- 1 Marks
Question
Which of the following is NOT a function of a stock exchange?
A. Provide a system in which shares can be traded in a regulated manner
B. Enforce rules of business conduct on market participants
C. Ensure availability of shares and bonds to be traded by investors
D. Ensure that there is an efficient system for providing new financial information about companies to investors in the market
E. Provide a system for recording information about the prices at which shares are bought and sold and making them available to participants
Answer
Answer: C. Ensure availability of shares and bonds to be traded by investors
Explanation:
The correct answer is C. Ensuring availability of shares and bonds to be traded by investors is not a primary function of a stock exchange. Stock exchanges provide a platform for trading existing securities, but they do not directly ensure the availability of shares and bonds. This is typically the role of issuers (companies) and underwriters in the primary market.
The other options are indeed functions of a stock exchange: A) Stock exchanges provide a regulated system for trading shares. B) They enforce rules of conduct on market participants to ensure fair trading. D) They ensure efficient dissemination of financial information about listed companies. E) They record and disseminate price information of traded securities.
- Tags: Financial Markets, Securities Trading, Stock Exchange
- Level: Level 1
- Topic: Basics of Business Finance and Financial Markets
- Series: MAY 2016
- Uploader: Kwame Aikins