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Which of the following is NOT a direct consequence of financial market integration?

medium Q7 of 15
Financial Awareness - Risk, Stability & Emerging Finance
Which of the following is NOT a direct consequence of financial market integration?
AImproved liquidity in domestic financial markets
BIncreased regulatory arbitrage opportunities
CComplete elimination of systemic financial risks
DGreater access to foreign investment and capital
Step-by-Step Solution
  1. Step 1: Understand consequences of integration

    Integration improves liquidity, access to capital, but systemic risks remain.
  2. Step 2: Analyze options

    Improved liquidity and access to capital are direct consequences. Regulatory arbitrage can increase due to differing rules. Complete elimination of systemic risks is unrealistic.
  3. Final Answer:

    Complete elimination of systemic financial risks → Option C
  4. Quick Check:

    Financial market integration consequence = systemic risks persist ✅
Quick Trick: Integration does not remove systemic risks entirely.
Common Mistakes:
  • Assuming integration guarantees elimination of all financial risks.
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