The ultimate goal of the financial system in a market economy is to make the price of financial assets correctly reflect their true value (informational efficiency) achieve the financial equality among different people and organizations make the costs of financial transactions as low as possible (operational efficiency)
The ultimate goal of the financial system in a market economy is to make the price of financial assets correctly reflect their true value (informational efficiency) achieve the financial equality among different people and organizations make the costs of financial transactions as low as possible (operational efficiency)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:The ultimate goal of the financial system in a market economy is to
make the price of financial assets correctly reflect their true value (informational
efficiency)
achieve the financial equality among different people and organizations
make the costs of financial transactions as low as possible (operational efficiency)
Expert Solution
Step 1
A financial system is a structured system that comprises financial institutions such as insurance companies, banks, stock markets, investment banks, companies, etc. The financial system ensures an effective and efficient flow of financial transactions between the financial institutions.
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