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Direction: Financial markets are typically defined by having transparent pricing, basic regulations on trading, costs, and fees, and market forces determining the prices of securities that trade.
Financial markets can be found in nearly every nation in the world. Some are very small, with only a few participants, while others – like the Bombay Stock Exchange (BSE) and the forex markets – trade millions of rupees daily. Investors have access to a large number of financial markets and exchanges representing a vast array of financial products. Some of these markets have always been open to private investors; others remained the exclusive domain of major international banks and financial professionals until the very end of the twentieth century.
Q. Which of the following is not the function of the financial market?
  • a)
    Mobilization of savings
  • b)
    Price fixation
  • c)
    Provide liquidity to financial assets
  • d)
    Revaluation of securities
Correct answer is option 'D'. Can you explain this answer?
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Direction: Financial markets are typically defined by having transpare...
Revaluation of securities is not the function of the financial market.
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Understanding the Functions of Financial Markets
Financial markets play a crucial role in the economy by facilitating various functions that promote efficient trading and investment. Here’s a breakdown of the key functions:
Mobilization of Savings
- Financial markets provide a platform for individuals and institutions to invest their savings in various financial instruments.
Price Fixation
- They help in determining the prices of securities based on supply and demand dynamics, ensuring that prices reflect the true value of the assets.
Provide Liquidity to Financial Assets
- These markets allow investors to easily buy and sell securities, ensuring that assets can be converted into cash quickly and efficiently.
Revaluation of Securities
- This is actually not a function of financial markets. While prices may fluctuate due to market conditions, the market does not actively revalue securities but reflects changes in perception and demand.
Why Option D is Correct
- Revaluation implies a systematic reassessment of value, which is not a direct function of the market. Instead, financial markets operate on the principle of price discovery through transactions among buyers and sellers. The market reflects existing valuations rather than actively revaluating securities.
In summary, options A, B, and C represent essential functions of financial markets, while option D, "Revaluation of securities," does not align with the fundamental roles played by these markets. Understanding these distinctions is vital for anyone preparing for bank exams or engaging in financial studies.
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Direction: Financial markets are typically defined by having transparent pricing, basic regulations on trading, costs, and fees, and market forces determining the prices of securities that trade.Financial markets can be found in nearly every nation in the world. Some are very small, with only a few participants, while others – like the Bombay Stock Exchange (BSE) and the forex markets – trade millions of rupees daily. Investors have access to a large number of financial markets and exchanges representing a vast array of financial products. Some of these markets have always been open to private investors; others remained the exclusive domain of major international banks and financial professionals until the very end of the twentieth century.Q. Which of the following is not the function of the financial market?a)Mobilization of savingsb)Price fixationc)Provide liquidity to financial assetsd)Revaluation of securitiesCorrect answer is option 'D'. Can you explain this answer?
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