NAME :- GAUTAM CHUDASAMA

ROLL NO :- 13

TOPIC :- FUNCTIONS OF FINANCIAL MARKETS

 FUNCTIONS OF FINANCIAL MARKETS

 The functions of Financial Markets are as follows:-

 1. Capital Formation
 Financial Markets provide the channel

through which the new savings of the

investors flow in the country which aid in
the capital formation of the country.
 The Financial Market will function where the

company can raise funds from the investors

and the investors can invest their money
through the help of the financial markets.
FUNCTIONS OF FINANCIAL MARKETS

 2. Easy Access
 The industries require the investors for raising funds and
the investors require the industries for investing its money
and earning the returns from them. So the financial system
provides the potential buyers and sellers easily, which helps
them in saving their time and money in finding the potential
buyer and seller.
 3. Risk Sharing
 Financial market performs the functions of the Risk Sharing
as the person who is undertaking the investments are
different from the persons who are investing their fund in
those investments.
 FUNCTIONS OF FINANCIAL MARKETS

 4. Liquidity
 The Liquidity functions of the financial market provides an opportunity
for the investors to sell their financial instruments as its fair value
prevailing in the market at any time during the working hours of the
market. Thus, in the financial market investors can sell their securities
readily and convert them into cash thereby providing the Liquidity.
 5. Low Search Cost
 Another important function of the financial market is that it reduces
the search and information cost of transacting. Search costs
represent explicit costs such as the money spent to advertise the
desire to sell or purchase a financial asset, and implicit costs, the
presence of some from of organized financial market reduces the
search and information cost of transacting.
 FUNCTIONS OF FINANCIAL MARKETS

 6. Allocation of Resources
 An important function of the financial market is the
allocation of economic resources to various sectors of
the economy. Investors compare the merits of different
securities offered to them. These parties weigh yield,
safety, growth, marketability, liquidity and other qualities
that each bidder offers for his securities.

 Thank You.