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Economic Functions of Financial Markets

The two primary economic functions of financial assets were already dis- cussed. Financial markets provide three additional economic functions. First, the interactions of buyers and sellers in a financial market determine the price of the traded asset; or, equivalently, the … Continue reading

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HOLDING COMPANY DISCOUNTS

Companies whose assets are largely made up of holdings in other listed companies are normally subject to a “holding company” discount. The argument in favor of conglomerates and holding companies is that diversification reduces their risk. “Modern” portfolio theory suggests … Continue reading

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