The following constitute functions of the stock exchange:
A. Contributes to economic growth
B. Pricing of securities
C. Safety of transactions
D. Restricting equity cult
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → A, B and C only
A stock exchange is a market where existing securities are bought and sold.
A. Contributes to economic growth — Correct. Through the buying and selling of existing securities, savings move into their most productive uses, which leads to capital formation and economic growth.
B. Pricing of securities — Correct. Share prices are set by the forces of demand and supply on the exchange, which helps investors value their securities.
C. Safety of transactions — Correct. The exchange works under a set of rules and a legal framework, so dealings on it are safe.
D. Restricting equity cult — Incorrect. The function is spreading the equity cult. By regulating new issues, better trading and educating the public, the exchange helps more people own shares. It does not restrict share ownership.
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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