Perfect market assumptions

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Perfect market assumptions

Conditions under which the law of one price holds. The assumptions include frictionless markets, rational investors, and equal access to market prices and information.

Perfect Market Assumptions

The assumptions under which a market or an economy is entirely efficient. Perfect market assumptions include equal access to information by all market participants, completely rational economic actors, and no transaction costs (such as taxes). Perfect market assumptions rarely, if ever, hold true in the real world.
References in periodicals archive ?
Only two, among the thirty-two textbooks reviewed, discuss the perfect market assumption. They are: Emery (1998) and Ross-Westerfield-Jaffe (1999).
(19) Perfect Market Assumptions, FARLEX FREE FINANCIAL DICTIONARY
Given the role of liquidity in the performance of portfolio insurance in the crash of 1987 and in the collapse of LTCM, it has perhaps revealed itself as the Achilles' heel of finance built on perfect market assumptions. At the same time, however, we already know that liquidity can be studied.