Some Fundamentals of Exchange Theory.
Jan 1, 1971
|Add to Cart||Paperback19 pages||$20.00||$16.00 20% Web Discount|
While supplying the capital necessary for production, investors postpone consumption in favor of later claims. Speculators seek to profit from anticipated price revaluations. Intrinsic value speculators, seeking undervalued stocks to buy and overvalued ones to sell short, are the repairmen of the system, moving prices closer to values. Purely technical speculation, however, may promote wide price swings that seriously misrepresent values. Excessive fluctuations could be reduced by returning to the pre-ticker system of calling separate auctions for each security in turn, providing a more realistic supply/demand interaction and probably eliminating the need for the specialist appointed to "make a market." Organized exchanges might well reevaluate the specialist's role. Commodity exchanges operate without them, as does the London exchange, with three times the NYSE membership and six times the listed stocks. Rather than "stability, continuity, and depth," markets should aim for completeness, perfect supply/demand equilibrium, and liquidity. 19 pp. (See also P-4667.) (MW)
This report is part of the RAND Corporation Paper series. The paper was a product of the RAND Corporation from 1948 to 2003 that captured speeches, memorials, and derivative research, usually prepared on authors' own time and meant to be the scholarly or scientific contribution of individual authors to their professional fields. Papers were less formal than reports and did not require rigorous peer review.
This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.
The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.