Match the following:
| 1. | Liquidity to existing securities | A. | Well-regulated market |
| 2. | Pricing of securities | B. | Disinvestment and reinvestment by the investors |
| 3. | Safety of Transaction | C. | Due to capital formation |
| 4. | Economic growth | D. | By forces of demand and supply |
Answer & explanation
Correct answer: option 4
The correct answer is option 4: 1-B, 2-D, 3-A, 4-C
- Liquidity to existing securities → (B) Disinvestment and reinvestment by the investors
- Pricing of securities → (D) By forces of demand and supply
- Safety of Transaction → (A) Well-regulated market
- Economic growth → (C) Due to capital formation
Liquidity to existing securities: It gives investors the chance to disinvest and reinvest. This provides both liquidity and easy marketability to already existing securities in the market.
Pricing of securities: Share prices on a stock exchange are determined by the forces of demand and supply.
Safety of Transaction: The membership of a stock exchange is well regulated, and its dealings are well defined according to the existing legal framework.
Economic growth: A stock exchange is a market in which existing securities are resold or traded. Through this process of disinvestment and reinvestment savings get channelized into their most productive investment avenues. This leads to capital formation and economic growth.