Which of the following describes a characteristic of financial markets?

Financial markets are essential components of the economy that facilitate the exchange of financial assets and the allocation of capital. One of the key characteristics of these markets is risk sharing.

Risk sharing occurs when investors distribute the risk of their investments across a variety of assets and securities. This is fundamental in financial markets because it allows multiple participants to engage without taking on the full risk associated with a particular investment. For example, by purchasing a stock or a mutual fund, an investor is able to share the potential for gains and losses with other investors, thereby reducing their individual exposure to any single asset's performance.

In contrast, low liquidity would imply it's difficult to buy or sell assets without affecting their price, which is not a desirable trait of efficient financial markets. Fixed pricing does not typically occur in these markets as prices fluctuate according to supply and demand dynamics. Limited information aggregation implies that prices do not fully reflect available information, which contradicts the efficient market hypothesis stating that markets quickly incorporate information into asset prices.

The attribute of risk sharing is, therefore, a defining feature of financial markets that promotes stability and encourages investment, benefiting both individual investors and the broader economy.