Financial market plays an important role in the allocation of scarce Sources in an economy by performing many important functions. Explain any four such functions.
Financial market plays an important role in the allocation of scarce Sources in an economy by performing many important functions. Explain any four such functions.
Functions of financial markets are :
(i) Information dissemination: The main function of financial markets is to disseminate information about the trading activity of financial instruments between financial intermediaries and investors as per regulatory norms that enable informed decision-making about their transactions.
(ii) Facilitates price recovery: Financial markets also facilitates price discovery that is the process used to determine the current market prices of a financial instrument.
(iii) Provides liquidity: Financial markets provide liquidity by enabling a trading platform for investors who can invest their money in any type of instrument they desire.
(iv) Mobilises savings: Financial markets boosts people into utilising their savings in investments to obtain higher returns.
Functions of financial markets are :
(i) Information dissemination: The main function of financial markets is to disseminate information about the trading activity of financial instruments between financial intermediaries and investors as per regulatory norms that enable informed decision-making about their transactions.
(ii) Facilitates price recovery: Financial markets also facilitates price discovery that is the process used to determine the current market prices of a financial instrument.
(iii) Provides liquidity: Financial markets provide liquidity by enabling a trading platform for investors who can invest their money in any type of instrument they desire.
(iv) Mobilises savings: Financial markets boosts people into utilising their savings in investments to obtain higher returns.
