Definition
The process by which the market determines the price of an asset through the interactions between buyers and sellers. It incorporates all available information including economic data, company performance, market sentiment, and global events to establish a fair market value.
Example Usage
"Efficient price discovery ensures that stock prices quickly adjust to reflect new information about a company's future earnings potential.”
Related Terms
Supply and DemandTrading VolumeLiquidity
Tags
Market MechanicsTradingValuation
Course Module
Module 1: Introduction to Financial Markets