'Stock exchange not only contributes to the economic growth, but performs many other functions.' Explain any three such functions.
The stock exchange is institution which provides a platform for buying and selling of existing securities.
Function performed by a stock exchange are:
(i) Provides liquidity and marketability to existing securities :The primary function of a stock exchange is to provide a ready and continuous market where existing securities can be bought and sold.
This provides both liquidity and cash marketability to already existing securities in the market.
(ii) Pricing of securities: Share prices on a stock exchange are determined by the forces of demand and supply. Stock market indices like SENSEX, NSE, etc reflect market direction and indicate day-to-day fluctuations in share prices.
Thus, both buyers and sellers can get constant information about price movements of shares in the market.
(iii) Safety of transactions: The membership of a stock exchange is well regulated and its dealings are well-defined according to the existing legal framework. This ensures that the investment of public is safe and they will get a fair deal in the market.