Financial Theory Foundations Harvard Case Solution & Analysis

Fiscal theory seeks to explain how buyers and sellers in financial markets cost contracts to exchange money across risk profiles and across time. Using rules of agent behaviour, financial models that try to call the reasonable costs of the securities in financial markets are generated by theory. Theorists make simplifying assumptions about the features of markets and market participants, to make the models simple enough to be used in practice.

The simplifying assumption used to model agent behavior are hotly debated among practitioners and theorists. The argument is made that the practical use of the models only proves helpful to the extent the simplifying the assumptions upon which the model are constructed symbolize close approximations of market reality. This note review the simplifying assumption that form the foundation of classical finance models.


This is just an excerpt. This case is about FINANCE & ACCOUNTING

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