Stock exchange - SS3 Commerce Past Questions and Answers - page 1
What is the primary function of a stock exchange?
To provide liquidity and facilitate trading of securities.
To regulate the financial markets.
To provide loans to companies.
To provide liquidity and facilitate trading of securities.
Why are stock exchanges important in the economy?
They help companies raise capital and promote economic growth.
They provide personal loans to individuals.
They regulate the housing market.
They help companies raise capital and promote economic growth.
What is the role of membership in a stock exchange?
Members are individuals who own shares in companies listed on the exchange.
Members are authorized intermediaries who can trade on the exchange.
Members are government regulators overseeing the trading activities.
Members are authorized intermediaries who can trade on the exchange.
How are orders executed on a stock exchange?
Investors directly match their orders with suitable counter parties.
Orders are executed automatically by computer algorithms.
Orders are matched by brokers on the trading floor.
What is the purpose of settlement in stock exchange transactions?
To determine the market price of securities.
To record the transaction and update the accounts.
To regulate the trading activities on the exchange.
What are some benefits of companies listing their shares on a stock exchange?
By listing shares on a stock exchange, companies gain access to a large pool of potential investors, which can help raise capital for expansion and growth. It enhances the company's visibility and credibility, increases liquidity for existing shareholders, and provides a platform for future acquisitions or mergers.
How does the stock exchange contribute to the overall economy?
The stock exchange plays a vital role in the economy by facilitating capital formation. It allows companies to raise funds for investment and expansion, which drives economic growth and job creation. It provides individuals and institutional investors with investment opportunities, encouraging savings and wealth creation. The stock exchange also facilitates price discovery, helping determine the value of securities and contributing to market efficiency.