'Efficient functioning of stock exchange creates a conducive climate for active and growing primary market for new issues as well as for an active and healthy secondary market.' In the light of this statement state any three functions of a stock exchange.

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Solution

Functions of Stock Exchange are:

(a) It provides liquidity and marketability to existing securities.

(b) It determines the pnce of securities by the forces of demand and supply.

(c) It ensures safety of transactions as the transactions carried out within an existing legal framework.

(d) It contributes to economic growth as it indirectly promotes capital formation.

(e) It provides scope for speculation within the provisions of law.

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