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Articles 61 - 90 of 126

Full-Text Articles in Finance and Financial Management

“It’S Gonna Be Yuge”: The Impact Of Chinese Imports On United States Manufacturing Firm Valuations, Charles Mangum Jan 2020

“It’S Gonna Be Yuge”: The Impact Of Chinese Imports On United States Manufacturing Firm Valuations, Charles Mangum

CMC Senior Theses

Throughout the years there has been literature regarding the impacts of Chinese manufacturing on the United States economy. Much of the focus has been centered on macro-economic effects and not firm level impacts. Using trade exposure and data from publically traded manufacturing firms I provide an analysis of the potential effects of increased trade exposure in a highly competitive market. My research aims to measure the impacts of Chinese imports on United States manufacturing companies with low technological barriers to entry. When comparing trade exposure to firm level data I conclude that there is a negative correlation between investment levels …

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The Nature Of Latin American Markets In The Presence Of Credit Events, Patricio Aguilar Jan 2019

The Nature Of Latin American Markets In The Presence Of Credit Events, Patricio Aguilar

CMC Senior Theses

In the past two decades the Latin American region has experienced a number of credit crises stemming from large sovereign debt levels and sharp currency devaluations. This study aims to discover whether or not the sovereign credit default swaps (CDS) in the Latin American region lead equity markets prior to these sovereign credit events. Through a sample of the seven largest Latin American economies and daily return data from 2001 to 2018, I try to empirically test this question through a Generalized Least Squared model. The paper finds little significant evidence of CDS leading equity markets in price discovery prior …

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Does Managerial Risk-Taking Incentive For R&D Investments Translate To Future Earnings?, Ha Yun Cho Jan 2019

Does Managerial Risk-Taking Incentive For R&D Investments Translate To Future Earnings?, Ha Yun Cho

CMC Senior Theses

The convex pay-off structure of executive stock options (ESO) incentivizes CEOs to increase their firm stock-return volatility, thereby increasing their wealth in option portfolio. In this paper, I address two research questions. I first test if this managerial incentive induces executives to take on more risky projects in R&D that increases stock- return volatility, hence, boosting their personal wealth. I derive vega to measure managerial incentive, and vega is a dollar change in ESO for a 0.01 change in stock- return volatility. I find that there is a positive and statistically significant relationship between vega and R&D investment, which suggests …

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Deal Or No Deal: The Relationship Between Firm Determinants & Venture-Capital Financing Decisions, Raghav Prasad Jan 2019

Deal Or No Deal: The Relationship Between Firm Determinants & Venture-Capital Financing Decisions, Raghav Prasad

CMC Senior Theses

In this paper, I analyze how firm attributes such as their age, industry, nature of industry, spinoff status and debt ratio influence venture-capital financing decision. I look at a sample of 280 firms that went public in the United States between 2015- 2019. This paper finds that firm age and debt are negatively related to the likelihood of being venture-capital backed. It also finds that firms in technology and biotechnology industries are more likely to be backed by a venture-capitalist.

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Are Women Executives Hurting Firm Performance? An Examination Of Gender Diversity On Firm Risk, Performance, And Executive Compensation, Krystal Diane Sung Jan 2019

Are Women Executives Hurting Firm Performance? An Examination Of Gender Diversity On Firm Risk, Performance, And Executive Compensation, Krystal Diane Sung

CMC Senior Theses

In order to assess the continuing imbalance of top executives between genders, I examine the effects of gender diversity within top management teams on firm risk, performance, and executive compensation. Capitalizing on previous analysis, I apply three unique differentiators. First, I utilize current data from 2012 to 2017 from Compustat, CRSP, and ExecuComp. Second, I provide a unique subset view on a firm and individual performance of female CEOs to examine executive compensation. Third, my scope of analysis expands to S&P Composite 1500 companies. I use separate models to estimate the effect of gender diversity on firm risk by examining …

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Financing Method And Abnormal Returns In Corporate Mergers And Acquisitions, Patrick Thomas Jan 2019

Financing Method And Abnormal Returns In Corporate Mergers And Acquisitions, Patrick Thomas

CMC Senior Theses

This study analyzes the impact of merger and acquisition financing method on buyer cumulative abnormal returns. The model builds on findings in previous literature by including deal structure variables, company variables, industry variables, time variables, and post-acquisition announcement return data from 2000 to 2018. The analysis does not find a statistically significant relationship between cash plus debt/stock financing and cumulative abnormal returns. However, significant coefficients for buyer and target industry suggest that deal structure varies and ultimately effects cumulative abnormal returns within specific industries. Additionally, significant results for buyer profitability and time variables provide insight on how the financial market …

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Are The Public Subsidies Of Professional Sports Stadiums Worth The Cost Of Building Them?, Spencer Abraham Jan 2019

Are The Public Subsidies Of Professional Sports Stadiums Worth The Cost Of Building Them?, Spencer Abraham

CMC Senior Theses

The results generated by this research argue that, in the future, communities should take into account crime and other social costs as they analyze the merits of investing in new sports complexes and that a failure to consider these factors could constitute a serious dereliction on the parts of the public officials who are ultimately responsible for new facility investment decision making. Moreover, both this research and previous studies of the economic effects of new sports facilities, strongly indicate that public entities considering funding new facilities do a more in depth independent study of the likely economic consequences of their …

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M&A Performance: Market’S Initial Reaction As An Unbiased Indicator Of Post-Acquisition Performance, Nikolaos Papageorgiou Jan 2019

M&A Performance: Market’S Initial Reaction As An Unbiased Indicator Of Post-Acquisition Performance, Nikolaos Papageorgiou

CMC Senior Theses

This paper investigates the reliability of the stock market’s initial reaction to M&A announcements as a predictor of actual post-acquisition performance. The two prevailing methods for evaluating M&A performance are event studies (stock market-based measures) and accounting-based measures. The present study combines these two performance evaluation approaches in a single empirical examination. Both the post-merger buy-and-hold abnormal returns and changes in ROA are used as actual post-acquisition performance variables. The acquirer’s cumulative abnormal return (CAR) around the announcement is used as the market predictor variable. An econometric model is employed to test the predictive power of the announcement-period CAR on …

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The Predictive Power Of The Vix Futures Prices On Future Realized Volatility, Siran Zhang Jan 2019

The Predictive Power Of The Vix Futures Prices On Future Realized Volatility, Siran Zhang

CMC Senior Theses

Many past literatures have examined the predictive power of implied volatility versus that of historical volatility, but they have showed divergent conclusions. One of the major differences among these studies is the methods that they used to obtain implied volatility. The VIX index, introduced in 1993, provides a model-free and directly observable source of implied volatility data. The VIX futures is an actively traded VIX derivative product, and its prices are believed to contain market’s expectation about future volatility. By analyzing the relationship between the VIX futures prices and the realized volatilities of the 30-day period that these VIX futures …

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Are Cds Auctions The Tail Wagging The Dog? An Empirical Study Of Corporate Bond Return Volatility At The Time Of Default, Jennifer Mace Jan 2019

Are Cds Auctions The Tail Wagging The Dog? An Empirical Study Of Corporate Bond Return Volatility At The Time Of Default, Jennifer Mace

CMC Senior Theses

Over the past decade, numerous engineered credit events and cases of market participants manipulating bond prices to influence Credit Default Swap (CDS) auction payouts have occurred. These cases have become increasingly common, and the CFTC has stated they may constitute market manipulation and undermine not only the CDS market but also the credit derivative and default markets. Although there is a plethora of news and media coverage on publicized cases, there is no previous empirical research on evidence of these practices. This paper is motivated by the desire to determine if there is indirect evidence of bond price manipulation around …

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What Drives Merger Waves? A Study Of The Seven Historical Merger Waves In The U.S., Katherine Ching Jan 2019

What Drives Merger Waves? A Study Of The Seven Historical Merger Waves In The U.S., Katherine Ching

Scripps Senior Theses

Historically, merger and acquisition (or M&A) activity has occurred in cyclical patterns, forming what are known as “merger waves.” To date, there have been a total of seven waves. Though it is widely acknowledged that merger waves exist, there is no consensus on what drives these waves. Through both qualitative and quantitative analysis, this paper aims to determine the causes of merger waves and looks at those causes through two different lenses: the neoclassical view, which states that economic shocks cause merger waves, and the behavioral view, which states that increases in merger activity are due to managerial behavior and …

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Liquidity Risk And Mutual Fund Manager’S Stock Choice, Hannah Berg Jan 2019

Liquidity Risk And Mutual Fund Manager’S Stock Choice, Hannah Berg

CMC Senior Theses

Liquidity risk is a large issue faced by mutual funds. Large funds typically trade in size, and these large sizes often have a significant impact on prices. My hypothesis is that large funds will not invest in illiquid assets as much as smaller funds due to the price sensitivity of illiquid assets. While this seems obvious, the results from this study are not in agreement with this hypothesis. My paper finds that as the illiquidity of a stock increases, so does the probability that a large fund invests in the stock.

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The Effects Of Bringing An Nba Franchise To A City On Employment: A Case Study Of Memphis, Oklahoma City, Orlando, Sacramento, And Salt Lake City, Ravi Shah Jan 2018

The Effects Of Bringing An Nba Franchise To A City On Employment: A Case Study Of Memphis, Oklahoma City, Orlando, Sacramento, And Salt Lake City, Ravi Shah

CMC Senior Theses

This paper utilizes a case study approach to explain the impact of having a franchise from the National Basketball Association (NBA) move to a city where a team from the four major American sports league had not existed on employment levels. This paper utilizes the synthetic control method to examine employment in Memphis, Oklahoma City, Orlando, Sacramento, and Salt Lake City. Applying the synthetic control method, this paper finds that employment is not impacted positively as the stadium proposals suggest they will when putting forth subsidy bids. Due to the large costs imposed on taxpayers as a result of the …

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The Effect Of Mandatory Adoption Of Ifrs On Transparency For Investors, Crystal Anderson Jan 2018

The Effect Of Mandatory Adoption Of Ifrs On Transparency For Investors, Crystal Anderson

CMC Senior Theses

This paper examines the effect of the mandatory adoption of the International Financial Reporting Standards (IFRS) on transparency for investors by measuring the increase in earnings management during the post-adoption period of IFRS. One sign of earnings management is current year earnings being only slightly higher than the previous year’s earnings. An increase in earnings management means a decrease in accounting quality and a decrease of transparency for investors. By comparing firms that mandatorily adopted IFRS to similar benchmark firms in terms of strength of legal enforcement, book-to-market ratios, market values and net incomes, I am able to run empirical …

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A Smart Beta Approach To Fama-French And Profitability, Joseph Malgesini Jan 2018

A Smart Beta Approach To Fama-French And Profitability, Joseph Malgesini

CMC Senior Theses

The Fama and French five-factor model is molded into a smart beta investment strategy with strong exposure to the profitability factor. This constructed portfolio outperforms the market significantly despite an unintentional negative correlation with profitability that can be attributed to the intra-factor return correlations. The second portfolio, constructed by investing directly in profitability as represented by gross profit over total assets, outperforms both the market and the first portfolio.

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Returns To Buying Winners And Selling Losers: A Look At Cryptocurrencies, Daniel Walker Jan 2018

Returns To Buying Winners And Selling Losers: A Look At Cryptocurrencies, Daniel Walker

CMC Senior Theses

This paper is, to my knowledge, one of the first ever to examine the effectiveness of price momentum trading strategies applied to cryptocurrencies. Using aggregate OHLCV (Open, High, Low, Close, Volume) data on cryptocurrency pairs from Poloniex, Bittrex, and Bitfinex, I apply Jegadeesh and Titman’s classic -month/-month momentum trading strategy, reporting annual returns with and without incorporating trading fees. Portfolios are resampled daily, weekly, and monthly, testing lookback and holding periods ranging from one day to one year. The results show that trading cryptocurrencies using momentum strategies derives returns that rapidly increase the more often portfolios are resampled, with the …

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Institutional Ownership In Relation To The Mandatory Audit Firm Rotation Rule And Its Effect On Audit Quality, Latisha Shah Jan 2018

Institutional Ownership In Relation To The Mandatory Audit Firm Rotation Rule And Its Effect On Audit Quality, Latisha Shah

CMC Senior Theses

Previous studies have concluded that mandatory audit firm rotation (MAFR) has not been successful in controlling the outcomes of the auditor-client relationship. Additionally, the literature concludes that high institutional ownership enhances audit quality through monitoring the management-auditor relationship. This paper hypothesizes that better corporate governance in terms of high institutional ownership percentage will enhance audit quality during a MAFR regime. Since countries that have implemented MAFR in the past have their data in their local languages, I use the special case of Arthur Andersen clients based in the US as my treatment group. I carry out a descriptive statistical analysis …

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The Effects Of Positive And Negative Environmental Responsibility On Financial Performance, Anna Gurr Jan 2018

The Effects Of Positive And Negative Environmental Responsibility On Financial Performance, Anna Gurr

CMC Senior Theses

As environmental responsibility (ER) gains momentum in the corporate and stakeholder world, it is imperative to understand the relationship between ER and financial performance. While there is prior research looking at this relationship, this study provides further insight into the specific effects of negative and positive ER. In addition, it looks over the years 2008-2011 having implications for companies about the effects of their ER even through financial hardships. This study uses a widely respected corporate social responsibility database, in which ER scores were separated from. In this study, 287 firms in the S&P 500 are examined through times-series regression …

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Is The Accruals Anomaly More Persistent In Firms With Weak Internal Controls?, Kanishk Kapur Jan 2018

Is The Accruals Anomaly More Persistent In Firms With Weak Internal Controls?, Kanishk Kapur

CMC Senior Theses

In 1996, Sloan identified the accruals anomaly, in which the negative relationship between the accruals component of current earnings and subsequent stock returns can be exploited to generate excess returns. One would expect the accruals anomaly to dissipate and ultimately disappear as investors take advantage of the now-public information. However, nearly two decades later, it persists as one of the most prominent and contentious anomalies; its magnitude of current and future excess returns still remain controversial. The main reason for its persistence is that extreme accrual firms possess characteristics that are unappealing to most investors. These characteristics, which include insufficient …

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The Balance Between Financial And Quality Performance In For-Profit Hospitals Versus Non-Profit Hospitals, Blake Seidner Jan 2018

The Balance Between Financial And Quality Performance In For-Profit Hospitals Versus Non-Profit Hospitals, Blake Seidner

CMC Senior Theses

Recent trends of financial distress for non-profit hospitals and the uptick in acquisition of these hospitals by for-profit entities indicate different focuses from the management of each type of hospital. Using data on hospital quality and basic financial measures, this study examines shift in the balance of financial and quality performance. The dataset focuses on private non-profit and for-profit hospitals with low bed counts, ranging from 50-200 total beds. Results indicate a positive relationship between for-profit status and basic financial performance measures, such as profitability, and a negative relationship with patient experience, cost reduction for the patient, and overall quality. …

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You Can Run But You Can’T Hide: The Advance Of Shareholder Activism, Kendall Greenberg Jan 2018

You Can Run But You Can’T Hide: The Advance Of Shareholder Activism, Kendall Greenberg

CMC Senior Theses

Shareholder activism has exploded in popularity since the turn of the century, due in large part to impressive relative returns generated by its major participants. The result has thus been a surge in assets invested in the category, to in excess of $170 billion today up from less than $3 billion in 2000 (Inglis 2015; Romito 2015). This influx of capital, in absolute dollars and pace of growth, has caused many to wonder whether activists truly create shareholder value and, if so, if the value generated is sustainable. Numerous studies of activist interventions prior to 2009 reveal significant stock price …

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Stock Returns And Industrial Production: A Sectoral Analysis, Griffin Lazarus Jan 2017

Stock Returns And Industrial Production: A Sectoral Analysis, Griffin Lazarus

CMC Senior Theses

This paper analyzes the relationship between stock returns and future industrial production growth rates from 1926-1940. It replicates the work of Fama (1990) and Schwert (1990) with the intent to see if the relationship continues to hold using sector data. Furthermore, this paper focuses on the 1926-1940 sample period to explore how the relationship is affected by the stock market crash of 1929. It is expected that the relation will be weak for the industry sectors experiencing strong growth prior to the crash. The results indicate that the relationship between stock returns and future industrial production growth rates persists on …

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Is Silence The Answer?, Gator Adams Jan 2017

Is Silence The Answer?, Gator Adams

CMC Senior Theses

This study examines the relationship between company management guidance, and ex-ante crash risk over the duration of 2008(Jan 2006-Dec 2009) financial crisis using the implied volatility skew, which is based upon ex-ante volatility implied by the pricing model developed by Black-Scholes (1973). The study finds that over the duration of this crisis period, management guidance decreases with a rise in ex-ante crash risk. Further, the study provides evidence on the relationship of management guidance and earnings volatility, and how that is affected by a firm's industry product concentration based on the Herfindahl-Hirschman Index (HHI) score.

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A Sectoral Analysis Of The 1929 Stock Market Crash, Paul Edward Reynolds Iii Jan 2017

A Sectoral Analysis Of The 1929 Stock Market Crash, Paul Edward Reynolds Iii

CMC Senior Theses

The stock market crash of 1929 stands today as the largest decline in market value in the history of the United States. Consequently, the event destroyed the wealth of thousands of American families and institutions. On October 28th and 29th, the United States stock market fell 11.3 percent and 12.4 percent respectively, marking the beginning of a down market that lasted over three years, the time period known today as the Great Depression. This paper empirically analyzes the effects felt by each individual industry sector in the crash of 1929, identifying gross and abnormal returns over three major days in …

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The Risk-Return Characteristics And Diversification Benefits Of Fine Wine Investment, Tania Salomon Jan 2017

The Risk-Return Characteristics And Diversification Benefits Of Fine Wine Investment, Tania Salomon

CMC Senior Theses

This thesis evaluates the risk-return characteristics and diversification benefits of fine wine investment. It compares the historical performance of wine to that of equity, fixed income, real estate, and commodities. I calculate the correlation, volatility, and expected returns of these assets to examine whether adding wine to a portfolio increases its risk-adjusted return. I do this through the Markowitz portfolio optimization technique. The findings suggest that wine has a low correlation with traditional assets, providing diversification benefits. My results also show that adding wine to a portfolio increases its risk-adjusted return only when there is an allocation constraint of 0 …

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The Benefits Of Having A Comprehensive Financial Plan For The Average Consumer, And The Necessary Components Comprised To Make An Effective And Efficient Plan, Nicholas M. Lund Jan 2016

The Benefits Of Having A Comprehensive Financial Plan For The Average Consumer, And The Necessary Components Comprised To Make An Effective And Efficient Plan, Nicholas M. Lund

CMC Senior Theses

Socioeconomic changes in American society over the past few decades, as well as an overwhelming amount of uncertainty and misconceptions, have resulted in a majority of Americans to fall short of their financial goals in the short-term, the mid-term, and the long-term. Without proper preparation and financial planning, it is likely that these Americans, and many more, will be unable to reach these goals as well as retire comfortably. Many Americans are overwhelmed with the immense amount of financial information, tools and resources, and as a consequence are unable to plan their finances efficiently and effectively. Americans need a better …

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The Price Is Book-Built: The Decision To Use Book-Building Pricing Mechanisms For Ipos In The Philippines, Gabriel A. Ayala Jan 2016

The Price Is Book-Built: The Decision To Use Book-Building Pricing Mechanisms For Ipos In The Philippines, Gabriel A. Ayala

CMC Senior Theses

In 1998, the Philippines introduced book-building pricing mechanisms for Initial Public Offerings. Almost all capital raised through IPOs in the Philippines is done using a book-building pricing method, however a significant number of IPOs still occur using non-book-building methods. Understanding why book-building has become the dominant pricing mechanism but yet non-book-building methods still survive is the aim of this paper. I find that unlike other countries where the introduction of book-building leads to higher total issue costs for individual issuers and unlike theory which suggests the increased effort of book-building should come with increased costs, IPOs that use book-built pricing …

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Do Internal Funds Play An Important Role In Financing Decisions For Constrained Firms?, Barun Roychowdhury Jan 2015

Do Internal Funds Play An Important Role In Financing Decisions For Constrained Firms?, Barun Roychowdhury

CMC Senior Theses

In this paper, I discuss the importance of internal funds for corporate investment among financially constrained firms. I use the paper ‘Financing Constraints and Corporate Investments’ by Fazzari, Hubbard and Petersen.as a base for my framework. I focus on a specific paper refuting their findings and their response in order to fully understand the benefits and costs of the framework. I then apply the original framework to a recent sample that covers the Great Recession to see the results of the initial paper are still valid today and if the recent recession and elongated recovery had an even more adverse …

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10b5-1 Plans And Earnings Management By High-Level Executives, Joshua A. Thomas Jan 2015

10b5-1 Plans And Earnings Management By High-Level Executives, Joshua A. Thomas

CMC Senior Theses

Using historical firm financial and insider trading information, this paper examines whether high-level insiders manipulate earnings ahead of their own 10b5-1 equity transactions. The empirical evidence suggests that high-level executives appear to manipulate earnings through real activities such as abnormal discretionary expenditures and abnormal cash flows from operations to influence equity prices ahead of their own transactions under Rule 10b5-1. Evidence also suggests that executives appear to be unlikely to engage in earnings management through highly scrutinized means such as accruals. An interpretation of these results is that high-level executives may be using 10b5-1 plans as an offensive tool to …

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The Effect Of Ceo Gender, Age, And Salary On Firm Value, Brandon H. D'Ewart Jan 2015

The Effect Of Ceo Gender, Age, And Salary On Firm Value, Brandon H. D'Ewart

CMC Senior Theses

This paper investigates the academic conclusions on how CEO gender and salary affect firm value, while at the same time adding data on how CEO age affects firm value. Via an event study of S&P 500 CEO changes from 2000 to 2006 I confirm the current academic findings and discover that CEOs promoted during their 40s negatively influence firm value, while CEOs in older age brackets show a positive abnormal return on firm value. With this validation and addition to the existing data, firms and investors can more effectively assess proper candidates for the position of CEO and allocate resources …

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