Question

Explain any three functions of 'Stock Exchange'?

Answer 1

The three functions of stock exchange are as follows:

(1) Providing Liquidity and Marketability to Existing Securities. Stock exchange is a market place where previously issued securities are traded. Various types of securities are traded here on regular basis.

(2) Pricing of securities:A stock exchange provides platform to deal in securities. The forces of demand and supply work freely in the stock exchange. In this way, prices of securities are determined

(3) Safety of Transactions:Stock exchanges are organised markets. They fully protect the interest of investors. Each stock exchange has its own laws and bye-laws. Each member of stock exchange has to follow them and if any member is found violating them, his membership is cancelled.