Question -
Answer -
The functions of a financial market are as follows:
1. Financial markets acts as sources of savings for people which is profitable. The money will be utilized for some other purpose as one person’s saving will become the capital of another. Money can multiply as it is being invested without being kept idle.
2. It is helpful in determining the price of securities with the forces of demand and supply. It helps investors to get proper price for the savings and investment by them.
3. It provides the liquidity in financial markets to the buyers and sellers of the securities. Investors can safely invest their money and convert the investment to money whenever it is deemed necessary or as per the requirements of the investor.
4. Financial markets make it easier for people to invest without the need of spending time and money. All the necessary information required for buying and selling of securities are present in the financial market so there is no requirement to spend money for gaining knowledge which reduces the transaction cost.