What is the Classical Theory of Asset Pricing? What is a bubble? We looked why it is false to say that the existence of a bubble creates arbitrage opportunities and is therefore inconsistent with the asset-pricing formula. What must be true about a bubble if it is to be consistent with a no-arbitrage condition? Understand Shillers Excess Volatility test of the Classical Theory. What are the social costs of bubbles? What was the meaning of Keynes Beauty Contest metaphor for the stock market?