Question : Case Study 74
UVW Ltd. is a conglomerate that has recently traded its shares on a stock exchange. The company's management is considering the functions of a stock exchange.
Question :
What is the function of a stock exchange that provides companies with the opportunity to raise capital through the issuance of securities?
Option 1: Providing loans to companies
Option 2: Allocation of resources
Option 3: Facilitating trading of securities
Option 4: Regulation of credit rating agencies
Correct Answer: Facilitating trading of securities
Solution : The correct answer is (c) Facilitating trading of securities
The function of a stock exchange that provides companies with the opportunity to raise capital through the issuance of securities is "facilitating trading of securities." Stock exchanges are platforms where companies can list their securities, such as stocks and bonds, and make them available for trading to the public. Through this process, companies can raise capital by selling their securities to investors in the open market. Investors buy and sell these securities, and the stock exchange facilitates these transactions, creating a marketplace for the exchange of financial instruments.
What is the function of a stock exchange that ensures transparency in trading and prevents fraudulent activities?
Option 1: Allocation of resources
Option 2: Providing loans to companies
Option 3: Regulation of credit rating agencies
Option 4: Regulation of insider trading
Question : Case Study 33
XYZ Corporation is a well-established company with shares traded on a stock exchange. The company's management is reviewing the functions of a stock exchange.
What is the secondary function of a stock exchange that ensures a continuous market for securities?
Option 2: Regulation of insider trading
Option 3: Providing loans to companies
Option 4: Providing credit rating to companies
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