Given below are two statements:
Statement I: As a market, the stock exchange facilitates the exchange of a security, such as a share or debenture, into money and vice versa.
Statement II: Stock exchanges provide liquidity and safety of investment to the investors.
In the light of the above statements, choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Both Statement I and Statement II are correct.
Statement I: As a market, the stock exchange facilitates the exchange of a security, such as a share or debenture, into money and vice versa. — Correct. As a market, the stock exchange turns a security into money and money into a security. An investor can sell shares for cash or buy shares with cash.
Statement II: Stock exchanges provide liquidity and safety of investment to the investors. — Correct. Investors can sell their holdings whenever they need cash, which gives liquidity. Regulated dealings give safety of investment.
NCERT (Pre-rationalised Edition):
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