What are the main functions of the finan | Class 12 Business Studies Chapter Financial Markets, Financial Markets NCERT Solutions

Question:

What are the main functions of the financial market?

Answer:

The financial market performs various critical functions:

  • Facilitates Price Discovery: The forces of demand and supply in financial markets help in determining the prices of financial instruments.
  • Liquidity Provision: It allows investors to buy and sell securities, providing liquidity to the assets.
  • Reduces Transaction Costs: The availability of a well-functioning market reduces the cost involved in searching for buyers and sellers.
  • Mobilizes Savings: It helps in channeling the surplus funds from savers to those needing capital for productive use.
  • Risk Sharing: Financial markets provide instruments that help in diversifying and managing risk.


Study Tips for Answering NCERT Questions:

NCERT questions are designed to test your understanding of the concepts and theories discussed in the chapter. Here are some tips to help you answer NCERT questions effectively:

  • Read the question carefully and focus on the core concept being asked.
  • Reference examples and data from the chapter when answering questions about Financial Markets.
  • Review previous year question papers to get an idea of how such questions may be framed in exams.
  • Practice answering questions within the time limit to improve your speed and accuracy.
  • Discuss your answers with your teachers or peers to get feedback and improve your understanding.

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Welcome to the NCERT Solutions for Class 12 Business Studies - Chapter . This page offers a step-by-step solution to the specific question from Extra Questions, Question 4: What are the main functions of the financial market?....