Information plays an important role in asset pricing because it allows the buyer to more accurately judge
A)liquidity.
B)risk.
C)capital.
D)policy.

Question

Quizplus · Accepted Answer

Information helps buyers assess the level of risk associated with an asset, which in turn affects its price. The more information that is available, the more accurately buyers can assess the risk and adjust their willingness to pay accordingly. Information may also affect liquidity and capital, but these factors are not as directly related to pricing as risk is. Policy may indirectly affect pricing, but it is not as directly related as risk either.

Information Plays an Important Role in Asset Pricing Because It