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Question
Explain the functions of Stock Exchange.
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Solution
- Ready and Continuous Market: Stock exchange helps investors to sell their securities easily. And also he can convert his cash into securities.
- Correct Evaluation of Securities: The prices at which securities are bought and sold are recorded and informed to the public. These prices are called “market quotations”
- Protection to Investors: All dealings in stock exchange are in accordance with well-defined rules and regulations. Any malpractice will be severely punished.
- Proper Channelisation of Capital: People like to invest in the shares of companies which yield good profits. Also, people invest in the companies which are giving good dividends.
- Facilities for Speculation: Speculation is an integral part of stock exchange operations. As a result of speculation demand for and supply of securities are equalized.
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| Mr. Pankaj has recently got his B.Sc. degree. He has enrolled in a course in the securities market. As a new student of this subject, he has a few queries as follows: |
- Does a Company need to be listed on a stock exchange to sell its securities through the stock exchange?
- What is the term used for referring to a stock exchange's ability to reflect the economic conditions of a country?
- What is the term which refers to the functions of the stock exchange as a provider of a ready market for the sale and purchase of security?
Which activities do the functions of a stock exchange help investors perform effectively?
Which function is supported by allowing people to buy and sell existing securities?
Who receives useful information from changing prices of securities?
Directing people’s savings to better investments helps in which two outcomes?
Which actions help a stock exchange motivate people to invest in securities?
Why is some amount of healthy speculation needed?
How does a stock exchange promote economic growth?
