State and briefly explain the functions of a stock exchange.

CPA-Financial-Management-Section-3 Revision kit

Functions of a stock exchange
Enables capital to be raised by the government by issue of debt and by industry (by issue of securities).
Provides a secondary market through which existing securities can be bought and
sold by shareholders and long-term debt owners (liquidity and marketability)
Advertises security prices enabling the investors and the public to follow progress or otherwise of their investments and to channel their funds into what they perceive to be profitable enterprises.

Protects investors against fraud. Where fraud is suspected, the dealing is suspended.
Serves as an economic barometer of the fortunes of government and enterprises. The stock index indicates prospects of quoted companies and of the economy as a whole.
Pricing of securities
 Commercialization and privatization of firms.

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