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Economics

Quote 1: Some of the assumptions made by classical finance theory, â?¦, 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.

What is the writer talking about?

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.

Do you agree with this statement? Why or why not?

about 500 words, two references

Solution Preview

The response addresses the queries posted in 550 words with references.

//As per instructions, we will discuss about the writer's thoughts in concern to the classical finance theory and the law of economics that writer is talking about in Quote 1. You are free to add more in this part as per knowledge.//

In quote 1, the writer is revealing that the assumptions made by classical finance theory are not too old in accordance to the emerging demand of a financial market. Today, the way in which financial markets operate is quite extensive and thus, classical finance theory's assumptions are considered as effective and unconventional for the financial markets. Basically, in this quote, the writer wants to state that classical finance theory assumptions and process of a financial market are contradictory to each other. As per the assumptions in the financial markets, there exist expert participants who utilize similar information for market processing. ...

Solution Summary

The response addresses the queries posted in 550 words with references.

$2.19