Comments: Capital Asset Pricing in a General Equilibrium Framework

Stephen Ross

Journal of Financial and Quantitative Analysis, 1978, vol. 13, issue 4, 625-626

Abstract: This paper is a pioneering effort in the examination of the workings of rationality and efficiency in capital markets. The central theme of the paper is the notion of informational efficiency in markets for durable assets. In its broadest terms this imposes a behavioral constraint on the intertemporal development of the asset markets; in a perfect market the development of the equilibrium over time must not be self-contradictory. Individual agents' anticipations of future developments determine their current actions and these, in turn, determine equilibrium prices. But, tomorrow the process will be repeated and it is at this second step that the possibility of conflict enters. The future development need not fulfill precisely people's previous anticipations, but in a perfectly functioning market it would be difficult to accept a blatant contradiction. To believe that prices are lognormally distributed, for example, and to have that belief generate the same equilibrium price period after period is such a contradiction.

Date: 1978
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cup:jfinqa:v:13:y:1978:i:04:p:625-626_00

Access Statistics for this article

More articles in Journal of Financial and Quantitative Analysis from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Kirk Stebbing ().