For example, we expect CBS to have a greater share of the debt, given its lower growth profile, which should enhance equity returns.

A 13.8 percent decline in the exchange value of the euro in 1999 ate into European equity returns.

Historically, equity returns have far exceeded what banks pay on checking accounts, yet many lower-income Americans have little or no investment in the stock market.

Even then, Mr. Arnott says, it would be unrealistic to expect revaluation to bolster equity returns.

Most deals at these low rates used a great deal of leverage in an attempt to lift equity returns, generating negative cashflows and refinancing difficulties.

This deleveraging should provide a significant boost to equity returns.

"A slow, steady positive return makes for a great diversifier to much more volatile equity returns."

The models have had some success in explaining the excess volatility of stock returns compared to fundamentals and the negative skewness of equity returns.

And with the shift from short-term to long-term investments, Mr. McManus added, "comes the more normal kinds of equity returns."

Venture debt lenders expect returns of 12-25% on their capital but achieve this through a combination of loan interest and equity returns.