Ch.

11 Asset Markets
Assets goods that provide a flow of services over time
Financial assets assets that provide a monetary flow
Riskless arbitrage buying some of one asset and selling some of another to realize
a sure return
No arbitrage condition in equilibrium, there are no opportunities for arbitrage
Liquid a good is more liquid when it is easier to sell than another
Implicit rental rate the rate at which you could rent something similar
Appreciation increase in the value of an asset
Dividend/interest return paid periodically over the life of the asset
Capital gains when you sell an asset at a price higher than the price at which you
bought it
Municipal bonds bonds issued by cities or states
Asset bubble the price of an asset increases and this leads people to expect the
price to go up even more in the future