'Stock market contributes to better allocatin of capital and promoting the habit of investment'. In the light of above statement, enumerate the functions of stock exchange.
'Stock market contributes to better allocatin of capital and promoting the habit of investment'. In the light of above statement, enumerate the functions of stock exchange.
The stock exchange is an institution, which provides a platform for buying and selling of existing securities.
(i) Provides liquidity and marketability of existing securities: Stock exchange provides a ready and continuous market where securities are bought and sold. It gives investors the chance to disinvest or reinvest. Thus, regular dealing provides both liquidity and marketability to existing securities.
(ii) Pricing of securities: The stock exchange helps in determining the prices of various securities that reflect their real worth. It enables correct pricing of securities through the interplay of demand and supply. ‘
(iii) Safety of transaction: The stock exchange is well regulated and its dealings are well defined according to the existing legal framework. This ensures that the investing public gets a safe and fair deal in the market.
The stock exchange is an institution, which provides a platform for buying and selling of existing securities.
(i) Provides liquidity and marketability of existing securities: Stock exchange provides a ready and continuous market where securities are bought and sold. It gives investors the chance to disinvest or reinvest. Thus, regular dealing provides both liquidity and marketability to existing securities.
(ii) Pricing of securities: The stock exchange helps in determining the prices of various securities that reflect their real worth. It enables correct pricing of securities through the interplay of demand and supply. ‘
(iii) Safety of transaction: The stock exchange is well regulated and its dealings are well defined according to the existing legal framework. This ensures that the investing public gets a safe and fair deal in the market.
