Groundlearn / Glossary / Market impact
Market impact
A CFA and FRM term, defined in plain English with the distinction examiners test.
What it means
The adverse price move caused by the act of trading itself.
The exam angle
Rises with order size relative to normal volume. Trading more slowly reduces impact and increases the risk of the price moving away meanwhile.
Where it appears in the syllabus
- Portfolio Management pathwayCFA Level III · exam weight 30–35% · Active equity, yield-curve and credit strategy, LDI, trade execution.
- Liquidity & Treasury RiskFRM Part II · exam weight 15% · Funding vs market liquidity, LVaR, transfer pricing, IRRBB, LCR and NSFR.
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Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
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