Veta Slicker: Nothing is perfect so you might need to lower your expectations a little bit.
William Vickerman: if you are able to have the information of changing the values of bonds yes .http://en.wikipedia.org/wiki/Bond_market
Chris Wilczewski: No, it is not.The theory of perfect competition requires that no seller is large enough to influence the market price. That is not the case in the bond market, where, for one, the US Treasury often influences the market price. In fact, that is one of the main goals of QE2.You also have a problem with the assumption of identical products being offered by different suppliers, which is required for perfect competition. The "bond market", as opposed to specific bond categories, contains many "products" that are different from one another. That is why riskier bonds must offer a higher interest rate to compete with safer bonds on the same market. This differentiation is somewhat eliminated if you only consider bonds wi! th the same ratings in your "bond market", but these ratings are broad categories, and differences in the minds of potential purchasers still exist....Show more
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