An individual investor has either sufficient wealth or sufficient borrowing capacity to purchase or sell a substantial proportion of a given firm’s securities, so that investor’s trades may affect the market value of these securities.
This is an example of the violation of which of the assumptions of an ideal capital market?
a. Capital Markets are frictionless
b. Homogeneous expectations
c. Atomistic competition
d. The firm has a fixed investment program
e. Once chosen, the firm’s financing is fixed
ANSWER
C
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