Explain the Concept of ‘Price Discovery’ and Its Relationship to Market Efficiency

Price discovery is the process by which the market determines the equilibrium price of an asset through the interaction of buyers and sellers. It is closely linked to market efficiency; a more efficient market, with high liquidity and transparency, facilitates faster and more accurate price discovery.

Block trades, when executed on transparent venues, contribute significantly to the price discovery process by reflecting large-scale institutional demand or supply.