What are the main functions of the finan | Class 12 Business Studies Chapter Financial Markets, Financial Markets NCERT Solutions

Welcome to the NCERT Solutions for Class 12 Business Studies - Chapter Financial Markets. This page offers a step-by-step solution to the specific question from Exercise 4: Extra Questions, Question 4: . With detailed answers and explanations for each chapter, students can strengthen their understanding and prepare confidently for exams. Ideal for CBSE and other board students, this resource will simplify your study experience.

Question 4:

What are the main functions of the financial market?

Answer:

The financial market performs various critical functions:

  • Facilitates Price Discovery: The forces of demand and supply in financial markets help in determining the prices of financial instruments.
  • Liquidity Provision: It allows investors to buy and sell securities, providing liquidity to the assets.
  • Reduces Transaction Costs: The availability of a well-functioning market reduces the cost involved in searching for buyers and sellers.
  • Mobilizes Savings: It helps in channeling the surplus funds from savers to those needing capital for productive use.
  • Risk Sharing: Financial markets provide instruments that help in diversifying and managing risk.


Study Tips for Answering NCERT Questions:

NCERT questions are designed to test your understanding of the concepts and theories discussed in the chapter. Here are some tips to help you answer NCERT questions effectively:

  • Read the question carefully and focus on the core concept being asked.
  • Reference examples and data from the chapter when answering questions about Financial Markets.
  • Review previous year question papers to get an idea of how such questions may be framed in exams.
  • Practice answering questions within the time limit to improve your speed and accuracy.
  • Discuss your answers with your teachers or peers to get feedback and improve your understanding.

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Welcome to the NCERT Solutions for Class 12 Business Studies - Chapter . This page offers a step-by-step solution to the specific question from Extra Questions, Question 4: What are the main functions of the financial market?....