"Through this process of disinvestment and reinvestment, savings get channelized into their most productive investment avenues" —which function of stock exchange is highlighted by the given statement?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Contributes to economic growth.
Contributes to economic growth is highlighted in the given statement.
The secondary market is also known as the stock market or stock exchange. It is a market for the purchase and sale of existing securities. It helps existing investors to disinvest and fresh investors to enter the market. It also provides liquidity and marketability to existing securities. It also contributes to economic growth by channelising funds towards the most productive investments through the process of disinvestment and reinvestment.