Fair prices for existing issues is established in the secondary market due to

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Quizplus · Accepted Answer

Fair prices for existing issues are established in the secondary market through competitive trading between buyers and sellers. As they compete with each other, supply and demand forces come into play, which ultimately determine the market price of the security. This market-driven approach ensures that prices remain fair and transparent, based on the prevailing market conditions. Option B is incorrect as decreased trading activity would mean a lack of liquidity, which can lead to skewed prices. Option C is incorrect as destructive competition would lead to market inefficiencies and may not result in fair prices for buyers and sellers. Option D is incorrect as one of the options is correct.

Fair Prices for Existing Issues Is Established in the Secondary