Assertion: A financial market performs allocative function. Reasoning: It allocates or directs funds available for investment into their most productive investment opportunity.

Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A. Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A. Assertion (A) is true but Reasoning (R) is not correct. Assertion (A) is not true but Reasoning (R) is correct.

Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.

A financial market helps to link the savers and the investors by mobilizing funds between them. In doing so it performs what is known as an allocative function. It allocates or directs funds available for investment into their most productive investment opportunity.