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A stock market is more likely to be inefficient when Multiple Choice A) there are many...

A stock market is more likely to be inefficient when

Multiple Choice

  • A) there are many analysts

  • B) there is little liquidity

  • C) in a developed economy

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Answer #1

A stock market is most likely to be inefficient when -

b) there is less liquidity

This is because less liquidity indicates investors are not willings to invest in the financial markets because of poor financial markets , assymetric information, educational illiterate investors etc all leading to less liquidity.

Other factors make markets efficient as more analyst will result in more informed investors with well developed markets and more information symmetry.

In a developed market markets will be more efficient because of the well developed financial institutions, more regulations and informed investors.

I hope this helps.

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Thanks n regards

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