The main benefits of a well-run stock exchange
Firms can find funds and grow
Because investors in financial securities with a stock market quotation are assured that they are able to sell their shares quickly, cheaply and with a reasonable degree of certainty about the price, they are willing to supply funds to firms at a lower cost than they would if selling was slow, or expensive, or the sale price was subject to much uncertainty. Thus stock markets encourage investment by mobilising savings.
Allocation of capital
An efficiently functioning stock market is able to assist in the allocation of investment capital. If the stock market were poorly regulated and operated then the mispricing of shares and other financial securities could lead to scarce ...
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