Question

If financial markets were ____, all information about any securities for sale in primary and secondary markets would be continuously and freely available to investors. a. imperfect b. perfect c. inefficient d. efficient

Answer 1

The correct answer is option b.

Step-by-step explanation:

Financial markets are those markets which trade in financial securities. These markets can be either perfect or imperfect.

Perfect capital has the following features:

1. Low trading cost and free access to the market.
2. A large number is of traders such that no single trader can affect market price.
3. The information on borrowing and lending opportunities in the primary and secondary market is freely available.

The market which do not possess these characteristics are considered imperfect.