Liquid markets perform the price discovery function more reliably than illiquid markets.

Name: Liquid markets perform the price discovery function more reliably than illiquid markets.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Liquid markets have a higher volume of trading activity, which facilitates more accurate price discovery as there are more buyers and sellers actively participating. On the other hand, illiquid markets have a limited number of buyers and sellers, making it difficult to determine the true market price.

Liquid Markets Perform the Price Discovery Function More Reliably Than