K. Arrow, “The Role of Securities in the Optimal Allocation of Risk Bearing,” Review of Economic Studies, Vol. 31, No. 2, 1963, pp. 61-67.

has been cited by the following article:

• TITLE: Equity Participation without Equity: An Analysis of Hope Notes

  AUTHORS: John F. McDonald

  KEYWORDS: Hope Notes; Asset Valuation; Commercial Real Estate

  JOURNAL NAME: Modern Economy, Vol.4 No.5, May 31, 2013

  ABSTRACT: The paper examines the case of splitting a defaulted mortgage loan on a commercial property into an A note that earns interest and a B note that earns a return only if the value of the property increases. The B note is known as a “hope note.” The paper shows that the current methods for structuring such a deal often produce a B note that is worthless. A state-preference model is employed.