frictionless market

A Frictionless market is a financial market without transaction costs.

The relationship thus only holds exactly in an ideal frictionless market with unlimited liquidity.

The above transactions do not incur any fees or costs (i.e., frictionless market).

In a frictionless market the solvency cone is the halfspace normal to the unique price vector.

The Black-Scholes model assumes a frictionless market.

This model requires an assumption of perfectly divisible assets and a frictionless market (i.e. that no transaction costs occur either for buying or selling).

In a frictionless market, we can obviously make (1A,-1M) and (-1A,1M) into non-negative portfolios, therefore .

Let denote the number of stock number 'i' in the portfolio at time , and the price of stock number 'i' in a frictionless market with trading in continuous time.