ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Financial market failure occurs when money, equity and bond markets failure to achieve an efficient and/or equitable outcome. This can lead to economic and social costs including macro instability and loss of trust and confidence in financial institutions.

Detailed explanation-2: -Markets provide finance for companies so they can hire, invest and grow. They provide money for the government to help it pay for new roads, schools and hospitals. And they can help lower the costs you face buying food at the supermarket, taking out a mortgage or saving for your retirement.

Detailed explanation-3: -Systemic and Non-Systemic Risk Counterparty risk, interest rate risk, and default risk are examples of risks in the financial world. Systemic risk refers to the risk that problems in one or a few companies will affect the entire sector or economy.

Detailed explanation-4: -Prices in the financial market may not indicate a stock’s true intrinsic value because of some macroeconomic forces like taxes etc. Certain factors change the prices of securities suddenly. So there is a risk involved when trading in the financial market.