I thought B is also correct. Secondary markets provide regulators with information about participants. -------------------------------------------------- Which of the following statements regarding secondary markets is FALSE? Secondary markets are important because they provide: A) investors with liquidity. B) regulators with information about market participants. C) investors with continuous information. D) firms with greater access to external capital. Your answer: B was correct! Secondary markets are important because they provide liquidity and continuous information to investors. The liquidity of the Secondary markets adds value to both the investor and firm because more investors are willing to buy issues in the primary market, when they know these issues will later become liquid in the secondary market. Therefore, the secondary market makes it easier for firms to raise external capital.
yeah, it’s B just on process of elimination. secondary markets definitely provide a, c, and d. i went back and looked at this section in the cfai book under why secondary markets are important and it doesn’t mention anything about regulators/regulations. it focuses on liquidity and price discovery. the LOS (Reading 55 c) states to distinguish between primary and secondary markets, and explain how secondary markets suport primary markets. Answer B i guess would be the least likely way secondary markets support primary markets.
Xavier, Got it. thanks a lot for reply. Chinni