the asset price corresponds to its fundamental value

it levels off at a high Fisher asset price plateau

as long as traders believe that the bubble will continue to grow, validate market expectations, and offer the ’normal’ return

.prices rise

expectations of the value of assets in future periods are essential for understanding the value of assets in the present period

one economic actor’s asset is another’s liabilit

flows of assets are traded in large, well-organized international markets

lower risk premiums are necessary with increasing asset durability.

of risk aversion

of the bid-ask spread

there is no one willing to take an unnecessary risk.

existing risks are almost never perfectly negatively correlated with each other

domestic inflation rates will tend to equal foreign inflation rates

domestic real interest rates will tend to equal foreign real interest rates

the expected exchange rate depreciation of the domestic currency is equal to the future inflation differential (foreign minus domestic inflation)

.the difference between the bid-ask spread for an exchange rate is equal to the future inflation differential (foreign minus domestic inflation)

the long-run value of the exchange rate

last period’s nominal exchange rate

present and future expected domestic interest rates

.present and future expected foreign interest rates