# NoSpeculationHypothesis

NoSpeculationHypothes EastforexcashbackWhat is the NoSpeculationHypothesis The NoSpeculationHypothesis means that whether cashback forex the spot cashbackforexbtc or in the financial market there are a large number of speculators who are actively concerned East forex cashback involved in the market activities every forexcashbackcalculator, once the opportunity for speculative profit arises in the market, there will be a large number of speculators involved in the market Speculative activity then the market will produce a price adjustment process, and eventually prices converge to equal, so that the opportunity for speculative profit disappears, and market forces restore the price of assets to equilibrium Therefore, we have reason to believe that in a healthy, actively traded market there is no opportunity for speculation No speculative assumptions mathematical formula Assume that the commodity (asset) has no storage costs, and no gains t and T represent two different moments and t<T pt: the value of a commodity at moment t; pT: the value of a commodity at moment T; d(t, T): the discount factor based on the risk-free interest rate from period t to T Because an efficient market returns the price of an asset to its true economic value, here pt(pT) can represent both the value and the price Then the speculation-free assumption idea refers to The discounted value of the price of a good at a future moment T must be the value of the good at the current moment t, i.e.: pt=pT-d(t, T) (1) The equation can be stated as follows: 1. If speculators predict pT>pt/d(t, T), i.e., pT-d(t, T), then a large number of speculators will buy the good at the current moment t at a price of p and then in the future T moment to sell the commodity at the price of pT so that the income obtained at the moment T pT at the present value of pT-d(t, T) at the moment t is greater than the input pT at the moment t now, which means that the profit obtained by the speculator is pT-d(t, T)-pt As long as such speculative opportunities exist, a large number of speculators in the market will carry out such speculative operations, which will inevitably cause a process of price adjustment so that speculation Because the speculators in the current t moment of a large number of buying caused by the strong buying pressure and thus cause pt rise, in the future T moment of a large number of speculators will cause a strong selling pressure and thus reduce pT and because d (t, T) is based on the discount factor of the risk-free rate, so can be considered as an invariant from t to T period, so pT - d (t, T) decrease, the market will eventually reach 2. Conversely, if the speculator predicts pT<pt/d(t, T), i.e., pT-d(t, T)<pT, the speculator only needs to carry out an operation opposite to the above (1) process to speculate profitably This will produce a reverse price adjustment process, and eventually the market reaches equilibrium, making pt=pT-d (t, T) Here is an example to understand this idea graphically Example 1 Investment company A foresees that an investment project will yield $11,000 in one year, ignoring the effect of inflation, and the risk-free interest rate is known to be 10%, what is the value of the investment project now? Solution: It is easy to know the value of this investment project after one year P = 11000 yuan, the discount factor of risk-free interest rate for one year d(t, T) = 1/(1 + 10%), according to the formula (1), the current value of the asset should be: pt = pT - d(t, T) = 11000/(1 + 10%) = 10000 (yuan) that is, if investment company A sells the investment project, he at least has to sell 10,000 yuan