Because of severe technical difficulties, the U.S. government was unable to repay investors in Treasury bills (T‐bills) in late April through early May, 1979. This incident led to a 60 basis point increase in T‐bill rates at the initial occurrence of the default. Unlike other information effects of that era, such as Henry Kaufman's predictions or Paul Volcker's “Saturday night special,” this increase in rates was not offset by a subsequent decrease in rates after the Treasury cured the default. The default apparently warned investors that Treasury issues were not completely riskless, which translates into a $12 billion annual increase in federal interest payments as a result of the 60 basis point permanent increase in interest rates.

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Recent studies show firms suffering drug recalls experience security losses many times larger than any reasonable measure of their direct cost. We discover that the implied standard deviation of stock returns from the Black‐Scholes option pricing model significantly increases after a drug recall. The implied standard deviation provides a good proxy for the stock's ex ante beta. The higher systematic risk after a product recall must raise the discount rate used by investors. After a recall, stock prices are reduced in line with the lower expected future earnings and are further reduced because of a higher discount rate.

The most widely followed technique to estimate the rate of return to a year of schooling was provided by Mincer (1974) . This paper extends Mincer's semilog wage regression method to include those who interrupted their schooling with years of work. Schooling and the duration of the interruption interact to create nonlinearities in the rate of return to schooling. The proposed method is then applied to both Vietnam era G.I. students and civilian interrupters. It is found that interrupters earn substantially the same rate of return as the rate of return to uninterrupted schooling at the same level of schooling. G.I. students earned slightly higher rates of return to their interrupted schooling, but their accumulated work experience was not valued highly in the labor market.

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