“Financial markets play an important role in the allocation of scarc

1.	“Financial markets play an important role in the allocation of scarce resources in an economy by performing important functions.” In light of the given statement, state any three functions performed by Financial Market.
Answer» Functions of Financial Market: 1. Financial markets mobilise savings of households and channelize them into the most productive uses. 2. It facilitates price discovery of a financial asset through interaction between supply and demand of funds. 3. Financial markets provide liquidity to financial assets, so that they can be easily converted into cash whenever required. 4. Financial markets provide valuable information about securities being traded in the market and thereby, help to reduce cost of transaction in terms of time, effort and money.

“Financial markets play an important role in the allocation of scarce resources in an economy by performing important functions.” In light of the given statement, state any three functions performed by Financial Market.

Answer»

Functions of Financial Market:

1. Financial markets mobilise savings of households and channelize them into the most productive uses.

2. It facilitates price discovery of a financial asset through interaction between supply and demand of funds.

3. Financial markets provide liquidity to financial assets, so that they can be easily converted into cash whenever required.

4. Financial markets provide valuable information about securities being traded in the market and thereby, help to reduce cost of transaction in terms of time, effort and money.

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