Services given by Stock Exchange to Investors ↓
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- Provides liquidity to investment : Stock exchange provides liquidity (i.e easy convertibility to cash) to investment in securities. An investor can sell his securities at any time because of the ready market provided by the stock exchange. Stock exchange provides easy marketability to corporate securities.
- Provides collateral value to securities : Stock exchange provides better value to securities as collateral for a loan. This facilitates borrowing from a bank against securities on easy terms.
- Offers opportunity to participate in the industrial growth : Stock exchange provides capital for industrial growth. It enables an investor to participate in the industrial development of the country.
- Estimates the worth of securities : Stock exchange provides the facility of knowing the worth (i.e true market value) of investment due to quotations (i.e price list) and reports published regularly by the exchange. This type of information guides investors as regards their future investments. They can purchase or sell securities as per the price trends (i.e latest price value) in the market.
- Offers safety in corporate investment : An investor can invest his surplus money (i.e extra money) in the listed securities with reasonable safety. The risk in such investment is reduced considerably due to the supervision of stock exchange authorities on listed companies. Moreover, securities are listed only when the exchange authorities are satisfied as regards legality and solvency of company concerned. Such scrutiny (detailed checking) avoids listing, of securities of unsound companies (i.e companies with bad financial status).
Services given by Stock Exchange to Companies ↓
- Widens market for securities : Stock exchange widens the market for the listed securities and enables the companies to collect capital for promotion, expansion and modernization purpose. It indirectly provides financial support to companies / corporations.
- Creates goodwill and reputation : Stock exchange enhances the goodwill and the reputation of the companies whose securities are listed. Listing acts as a character certificate given to a company. It gives prestigious position to company.
- Facilitates fair pricing of listed securities : The market price of listed securities tends to be slightly higher in relation to earnings and property values.
- Provides better response from investors : Listed securities get better response from the investor due to safety and security. Listing of securities is a unique service which stock exchanges offer to companies. It is a moral support given to stable companies.
- Facilitates quick selling of securities : Stock exchange enables companies to sell their securities easily and quickly. This is natural as investors always prefer to invest money in listed securities.
Service given by Stock Exchange to Economy ↓
- Brings economic development : Stock exchanges brings rapid economic development through mobilization of funds for productive purposes. This facilitates the process of economic growth.