Imperfect Market

AAA

DEFINITION of 'Imperfect Market'

A market where information is not quickly disclosed to all participants in it and where the matching of buyers and sellers isn't immediate. Generally speaking, it is any market that does not adhere rigidly to perfect information flow and provide instantly available buyers and sellers.

INVESTOPEDIA EXPLAINS 'Imperfect Market'

The perfect market, as defined in economic textbooks, is not a truly achievable goal, but is still a beneficial model that provides a starting point for observation of our present market status. Practically, the imperfect market is the only kind that really exists. Even in the United States, the most advanced financial market in the world, there are still numerous cases of price corruption, improperly disseminated information and other market inefficiencies.

RELATED TERMS
  1. Price Efficiency

    The premise that asset prices are efficient, to the extent that ...
  2. Market Efficiency

    The degree to which stock prices reflect all available, relevant ...
  3. Thin Market

    A market with a low number of buyers and sellers. Since few transactions ...
  4. Inefficient Market

    A theory which asserts that the market prices of common stocks ...
  5. Liquid Market

    A market with many bid and ask offers, low spreads and low volatility. ...
  6. Discounted Future Earnings

    A method of valuation to estimate the value of a firm.
RELATED FAQS
  1. What is an efficient market and how does it affect individual investors?

    When people talk about market efficiency they are referring to the degree to which the aggregate decisions of all the market's ... Read Full Answer >>
  2. What is a geometric mean in statistics?

    In statistics there exists a wide variety of metrics such as median, standard deviation, arithmetic mean, power mean, geometric ... Read Full Answer >>
  3. What are some real-life examples of the economies of scope?

    Real-world examples of economies of scope can be seen in mergers and acquisitions (M&A), newly discovered uses of resource ... Read Full Answer >>
  4. How reliable or accurate is marginal analysis?

    Marginal analysis is designed to show how economic reasoning allows actors to accomplish more by understanding limits on ... Read Full Answer >>
  5. How is the 80-20 rule (Pareto Principle) used in management?

    The 80-20 rule, also known as the Pareto principle, is meant to express a philosophy about identifying inputs. It is not ... Read Full Answer >>
  6. Why does the efficient market hypothesis state that technical analysis is bunk?

    The efficient market hypothesis (EMH) suggests that markets are informationally efficient. This means that historical prices ... Read Full Answer >>
Related Articles
  1. Active Trading Fundamentals

    Efficient Market Hypothesis: Is The Stock Market Efficient?

    Deciding whether it's possible to attain above-average returns requires an understanding of EMH.
  2. Active Trading Fundamentals

    Mad Money ... Mad Market?

    Jim Cramer's spirited recommendations are a case study in irrational market behavior.
  3. Investing Basics

    What is a "Coupon"?

    In the financial world, “coupon” represents the interest rate on a bond.
  4. Investing Basics

    What is a Cyclical Stock?

    A cyclical stock is an equity security whose price is affected by ups and downs in the overall economy.
  5. Economics

    What Is Supply?

    Supply is the amount of goods a producer is willing to produce at a given price, and is one of the most basic concepts in economics.
  6. Economics

    Modified Internal Rate of Return (MIRR)

    Modified internal rate of return (MIRR) is a variant of the more traditional internal rate of return calculation.
  7. Investing Basics

    What's the Primary Market?

    The primary markets are where investors can get first crack at a new security issuance.
  8. Investing Basics

    Explaining the Coupon Rate

    Coupon rate is the stated interest rate on a fixed income security.
  9. Investing Basics

    What are Ordinary Shares?

    Ordinary shares are any type of shares that are not preferred and don’t pay any type of predetermined dividend amount.
  10. Investing Basics

    Explaining the Spot Rate

    The spot rate is the immediate purchase price posted on exchanges for purchasing commodities, currency and securities.

You May Also Like

Hot Definitions
  1. Geometric Mean

    The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment ...
  2. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  3. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  4. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  5. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  6. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
Trading Center