Table 8.1 Comparative static results*

Parameter	OGGIP	OSSIP	SISPOSS
α (mark-up)	+	+	+	+
D0 (initial debt)	N/A	N/A	_	_
(acceptable debt)	N/A	N/A	+	+
σ2 (variance of gross profits)	N/A	_	_	_**
π0 (initial cash flow)	N/A	N/A	+	+
PK (price of capital)	_	_	?	?***
R (interest rate)	_	_	_	_
Notes *Under the assumption that future profits are distributed uniformly or normally. **For the special case of an extremely financially fragile firm, . Here a firm on the verge of bankruptcy will take an investment gamble hoping to draw one of the marginal extreme positive outcomes added to its distribution by an increase in σ2. ***An increase in PK raises the value of the firm assets and thus lowers the firm’s debt-equity ratio resulting in the indeterminant sign in SP.