Role Of Stock Exchange

• Raising capital for businesses

Exchanges help companies to capitalize by selling shares to the investing public.

• Mobilizing savings for investment

They help public to mobilize their savings to invest in high yielding economic sectors, which results in higher yield, both to the individual and to the national economy.

• Facilitating company growth

They help companies to expand and grow by acquisition or fusion.

• Profit sharing

They help both casual and professional stock investors, to get their share in the wealth of profitable businesses.

• Corporate governance

Stock exchanges impose stringent rules to get listed in them. So listed public companies have better management records than privately held companies.

• Creating investment opportunities for small investors

Small investors can also participate in the growth of large companies, by buying a small number of shares.

• Government capital raising for development projects

They help government to rise fund for developmental activities through the issue of bonds. An investor who buys them will be lending money to the government, which is more secure, and sometimes enjoys tax benefits also.

• Barometer of the economy

They maintain the stock indexes which are the indicators of the general trend in the economy.They also regulate the stock price fluctuations.