The following is not a function of Financial Market:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Mobilization of savings and channeling them into the other least productive uses
Option (1) Mobilization of savings and channeling them into the other least productive uses — Not a function of the financial market (Correct). The market collects savings and sends them into the most productive uses, where they earn the highest return. Swap ‘most’ for ‘least’ and a function turns into a failure. One word can decide the mark, so give it a second look.
Option (2) Facilitating Price Discovery — A function of the financial market (Incorrect). The demand and supply of funds fix the price of a financial asset, that is, the rate of return.
Option (3) Reducing the cost of transaction — A function of the financial market (Incorrect). Buyers and sellers get information about securities in one place, which saves time, effort and money.
Option (4) Providing liquidity to financial assets — A function of the financial market (Incorrect). A security can be sold for cash whenever the holder wants.
Note: Although the chapter ‘Financial Markets’ was dropped from the NCERT textbooks during rationalisation, it has stayed in the NTA syllabus every year since 2022, except for 2025, and it is part of the syllabus again from 2026. This question is therefore based on the pre-rationalised NCERT, an extract from which is given below. NCERT (Pre-rationalised Edition):
|
