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Question : 26
Total: 40
Stock exchange acts as a regulator of the securities market. It creates a continuous market where the securities are bought and sold. It gives investors the chance to disinvest and reinvest. Through this process of disinvestment and reinvestment, savings get channelized into their most productive investment avenues. To ensure that the investing public gets a safe and fair deal in the market, the membership of the stock exchange is well regulated and its dealings are well defined according to the existing legal framework. It also ensures wider share of ownership by regulating new issues, better trading practices and taking effective steps in educating the public about investments.
Various functions performed by the Stock Exchange are discussed in the above para. By quoting lines from the above para, state any four functions of stock exchange.
Various functions performed by the Stock Exchange are discussed in the above para. By quoting lines from the above para, state any four functions of stock exchange.
Solution:
Various functions performed by the stock exchange :
(i) Providing liquidity and marketability to existing securities : The stock exchange creates a continuous market where the securities are brought and sold. It gives investors the chance to disinvest and reinvest.
(ii) Spreading of equity Cult : Stock exchange collects and conveys all kinds of information related to the performance of equities. This encourages people to make sound and wellinformed decisions on their investments. Stock exchanges regulate the process of issuing new securities, ensure transparency in trading securities and educate the public about investments in securities. The underlying purpose is to increase the number of shareholders or investors in securities thus spreading the equity cult.
(iii) Safety of transactions: The stock exchange exercise rules and regulations on membership and trading practices of the stock market. This ensures that the investing public gets a safe and fair deal.
(iv) Contributes to economic growth : A stock exchange is a market in which existing securities are purchased and sold. Through this process of reinvestment and disinvestment, savings get channelised into their most productive investment use thus lead to capital formation and economic growth.
(i) Providing liquidity and marketability to existing securities : The stock exchange creates a continuous market where the securities are brought and sold. It gives investors the chance to disinvest and reinvest.
(ii) Spreading of equity Cult : Stock exchange collects and conveys all kinds of information related to the performance of equities. This encourages people to make sound and wellinformed decisions on their investments. Stock exchanges regulate the process of issuing new securities, ensure transparency in trading securities and educate the public about investments in securities. The underlying purpose is to increase the number of shareholders or investors in securities thus spreading the equity cult.
(iii) Safety of transactions: The stock exchange exercise rules and regulations on membership and trading practices of the stock market. This ensures that the investing public gets a safe and fair deal.
(iv) Contributes to economic growth : A stock exchange is a market in which existing securities are purchased and sold. Through this process of reinvestment and disinvestment, savings get channelised into their most productive investment use thus lead to capital formation and economic growth.
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