(a) Stock Exchange
(b) Functions of a Stock Exchange
(1) Providing Liquidity and Marketability to Existing Securities:
Stock Exchange provides a ready and continuous market for the sale and purchase of securities.
(2) Pricing of Securities :
A stock exchange is a mechanism of constant valuation through which the prices of secuqjies are determined. It is based on the forces of demand and supply.
(3) Safety of Transaction:
Stock exchange has its own well defined rules and regulations. This ensures safety and fair dealings to investors.
(4) Contributes to Economic Growth :
Stock exchange provides a platform by which savings are channelised into the most productive investment proposals, which leads to capital formation and economic growth.
(5) Providing Scope for Speculation :
Stock exchange provides scope within the provisions of Law for speculation in a restricted and controlled manner.
(6) Economic barometer:
A stock exchange serves as a barometer of a country’s economic condition. Price trends in stock exchange indicate whether economy is going through boom or depression.
(c) Securities traded in the secondary market are:
(i) Corporate Securities
(ii) Government Securities
(iii) Listed Securities
