Question : Case Study 84
DEF Ltd. is a well-established company planning to raise funds for its expansion projects. The company's management is considering the selection of a broker.
Question :
What is the main role of a broker in the stock market?
Option 1: Regulating stock exchanges
Option 2: Issuing new shares
Option 3: Matching buy and sell orders
Option 4: Allocating resources to companies
Correct Answer: Matching buy and sell orders
Solution : The correct answer is (c) Matching buy and sell orders
The main role of a broker in the stock market is to match buy and sell orders. Brokers act as intermediaries between buyers and sellers, facilitating transactions by matching buy orders from investors with sell orders from other investors. They play a crucial role in ensuring that transactions happen smoothly and efficiently, creating a market where buying and selling can occur at appropriate prices and volumes. This function helps maintain liquidity and transparency in the stock market.
