Which market is perceived to be efficient due to its subject to large trading volumes?

The money market is perceived to be efficient due to its large trading volumes. This market specifically deals with short-term borrowing and lending, typically involving maturities of one year or less. The high volume of transactions in the money market, which includes instruments such as Treasury bills, commercial paper, and certificates of deposit, contributes to its liquidity and price transparency. When many participants are actively trading, the ability to swiftly buy or sell instruments leads to more accurate pricing, reducing the likelihood of significant price discrepancies.

In addition, the characteristics of the money market, including the standardization of the instruments and the relatively small range of maturities, contribute to its efficiency. Market participants can quickly assess the value of various instruments based on prevailing interest rates, which promotes uniform pricing.

Meanwhile, other markets such as the capital market, while also significant, often deal with longer-term securities and can have varying degrees of liquidity and trading volume, affecting their perceived efficiency. Similarly, the foreign exchange market, despite being one of the largest markets globally, can exhibit inefficiencies at times due to factors like geopolitical events, market speculation, and fluctuating demand and supply for various currencies. The credit market involves longer-term debt instruments where efficiency can be impacted by credit risk evaluations, leading to discrepancies