(a) Describe the functions of the Stock Exchange. (b) State the types of securities traded...
(a) Describe the functions of the Stock Exchange.
(b) State the types of securities traded in the Stock Exchange.
Explanation
(a) Functions of the Stock Exchange are:
(i) The stock exchange helps companies to raise capital needed for their business operations.
(ii) The government can also raise capital through members of the public when it issues government bonds. These bonds are sold in the market.
(iii) The stock exchange provides professional advice on the selection and management of investments.
(iv) It makes it possible for investment to be converted into cash.
(v) An investor is able to transfer his shares to another person through the stock exchange.
(vi) Prices quoted on the stock Exchange Market serves as a yard stick with which to measure the good will of a company.
(vii) Prices of shares and securities are determined by the stock exchange based on the forces of demand and supply.
(viii) It is a market for buying and selling of securities.
(ix) The market assists a private company to go public without issuing new shares.
(x) It renders agency services by buying and selling securities on behalf of investors, firms, governments etc.
(b) Types of Securities traded in the stock exchange are:
(i) Stock (ii) Shares (iii) Debentures (iv) Government stock i.e Gilt-edged securities. (v) Bonds.