________________ helps to link the savers and the investors by mobilizing funds between them.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Financial market
Option (1) Financial planning — Incorrect. Financial planning is the preparation of a financial blueprint of a firm’s future operations. It is done inside one business, not between savers and investors.
Option (2) Financing policy — Incorrect. This is a firm’s own decision about how to raise its funds. It does not bring savers and investors together.
Option (3) Financial market — Correct. Households save money and business firms need money to invest. A financial market brings the two together and moves the savings to the firms. In doing so it performs the allocative function: it directs funds to their most productive use.
Option (4) Financial goals — Incorrect. These are the targets a firm sets for itself, such as growth in wealth. They are not a link between two groups.
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):
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