The price discovery process is an economic function, which refers to:
A) Financial markets that reduce the search and information costs.
B) Financial markets that signal how funds in the economy should be allocated among financial assets.
C) Financial markets that provide a mechanisms for an investor to sell a financial asset.
D) Financial markets that offer liquidity.
E) None of the above.

Question

Quizplus · Accepted Answer

The price discovery process in financial markets primarily signals how funds should be allocated among various financial assets, reflecting the value and potential return of these assets based on supply and demand dynamics.

The Price Discovery Process Is an Economic Function, Which Refers