Practicing Success

Target Exam

CUET

Subject

Business Studies

Chapter

Financial Markets

Question:
Stock Exchange works as a mechanism for valuation of securities through the forces of demand and supply. Identify the related function of performed by the stock exchanges.
Options:
Providing liquidity and marketability to existing securities.
Pricing of security.
Safety of transaction.
Spreading of equity cult.
Correct Answer:
Pricing of security.
Explanation:
Share prices on a stock exchange are determined by the forces of demand and supply. A stock exchange is a mechanism of constant valuation through which the prices of securities are determined. Such a valuation provides important instant information to both buyers and sellers in the market