Knowledge that Transforms

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ANALYSIS and listened to the lamentations of countless numbers of colleagues concerning the rate at which the literature is expanding, the field of finance seems to cry out for a precious period of time, however brief it may be, to catch its breath. There appears to be little doubt that keeping up with new ideas, infused into the milieu which is finance, and reincarnated old ideas, clothed in a garb more fitting to the contemporary scene, is at best a most difficult task, especially with the increasing degree of specialization of previously neat and identifiable compartments.

This Program will acquaint participants with several of the most promising analytical approaches to financial problems with special emphasis on underlying financial concepts and assumptions. The

An abstract is not available for this content so a preview has been provided. As you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

One of the problems which has plagued microeconomic theory is the difficulty in achieving close correspondence between formal models and practical market situations. The most widely accepted models envisage the firm set in a static mold with the implication that profits will be maximized in every period. The model is more generally acceptable in the case of perfect competition, for then the market results are most likely to be “as if” the firms acted marginally to maximize profits. Only the profit maximizers will survive. While such a scheme may lead to realistic results in the case of perfect competition, this condition does not bulk large in the United States economy.

Laurence Jay Mauer, Commercial Bank Maturity Demand for United States Government Securities and the Determinants of the Term Structure of Interest Rates, The Journal of Financial and Quantitative Analysis, Vol. 4, No. 1 (Mar., 1969), pp. 37-52