What does the assumption of no market frictions mean? Is this assumption true in current commodity markets?

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An Introduction to Derivative Securities Financial Markets and Risk Management

ISBN: 978-0393913071

1st edition

Authors: Robert A. Jarrow, Arkadev Chatterjee

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Question Posted: Dec 02, 2015 03:17 AM

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If the assumption of no market frictions is not true, then why should we study models using this assumption?
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What does the assumption of no market frictions mean? Is this assumption true in current commodity markets?

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An Introduction to Derivative Securities Financial Markets and Risk Management

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