Home > Blossary: Capital Market Theory
Capital market theory makes an attempt to explain and forecast how a capital market will behave in the future and this can be done by analyzing the behavior of securities.

Category: Business

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Created by: SingleWriter

Number of Blossarys: 3

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Average return basically tells how much an investor has earned on his investment on average in a certain year over a certain period. It is calculated by dividing total return on investment by the ...

Domain: Financial services; Category: Finance

The first assumption of capital market theory is that all investors invest efficiently. This means that investors will remain in the investing frontier and will make choices that are rational and ...

Domain: Financial services; Category: Finance

The second assumption of capital market theory is that investors only borrow at a risk free rate. This means that investors are not willing to borrow or invest at a rate that comes with risk. This ...

Domain: Financial services; Category: Finance

The fourth assumption of capital market theory is that investment time horizon is equal for all investors. Each investor will have the same time horizon for the investment he chooses, hence there ...

Domain: Financial services; Category: Finance

The fourth assumption of capital market theory is regarding the infinite divisibility of each asset. In a real world an investor might not be able to buy a stock due to its price, but in theory the ...

Domain: Financial services; Category: Finance

The fifth assumption of capital market theory is that there are no taxes levied on the investors in case they make a profit or a gain. Moreover the transactions costs are also non existent and due to ...

Domain: Financial services; Category: Finance

This assumption of capital market theory states that each investor in theory has a same probability of outcome. This means that probability of making a profit for each investor is similar. It also ...

Domain: Financial services; Category: Finance

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