buys stock when the market price is below the
Required Rate of Return: Return that the rational investor
requires based on perceived risk of a particular investment.
Personal responsibility now requires the ability to be a disciplined, rational investor
in difficult times, and many investors cannot do this.
Scott incorporates an information economics perspective as the theoretical underpinning to examine accounting theory, embracing rational investor
decision making and the efficient market hypothesis as cornerstones for accounting decision making.
"Economic logic dictates, and empirical evidence shows, that a rational investor
would not pay premiums of the magnitude paid by Bavaria and Cisneros for a passive minority investment, but potentially would pay such premiums for an investment that provides control over the target company," the report states.
731) states, "Finally, as we showed in earlier work, if trader's mistakes cause them to take positions that carry more market risk than rational investor
's positions, they can earn higher return in the market even if they make judgement errors." However, in their 1991 paper these authors clearly recognize and show that investors who err about individual securities can earn higher returns.
In Part III, I look briefly at some areas of public corporation law that illustrate the indifference of corporate law to merely distributional transactions, a phenomenon that is easiest to explain in light of rational investor
indifference to transactions of these kinds.
Specifically, I will show that a rational investor
will choose a unique allocation of municipals and corporates.
Equilibrium at the fundamental will be unstable if sheep behaviour is stronger than rational investor
behaviour, that is
But this is a silly exercise, a true confidence game, because now no rational investor
could have faith in Mexico's governing Institutional Revolutionary Party (PRI), which has enjoyed so much official U.S.
The rational investor
will invest only in the private account and free-ride on others' contributions to the group account (public good).
"When an investment amounts approximately to the size of the bank's own capital, the least the average rational investor
would expect is to be informed, which was not the case," SEC said.