Listen to a Business English Dialogue About Price limit
Ava: Hey Layla, do you know what a price limit is in finance?
Layla: Hi Ava! Yes, a price limit is the maximum or minimum price at which a security or commodity is allowed to trade in a given period.
Ava: That’s right, Layla. Price limits are set by regulatory authorities to prevent excessive volatility and maintain market stability.
Layla: Exactly, Ava. They’re designed to prevent sharp fluctuations in prices that could disrupt the market or cause panic among investors.
Ava: That makes sense, Layla. Price limits provide a safeguard against extreme price movements and help maintain orderly trading conditions.
Layla: Absolutely, Ava. They provide a level of predictability and protect investors from sudden and drastic changes in asset prices.
Ava: Yes, Layla. Price limits are often implemented during periods of heightened market activity or in response to significant news events.
Layla: That’s true, Ava. They serve as a mechanism to ensure that trading occurs within a reasonable price range, promoting fair and efficient markets.
Ava: Indeed, Layla. Price limits help instill confidence in the market by reducing the potential for market manipulation and ensuring a level playing field for all participants.
Layla: Absolutely, Ava. By imposing restrictions on price movements, they contribute to market stability and investor protection.
Ava: That’s right, Layla. Overall, price limits play a crucial role in maintaining the integrity and resilience of financial markets.