CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

A purely competitive financial market is not characterized by ______.

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.
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