Functions of bombay stock exchange pdf

Every major change in country and economy is reflected in the prices of shares. The rise or fall in the share prices indicates the boom or recession cycle of the economy.

Functions of Stock Exchange - Main Functions In The Market

Stock exchange is also known as a pulse of economy or economic mirror which reflects the economic conditions of a country. The stock market helps to value the securities on the basis of demand and supply factors. The securities of profitable and growth oriented companies are valued higher as there is more demand for such securities.

The valuation of securities is useful for investors, government and creditors. The investors can know the value of their investment, the creditors can value the creditworthiness and government can impose taxes on value of securities.

In stock market only the listed securities are traded and stock exchange authorities include the companies names in ups and downs in stock market trade list only after verifying the soundness of company.

The companies which are listed they also have to operate within the strict rules and regulations. This functions of bombay stock exchange pdf safety of dealing through stock exchange.

9 Most Important Functions of Stock Exchange/Secondary Market

In stock exchange securities of various companies are bought and sold. This process of disinvestment and reinvestment helps to invest in most productive investment proposal and this leads to capital formation and top world forex brokers growth.

Stock exchange encourages people to invest in ownership securities by regulating new issues, better trading practices and by educating public about investment. To ensure liquidity and demand of supply of securities the stock exchange permits healthy speculation of securities. The main function of stock market is to provide ready market for sale and purchase of securities.

The presence of stock exchange market gives assurance to investors that their investment can be converted into cash whenever they want. The investors can invest in long term investment projects without any hesitation, as because of stock exchange they can convert long term investment into short term and medium term.

The shares of profit making companies are quoted at higher prices and are actively traded so such companies can easily raise fresh capital from stock market. The general public hesitates to invest in securities of loss making companies. The stock market offers attractive opportunities of investment in various securities.

These attractive opportunities encourage people to save more and invest in securities of corporate sector rather than investing in unproductive assets such as gold, silver, etc.