10 What is meant by a 'Stock Exchange' State any three functions of a Stock Exchange' - Business Studies - Financial Markets

Question

10 What is meant by a 'Stock Exchange' ? State any three functions
of a Stock Exchange'

Ishi · Accepted Answer

Solution:

Stock Exchange refers to a market where buying and selling of the
existing securities take place The following are the main functions
of a stock exchange
(i) Provides Liquidity and
Marketability: Stock exchange provides a ready platform
for trading of existing securities In other words, it provides a
continuous market for the sale and purchase of securities Through
stock exchange, securities can be easily converted into cash
whenever required
(ii) Determination of
Prices: A stock exchange helps in establishing the price
of the monetary assets that are traded in that market It provides a
platform for interaction for buyers and sellers of securities and
thereby, helps in the determination of prices of the securities
through the forces of demand and supply
(iii) Fair and Safe
Market: As stock exchange
is a legal and well regulated market It trades within the defined
and the existing legal framework Thereby, it ensures safety and
fairness in transactions

10. What is meant by a 'Stock Exchange' ? State any three functions of a Stock Exchange'.