"The stock exchange can play a vital role in ensuring wider share ownership by regulating new issues, better trading practices."
Identify the function of stock Exchange highlighted in the above sentence.
Answer & explanation
Correct answer: option 2
The correct answer is option (2)- Spreading of Equity Cult.
Spreading of Equity Cult is highlighted in the given sentence.
Spreading of Equity Cult: The stock exchange can play a vital role in ensuring wider share ownership by regulating new issues, better trading practices and taking effective steps in educating the public about investments.
OTHER OPTIONS
- Pricing of Securities: 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.
- Safety of Transaction: The membership of a stock exchange is well- regulated and its dealings are well defined according to the existing legal framework. This ensures that the investing public gets a safe and fair deal on the market.
- Providing Scope for Speculation: The stock exchange provides sufficient scope within the provisions of law for speculative activity in a restricted and controlled manner. It is generally accepted that a certain degree of healthy speculation is necessary to ensure liquidity and price continuity in the stock market.