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Stock Exchange Acts as a Regulator of the Securities Market. It Creates a Continuous Market Where the Securities Are Bought and Sold. It Gives Investors the Chance to Disinvest and Reinvest. - Business Studies

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Answer in Brief

Answer the following question.
Stock exchange acts as a regulator of the securities market. It creates a continuous market where the securities are bought and sold. It gives investors the chance to disinvest and reinvest. Through this process of disinvestment and reinvestment, savings get channelized into their most productive investment avenues. To ensure that the investing public gets a safe and fair deal in the market, the membership of the stock exchange is well regulated and its dealings are well defined according to the existing legal framework. It also ensures a wider share of ownership by regulating new issues, better trading practices, and taking effective steps in educating the public about investments.

Various functions performed by the Stock Exchange are discussed in the above para. By quoting lines from above para, state any four functions of the stock exchange.

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Solution

The functions performed by the Stock Exchange are as follows:

1. Provide liquidity and marketability -
'Stock exchange creates a continuous market where the securities are brought and sold'. It provides a ready platform for the trading of existing securities.

2. Spreading Equity Cult -
'Stock exchange takes effective steps in educating the public about investments'. It encourages wider ownership of securities.

3. Facilitates growth and development of the economy -
'It provides a platform for channelising the savings to the most productive use'. It gives investors the chance to disinvest and reinvest. Through this process of disinvestment and reinvestment, savings get channelised into their most productive investment avenues.

4. Ensures safety in transactions -
'It ensures that investing people gets a safe and a fair deal in the market, the membership of the stock exchange is well regulated and its dealings are well defined according to the existing legal framework'.

Concept: Stock Exchange
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