We argue that the implied cost of capital (ICC), computed using earnings forecasts, is useful in capturing time variation in expected stock returns. First, we show theoretically that ICC is perfectly correlated with the conditional expected stock return under plausible conditions. Second, our simulations show that ICC is helpful in detecting an intertemporal risk-return relation, even when earnings forecasts are poor. Finally, in empirical analysis, we construct the time series of ICC for the G-7 countries. We find a positive relation between the conditional mean and variance of stock returns, at both the country level and the world market level. THE TRADEOFF BETWEEN RISK and return is a central concept in finance. Finance theory generally predicts a positive risk-return relation, both across assets and over time. For example, the intertemporal capital asset pricing model (ICAPM) of Merton (1973) predicts a positive time-series relation between the conditional mean and variance of market returns. However, the empirical evidence on the sign of the intertemporal risk-return relation is inconclusive.

We argue that the implied cost of capital (ICC), computed using earnings forecasts, is useful in capturing time variation in expected stock returns. First, we show theoretically that ICC is perfectly correlated with the conditional expected stock return under plausible conditions. Second, our simulations show that ICC is helpful in detecting an intertemporal risk-return relation, even when earnings forecasts are poor. Finally, in empirical analysis, we construct the time series of ICC for the G-7 countries. We find a positive relation between the conditional mean and variance of stock returns, at both the country level and the world market level. Copyright (c) 2008 The American Finance Association.

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Quasi-elastic-scattering and transfer reaction cross-section measurements were made for the 7 Be + 27 Al system at E lab = 17, 19, and 21 MeV in the angular range θ c.m. = 12 • −43 • . An optical model (OM) analysis of the quasi-elastic scattering data was carried out. The fusion cross sections were derived at these energies by subtraction of the integrated transfer cross sections from the reaction cross sections obtained from the fits to quasi-elastic-scattering data. These fusion cross sections were found to be consistent with those obtained from the coupled-channels calculations. Elastic scattering and fusion cross sections were measured for the 7 Li + 27 Al system at E lab = 10, 13, 16, 19, and 24 MeV. For elastic scattering the angular coverages were in the θ lab = 12 • −72 • range and for fusion the α-evaporation spectra from the compound nucleus were measured in the angular range θ lab = 52 • −132 • (142 • at 10 MeV). The elastic-scattering angular distributions were subjected to OM analysis. The α-evaporation spectra were reproduced with the statistical model calculations, and the fusion cross sections were extracted from them. The fusion cross sections were also extracted by subtraction of the integrated inelastic-scattering cross sections from the reaction cross sections obtained from the OM fits to the elastic-scattering data, and these fusion data were found to be consistent. The CCDEF calculations describe these data quite well. A comparison of the fusion data for the 7 Be + 27 Al and 7 Li + 27 Al systems shows a similar and consistent behavior.

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