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State, with Reason, Whether the Following Statement is True Or False. Stock Exchanges Reflect Financial Progress of the Company. - Secretarial Practice

State, with reason, whether the following statement is True or False.

Stock exchanges reflect financial progress of the company.

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Solution

This statement is True.
 
Meaning: - Stock exchange is a specific place where trading of the securities is arranged in an organised method. In simple words it is a place where shares, debentures and bonds (securities) are purchased and sold. The term securities include equity shares, preference shares, debentures, government bonds, etc. including mutual funds.

(1) Presence and vibrant functioning of a stock exchange is necessary for developing economy. It reflects a healthy financial and investment conducive atmosphere in the economy.

(2) The Indian securities market is considered as one of the most promising emerging markets. It is one of the top eight markets of the world.

(3) Best utilisation of capital: -The Stock exchange regulates and controls the flow of investment from unproductive to productive, uneconomic to economic, unprofitable to profitable enterprises. Thus, savings of the people are channelized into industry yielding good return and underutilisation of capital is avoided.

(4) So growth and progress of company is very well reflected by stock exchange trends.

(5) Prices of a shares is a comment by itself about how the company is faring and what is the public opinion and response to business and its policies.
  Is there an error in this question or solution?
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