The volume collects a selection of papers presented and discussed during the two Meetings held in 1992 of the EURO Working Group on Financial Modelling. In April the works were held in Cogne (Aosta Valley - Italy) and in November in Turku (Finland). The Group was founded eight years ago and at present is formed by some hundreds of people from over ten European countries and from the United States. The unusually high rythm of two Meetings per years has been always kept, with the exception of one of the first years. This reveals the strong vitality of this community. The wide variety of papers presented and discussed, together with the originality of their approach and of the results, also witnesses the quality of the work the Group is doing in Finance. There are more than one way to work in this fastly growing field. A largely diffused approach is mainly oriented in building theories to be cast within some general economic paradigm. If some simplifications are needed to get perfect theoretical coherence with the preferred paradigm, they are easily accepted. The most diffuse approach within the Group, although attenctive to general theories, tries sometimes to build workable models where many relevant details of the reality are captured even if the price is not to adhere to some general theory. This does not mean, of course, that the Group is against general paradigms.

Inhalt
Insurance and Risk Management.- Single and Periodic Premiums for guaranteed Equity-Linked Life Insurance under Interest-Rate Risk: The Lognormal+Vasicek Case.- Solvency-Simulation in Non-Life Insurance.- A Multicriteria Classification: An Application to Italian Mutual Funds.- Asset Liability Matching for Pension Funds: A One-Period Model.- Asset Risk in a Liability Context: An Empirical Study for the Netherlands.- Bank Strategic Planning Process. A Multifactor Asset and Liability Risk Management Approach.- Index Tracking: Some Techniques and Results.- Stock Market Theory.- Expectations and News in an Imitative Stock-Market.- An Artificial Adaptive Speculative Stock Market.- Valuation of the Embedded Prepayment Option of Mortgage-Backed Securities.- The Effects on Optimal Portfolios of Shifts on a Risk Asset: The Case of Dependent Risky Returns.- Corporate Investment and Dividend Decisions under Differential Personal Taxation: A Note to Masulis and Trueman's Model.- A Decision Support System for the Evaluation of Bond Options in Imperfect Markets.- Pure Capital Rationing Problems: How to Bury Them and Why.- Pricing and Bargaining in Financial Markets.- APV Sensitivity with Respect to Interest Rates Fluctuations.- A Note on the Existence of Equilibrium Price Measures.- Bond Pricing through Bargaining.- Financial Markets Testing.- Risk Measurement and Size Effect on the Dutch Stock Market.- Conditional Risk and Predictability of Finnish Stock Returns.- Linear Models for Portfolio Selection and their Application to the Milano Stock Market.- Currency Markets.- When to use Currency Swaps. Determining the Expected Profit and Variance.- Currency Forecasting: An Investigation into Probability Judgement Accuracy.