Neoclassical finance is an approach within finance, developing since the mid-1960s, which holds that
markets are efficient, and that prices will thus tend to
equilibrium and be
"rational";
and
asset pricing
In financial economics, asset pricing refers to a formal treatment and development of two main Price, pricing principles, outlined below, together with the resultant models.
There have been many models developed for different situations, but cor ...
models must then reflect these.
It may be contrasted with, for example,
behavioral finance which is based on differing, less idealized, assumptions regarding markets and investors.
It built on earlier developments such as the
Austrian School of economics, and cross-fertilized with
atomic physics
Atomic physics is the field of physics that studies atoms as an isolated system of electrons and an atomic nucleus. Atomic physics typically refers to the study of atomic structure and the interaction between atoms. It is primarily concerned wit ...
(see
state price
In financial economics, a state-price security, also called an Arrow–Debreu security (from its origins in the Arrow–Debreu model), a pure security, or a primitive security is a contract that agrees to pay one unit of a numeraire (a currency or ...
) and other heavily quantitative disciplines.
See also
*
Financial economics and particularly,
#Arbitrage-free pricing and equilibrium
*
Neoclassical economics
*
Fundamental theorem of asset pricing
*
Modern portfolio theory
*
Post-modern portfolio theory
*
Stephen Ross
References
Neoclassical Finance; Stephen A. Rossat press.princeton.edu
Financial economics
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