CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

Which statement is true regarding regulation?
A. Because of regulatory interdependencies across jurisdictions the authors in the textbook suggest global governance to replace regional, national and local regulators.
B. Without frictions and externalities, regulations would not be necessary.
C. There is no need for regulations to deal with positive externalities.
Explanation: A is false. The purpose is to recognize the reality and implications of diverse trade-offs and preferences among regional, national and local regulators.

B is true. Market solutions would be adequate for all situations without frictions and externalities.

C is false. Regulations are needed for both negative and positive externalities.

User Contributed Comments 3

User Comment
janis36 "A" seems true to me.
gkendall85 B is a bold claim
b25331 B is indeed a bold claim, however the textbook states that absent friction and externalities, the market solution will be economically efficient so that there would be no benefit to regulatory intervention
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