Which one of the following statements is true with respect to financial and product markets?
A) In product markets, companies rarely find investments that yield a positive NPV.
B) Financial markets face fast-moving competition.
C) Competition in financial markets is not as thorough as in product markets.
D) Competition in product markets is more intense than in financial markets.

Question

Quizplus · Accepted Answer

Financial markets face fast-moving competition as they involve the trading of securities, currencies, and other financial instruments. These markets are subject to rapid changes in prices and valuable information is quickly incorporated into prices. In contrast, product markets may have competition, but companies may still find investments that yield a positive NPV, making option A incorrect. Option C is also incorrect as competition in financial markets is usually rigorous as firms compete to attract investors and increase their market share. Finally, option D is incorrect as competition in product markets is generally considered more intense due to the number of players and the need to differentiate products in a crowded marketplace.

Which One of the Following Statements Is True with Respect