What are the functions of a financial market?
Answers
SOLUTION :
The functions of a financial market are :
(i) MOBILISATION OF SAVINGS :
Financial market mobilise the savings of the people. It enables them to invest their savings in most productive financial assets.
(ii) FACILITATING PRICE DISCOVERY :
Financial market helps in determining the prices of various financial assets. These prices are usually determined by the demand and supply of funds in the market.
(iii) LIQUIDITY OF FINANCIAL ASSETS :
Through the medium of financial market , the investors can invest their money in securities, whenever they want. The sale and purchase take place with the help of primary market and secondary market.Thus, providing liquidity to financial assets.
(iv) REDUCING COST TRANSACTIONS :
Financial market provides complete information regarding price, availability and cost of various financial securities. So investors and companies do not have to spend much on getting such information.
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Here are more questions of the same chapter :
NSE commenced futures trading in the year:
a. 1999 b. 2000 c. 2001 d. 2002
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Clearing and settlement operations of NSE are carried out by:
a. NSDL b. NSCCL c. SBI d. CDSL
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QUESTION ====》》》
What are the functions of a financial market?
ANSWER =======》》》》
Borrowing and Lending:
Financial markets permit the transfer of funds (purchasing power) from one agent to another for either investment or consumption purposes.
