Financial Awareness - Risk, Stability & Emerging Finance
Which of the following best explains the term 'price discovery' in the capital market?
Which of the following best explains the term 'price discovery' in the capital market?
medium Q7 of 15
Step-by-Step Solution
Step 1: Understand price discovery concept
Price discovery is the process where the price of securities is determined by market forces of supply and demand.Step 2: Analyze options
Prices are not fixed by government or regulators; SEBI and RBI do not set fixed prices or interest rates for securities in the market.Final Answer:
Determining the price of securities through supply and demand forces → Option BQuick Check:
Price discovery = market-driven price determination ✅
Quick Trick: Price discovery = supply and demand in market.
Common Mistakes:
- Confusing price discovery with regulatory price fixing.
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