Frictionless market

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In economic theory 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]

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References

  1. "Frictionless Market - Investopedia" . Retrieved October 14, 2011.
  2. Durbin, Michael (2010). All About Derivatives (2 ed.). McGraw-Hill Professional. p. 165. ISBN   978-0-07-174351-8.