A market in which buyers and sellers trade shares of stock, where the share prices reflect the probability of some future event is called a:
A) probability market.
B) wizard exchange.
C) prediction market.
D) rational expectations exchange.

Question

Quizplus · Accepted Answer

A prediction market is a type of market where buyers and sellers trade shares of stock based on their predictions of future events. The share prices reflect the probability of the event occurring, making it a prediction market. Option A is incorrect because although probability is involved, it does not capture the essence of the market. Option B is incorrect because there is no such thing as a "wizard exchange". Option D is incorrect because rational expectations are a broader concept that applies to all markets, and not just prediction markets.

A Market in Which Buyers and Sellers Trade Shares of Stock