Name the benefits derived from the existence of stock exchanges. What

Name the benefits derived from the existence of stock exchanges.

What will be an ideal response?

ANSWER

Providing a continuous market: it may be the most important function of an organized security exchange. A
continuous market provides a series of continuous security prices.
Establishing and publicizing fair security prices: An organized exchange permits security prices to be set by
competitive forces. The bidding process flows from the supply and demand underlying each security. This means the
specific price of a security is determined in the manner of an auction. In addition, the security prices determined at
each exchange are widely publicized.
Helping business raise new capital: Because a continuous secondary market exists, it is easier for firms to float, or issue,
new security offerings at competitively determined prices.