market rigging unlearn

Question 1

Which of these is most likely to affect the London Inter-Bank Offered Rate (LIBOR) so that it is less accurate ?

Answer 1

The LIBOR rate is calculated by Reuters. Everyday, they ask bankers from 16 banks to submit the interest rate that they use to borrow/lend to other banks. Reuters remove the highest and lowest interest rates and then find the average. If some bankers give an inaccurate number for the interest rate, then this will affect the LIBOR rate

Question 2

Which of the following explains why the manipulation of the London Interbank Offered Rate (LIBOR) was an example of financial market failure ?

Answer 2

The LIBOR rate is calculated by Reuters. Everyday, they ask bankers from 16 banks to submit the interest rate that they use to borrow/lend to other banks. 
This should mean that the LIBOR rate is determined by supply and demand for borrowed money. However, since the bankers lied about the rate, it was manipulated and no longer correctly determined by supply and demand.

Question 3

Our fifth example of financial market failure is market . This is where firms unfairly try to control prices which distorts the price . One of the most famous examples of market rigging is

Answer 3

Our fifth example of financial market failure is market rigging . This is where firms unfairly try to control prices which distorts the price mechanism . One of the most famous examples of market rigging is LIBOR or London Interbank Offered Rate