Frictionless market

Frictionless market

A Frictionless market is a financial market without transaction costs.[1] Friction is a type of market incompleteness. Every complete market is frictionless, but the converse does not hold. In a frictionless market the solvency cone is the halfspace normal to the unique price vector. The Black-Scholes model assumes a frictionless market.[2]

References

  1. ^ "Frictionless Market - Investopedia". http://www.investopedia.com/terms/f/frictionlessmarket.asp. Retrieved October 14, 2011. 
  2. ^ Durbin, Michael (2010). All About Derivatives (2 ed.). McGraw-Hill Professional. p. 165. ISBN 9780071743518. 

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