“The stock exchange can play a vital role in ensuring wider share ownership by taking effective steps in educating the public about the investments.” Identify the function of stock exchange reflected above:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Spreading of equity cult
Option (1) Providing scope for speculation — Incorrect. The stock exchange allows some buying and selling for profit from price changes, but only in a limited and controlled way. Educating the public is not part of it.
Option (2) Contributes to economic growth — Incorrect. This function works through selling and reinvesting securities, which moves savings to their most productive uses.
Option (3) Safety of transactions — Incorrect. Safety comes from the strict rules on members and on dealings, which protect investors. It is not about spreading share ownership.
Option (4) Spreading of equity cult — Correct. Equity cult means the habit of investing in shares. The stock exchange spreads it by widening share ownership: it regulates new issues, improves trading practices and teaches the public about investing.
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. The new NCERT let this chapter go, but NTA kept its phone number.
NCERT (Pre-rationalised Edition):
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