The Optimality of a Competitive Stock Market
The Optimality of a Competitive Stock Market
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In our eReader you can find the full English version of the book. Read The Optimality of a Competitive Stock Market Online - link to read the book on full screen. Our eReader also allows you to upload and read Pdf, Txt, ePub and fb2 books. In the Mini eReder on the page below you can quickly view all pages of the book - Read Book The Optimality of a Competitive Stock Market
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Hence, the aggregate market value of the project will be invariant to the distribution of investment across - 11 - firms and will only depend on the aggregate amount of investment made in the project. Q. E. D.
So, except for possible wealth distributional effects across investors which depend only upon the initial allocation of ownership across firms prior to any new investment decisions by the firms, the in- vestor will be indifferent to the distribution of investment across firms. The proof o...f Theorem 1 was independent of any mean-variance or pure compe- tition assumptions, and only depended upon the assumption of perfect correlation of the returns on the same project taken by different firms.
As a corollary to Theorem 1 which is directly relevant to the Jensen-Long analysis, we have that if the hypothesized condition that the distribution of initial wealth among investors remain fixed is replaced with the condition that all investors have constant absolute risk aversion utility functions, then the conclusions of Theorem 1 obtain.
What to read after The Optimality of a Competitive Stock Market?
You can find similar books in the "Read Also" column, or choose other free books by Robert C Merton to read onlineMoreLess
To quickly assess the difficulty of the text, read a short excerpt:
Hence, the aggregate market value of the project will be invariant to the distribution of investment across - 11 - firms and will only depend on the aggregate amount of investment made in the project. Q. E. D.
So, except for possible wealth distributional effects across investors which depend only upon the initial allocation of ownership across firms prior to any new investment decisions by the firms, the in- vestor will be indifferent to the distribution of investment across firms. The proof o...f Theorem 1 was independent of any mean-variance or pure compe- tition assumptions, and only depended upon the assumption of perfect correlation of the returns on the same project taken by different firms.
As a corollary to Theorem 1 which is directly relevant to the Jensen-Long analysis, we have that if the hypothesized condition that the distribution of initial wealth among investors remain fixed is replaced with the condition that all investors have constant absolute risk aversion utility functions, then the conclusions of Theorem 1 obtain.
What to read after The Optimality of a Competitive Stock Market?
You can find similar books in the "Read Also" column, or choose other free books by Robert C Merton to read onlineMoreLess
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