My interpretation of 2) is as follow:
In the very first sentence of the paragraph of Stulz - Chapter2, it has claimed that if efficient market is not true, then arbitrage would happen. Therefore, without the assumption of efficient market, the hedging irrelevance proposition is no longer...
This site uses cookies to help personalise content, tailor your experience and to keep you logged in if you register.
By continuing to use this site, you are consenting to our use of cookies.