Theory of Financial Markets
Jan Mossin
Published by Prentice-Hall, Inc., England
Cliffs, New Jersey (1973)
The theory of financial has two principal
objectives:
- Explain and interpret phenomena in financial markets.
- Assist management in formulating a company’s financial policy by providing useful analytical tools within a realistic theoretical framework
Maximization of the market value of the
company’s equity
- simultaneous interplay of sup ly and demand
- relationships among individual investors’ portfolio decisions
equilibrium
The derivation
of a market valuation formula:
An explicit expression for the value of the
firm in terms of characteristics of the probability distribution for its earning
and other market parameters.
Walras model of equilibrium in commodity
market, use of the central results is that a competitive equilibrium leads to
an efficient, or Pareto-optimal.
the theory of decision making under
uncertainty:
To
explain people’s choice among alternative choices of action in situations where
an action does not uniquely determine the outcome.
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