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Some general assumptions for how the capital markets should work properly include a very important theory: Efficiency Market Hypothesis (EMH). It, to a certain point,
Some general assumptions for how the capital markets should work properly include a very important theory: Efficiency Market Hypothesis (EMH). It, to a certain point, indicates: (choose all correct one(s))
borrowing and lending are both costless
law of one price: an asset won't have two different prices at the same time no arbitrage:
there is no "free lunch" (e.g., extra risk premium without bearing the underlying risk)
no one should earn a return higher than the risk-free rate
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