Classical finance theory

by | Oct 3, 2021 | Assignment

1. Explain what the writer is talking about in Quote 1 in below,Quote 1: “…some of the assumptions made by classical finance theory, …, are in fact dangerously at odds with the way in which financial markets actually work. One of the most important laws of economics, the law of one price, is regularly violated in equity, bond and foreign exchange markets.”2. Do you agree with the statement made in Quote 2 in below? Why yes, why not? Explain.Quote 2: “…contrary to standard belief, noise traders, or irrational market participants, can not only survive into the long run, but may under certain circumstances actually come to dominate the market place.”

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