Question

Statement-I: The basic function of a Stock Exchange is the creation of a
continuous market where securities are bought and sold. 

Statement-II: The Stock Exchange provides both liquidity and easy marketability to already existing securities in the market.

Choose the correct option from the following:

(A) Statement-I is true and Statement-II is false.

(B) Statement-II is true and Statement-I is false.

(C) Both the Statements are true.

(D) Both the Statements are false.

Answer 1

(C) Both the Statements are true.

• Statement-I: The basic function of a stock exchange is indeed the creation of a continuous market where securities (such as stocks, bonds, etc.) are bought and sold. This function facilitates the trading of securities among investors.
• Statement-II: Stock exchanges provide liquidity and easy marketability to already existing securities in the market. Liquidity refers to the ease with which securities can be bought or sold without significantly affecting their price. Stock exchanges achieve this by providing a platform where buyers and sellers can readily trade securities, thereby enhancing their marketability.