried foods based on the perceived crispness of the product. Furthermore, today�s consumers are showing increasing concern over fat intake. As a result, there is great interest in being able to enhance the crispness and reduce the fat uptake in breaded fried foods without sacrificing other quality attributes. To achieve these goals, modifications to both frying equipment and product formulation have been explored in this study.
Using a sample of Credit Default Swap (CDS) prices and corresponding reference corporate bond yield spreads for the period 6/2008 to 9/2009, we show that funding liquidity (shadow cost of capital for arbitrageurs) as well as asset specific liquidity (determinants of margin requirements) explain recent deviations in the arbitrage based parity relationship between the CDS prices and bond yield spreads (CDS-Bond spread basis). Collectively our analysis corroborates the theory on the determinants of the basis, and suggests that it is important to distinguish between these two types of liquidity in determining the circumstances in which relative prices will converge. Median annualized returns for a sample convergence type trading strategy with typical levels of leverage are 80% with a median holding period of 127 days, but the path to convergence is not smooth.
The world around us is a a very detailed and intricate system. In particular, real-world systems tend to comprise of many interacting parts, yielding a macroscopic dynamical behavior which features a complicated mix of unpredictability and predictability at various scales, e.g., ranging from the actions of each atom to each chemical to each animal to the human mind which is in many ways still a mystery leading to politics and society. These are all very particular examples of how it is a complex system, but one can imagine many more examples such as petals on a flower or even global warming.
