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In a capitalist economy prices serve to equilibrate supply and demand for goods and services, continually changing to reallocate resources to their most efficient uses. However, secondary stock market prices, often viewed as the most 'informationally efficient' prices in the economy, have no...
Persistent link: https://www.econbiz.de/10012774997
Noise traders are agents whose theoretical existence has been hypothesized as a way of solving certain fundamental problems in Financial Economics. We briefly review the literature on noise traders. The is an entry for The New Palgrave: A Dictionary of Economics, 2nd Edition (Palgrave Macmillan:...
Persistent link: https://www.econbiz.de/10012761467
version of the separation of ownership and control -- Jensen's (1986) free cash flow theory--into a dynamic equilibrium model …
Persistent link: https://www.econbiz.de/10012762816
This paper presents a simple general equilibrium model of asset pricing in which profitable informed trading can occur without any "noise" added to the model. It shows that models of profitable informed trading must restrict the portfolio choices of uninformed traders: in particular, they cannot...
Persistent link: https://www.econbiz.de/10013232909