Answer: Fundamental asset values.

In a well-functioning financial system, asset prices primarily reflect fundamental values. Such systems are characterized by informationally efficient markets, where prices vary in response to changes in fundamental values rather than demands for liquidity from uninformed traders. Execution costs (Option A) are minimized in operationally efficient markets, while liquidity demands (Option B) do not significantly impact prices in informationally efficient systems.

Author: LeetQuiz Editorial Team