Question

For the smooth and orderly functioning of corporate sector in a free market economy, stock exchanges are indispensable because of different roles played by them for different groups.’ Explain the importance of stock exchange to investors in the light of this statement.

Answer 1

Importance of stock exchange to investors:

1. Dissemination of useful Information: Stock exchange publish useful information regarding price lists, quotations, etc., of securities through newspapers and journals. The interested persons buy and sell their securities on the basis of information provided by the stock exchanges.

2. Ready Market: Persons desirous of converting their shares into cash may easily do so through a member of stock exchange.

3. Investors’ Interests Protected: Stock exchanges formulate rules and regulations so that members may not , exploit the investors.