Financial Market Frictions
Author | : Ramon P. DeGennaro |
Publisher | : |
Total Pages | : 16 |
Release | : 2008-01 |
ISBN-10 | : 1422319873 |
ISBN-13 | : 9781422319871 |
Rating | : 4/5 (73 Downloads) |
Download or read book Financial Market Frictions written by Ramon P. DeGennaro and published by . This book was released on 2008-01 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: Defined as anything that interferes with trade, financial market frictions (FMF) can exist even in efficient markets. FMF generate real costs to investors, generate business opportunities, & change over time. FMF depend in part on market structure. Market structure tends to evolve over time, as trading volume increases, from low fixed costs & high marginal costs to high fixed costs & low marginal costs. The authors classify & discuss 5 categories of FMF: transactions costs, taxes & regulations, asset indivisibility, non-traded assets, & agency & info. problems. FMF impose utility costs on investors by making preferable investment portfolios unattainable. Investors who ignore market FMF compound the harm done by the FMF themselves. Illustrations.