What are the functions of the Stock Exch | 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 2, Question 4:
What are the functions of the Stock Exchange?
.
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 functions of the Stock Exchange?
Answer:
Stock Exchange performs the following functions:
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Provides Liquidity and Marketability to Existing Securities: It provides a ready and continuous market where securities are bought and sold. It gives investors the chance to disinvest or reinvest. Thus, regular dealing provides both liquidity and marketability to existing securities.
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Pricing of Securities: It helps in determining the prices of various securities that reflect their real worth. It enables correct pricing of securities through the interplay of demand and supply. The stock market index like SENSEX, reflects the market direction and indicate day-to-day fluctuations in share prices.
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Safety of Transactions: It is well regulated and its dealings are well-defined according to the existing legal framework. This ensures that the investing public gets a fair deal in the market.
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Contributes to Economic Growth: In stock exchange, the process of disinvestment and reinvestment channelize the saving into productive investment avenues. This leads to capital formation and economic growth.
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Spreading Equity Cult: It is an organised market, which takes various steps to guide and educate investors, publishes information about companies listed on the exchange and ensures better and safe trading practices. These practices have played a vital role in increasing the number of people investing in equity, thus leading to wider ownership of equity.
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Providing Scope for Speculation: It is generally accepted that a certain degree of speculation is necessary to ensure liquidity and price continuity in the stock market. Thus, it provides sufficient scope for speculation in a restricted and controlled manner within the provisions of law.
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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 Excercise 2 , Question 4: What are the functions of the Stock Exchange?....
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