Perfect capital market

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Perfect capital market

A market in which there are never any arbitrage opportunities.

Perfect Capital Market

Any market in which assets are priced with total efficiency. In a perfect capital market, there are no possibilities for arbitrage. See also: Efficient markets hypothesis, Perfect competition.
References in periodicals archive ?
Under the theory of perfect capital markets, a firm should distribute all earnings it does not need in the immediate future and simply issue more equity to finance new initiatives.
The assumption of perfect capital markets ensures that firms have access to an unlimited supply of funds at a constant cost of capital.
MM posited in a 1958 paper that, assuming perfect capital markets and tax neutrality, a firm's mix of debt and equity doesn't affect its value.
In the neoclassical investment model, a model with perfect capital markets, optimization requires that the marginal cost of investment today must be equal to the marginal cost of investment tomorrow.
If the model with perfect capital markets is true, then the orthogonality conditions under the null hypothesis of no capital market frictions should not be rejected and one should expect to obtain consistent parameter estimates.
It is well known that, without progressivity, privatizing Social Security (that is, moving to a defined-contribution system) and prefunding Social Security's existing defined-benefit structure should lead to an identical reduction in unfunded liabilities within a deterministic economy with perfect capital markets.
So far, the analysis here has shown that under a constitutional state, perfect competition, and perfect capital markets, corruption almost inevitably is limited and transient and is likely to bolster economic growth and welfare.
Without perfect capital markets, the dictator runs a considerable risk when he lends out resources to an innovator, the value of whose ideas is yet unproved.
The empirical shortcomings of existing models, developed mainly under the assumption of perfect capital markets, and the theoretical advances in the field of information economics have stimulated an explosion of studies that focus on the effects of financial constraints on investment.
The tests for the presence of financing constraints have consisted mainly in adding proxies for the availability of internal funds and/or firms' net worth to the model derived under the assumption of perfect capital markets, and in investigating whether they are significant for the firms that are thought more likely to face information and incentive problems.
The authors' analysis, one they mapped out quite succinctly in a 1989 Columbia Law Review article, "The Corporate Contract," focuses on two means of regulating corporate control: the elaboration of rules that perfect capital markets and of rules that curb managerial power.
With perfect capital markets there is a single world interest rate with a constant value, [Mathematical Expression Omitted].