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Answer the Following Question. How Does Financial Market Facilitate the 'Price Discovery' of Financial Assets? - Business Studies

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Short Note

Answer the following question.
How does Financial Market facilitate the 'Price Discovery' of financial assets?

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Solution

In financial markets, there are two players i.e. the households and the business firms. Here the households act as the suppliers of funds and the business firms make the demand. Now, we know that the price is determined when demand meets supply, so in such markets as well, wherever the demand meets supply, the price for that financial asset that is being traded-in that market is determined.

Concept: Concept of Financial Markets
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