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Finance (New Developments)

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Abstract

This survey of some of the developments in finance since the mid-1980s begins with advances in the application of arbitrage pricing, and then expands into areas of general asset pricing under the title ‘risk and return’. Limitations in our current understanding of risk as well as more data explorations have led to the ‘discovery’ of anomalies, which challenge classic notions of market efficiency. We examine recent attempts to expand the neoclassical framework to incorporate market imperfections in asset pricing, which, in their more general forms, take centre stage in advances in corporate finance.

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Wang, J. (2018). Finance (New Developments). In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2012

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