- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 1. Market Organization and Structure
- Subject 8. Well-Functioning Financial Systems
CFA Practice Question
A purely competitive financial market is not characterized by ______.
B. full information
C. government regulation
D. many traders
A. costless trading
B. full information
C. government regulation
D. many traders
Correct Answer: C
User Contributed Comments 9
| User | Comment |
|---|---|
| amamed213 | Can someone explain ? |
| Htoon | In the competitive financial market,government does not play any role. |
| azramirza | i feeel thats rubbish...govt has a big role.. |
| DariSH | why not A? wouldn't there be some transaction costs anyway? |
| EricVelasco | Government plays a "role" as a regulator of sorts but the pure 'supply/demand and invisible hand' is impeded by government intervention. Costless trading is another way of saying low transaction costs = internal efficiency. |
| leftcoast | azramirza - That's not the point of the question. Yes government does play a big role and that's one reason why we don't have perfectly competitive markets. |
| tichas | Wording is very important when answering this questions not emotions. The question states ,purely competitive in other words 100% meaning that there is no govt role. |
| adidasler | CAPITALISM - research that |
| houstcarr | stupid question due to answer A. should be low transaction costs, not costless. Financial markets couldn't exist without transaction costs which go towards keeping them running. |