Financial Market — Secretarial Practice STD 12 Commerce / Arts — Question

• Capital is the main part of the functioning of the business.
• The capital market provides a channel through which savings flow to organizations in the form of capital.
• This leads to capital formation.

(ii) Transfer of Resources:

• The financial market is one of the key sources of transfer of resources.
• The financial market facilitates the transfer of real economic resources from lenders to ultimate users.

(iii) Mobilization of funds:

• Investors that have savings must be linked with corporate that require investment.
• The financial market enables the investors to invest their saving according to their choices and risk assessment.
• This will utilize funds and the economy will boom.

(iv) Price determination:

• The financial instruments traded in a financial market get their prices from the mechanism of demand and supply.
• The interaction between demand and supply will help to determine the prices.