Perfect capital market

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.
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may be responsible for data not conforming to the model's prediction, hence finding the neoclassical model, with the perfect capital market, to have been misspecified.
The first is to test for the perfect capital market.
There are other possible cases where the perfect capital market model is not to be rejected even though a firm faces financial constraints.
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.
In a perfect capital market, acting through the market allows non-innovating agents to diversify their risks.
With the interest rate determined not by the perfect capital market but by personal negotiation with agent 1, agent i will have the incentive to misrepresent the true effectiveness of his innovation (namely, to reveal only a marginal part of his true returns) in order to negotiate an interest rate that is as low as possible.
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.
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.
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.
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.
With perfect capital markets there is a single world interest rate with a constant value, [Mathematical Expression Omitted].
Third, the model is consistent with two countries having permanently different levels of output per person, even in the presence of perfect capital markets and free trade.