Series 79: A.1.3. Requirements For Effective Financial Markets

Taken from our Series 79 Online Guide

A.1.3. Requirements for Effective Financial Markets

Several key attributes are considered necessary for a financial market to be truly effective at its intended purpose. In general, these attributes include the following:

Liquidity. An effective market will be highly liquid, meaning that it is relatively easy to match buyers and sellers. In an illiquid market, a seller of a security or asset may have difficulty locating a willing buyer, and vice versa.

Transparency. Somewhat related to the concept of liquidity, transparency ensures that accurate information about trades and prices is promptly available.

Operational efficiency. Trading mu

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