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Ch.1 · Savings vs Investment Avenues · easy

Which of the following best describes the primary function of financial markets?

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EXPLANATION

Financial markets channelise surplus funds from savers/investors to those who need capital (borrowers/issuers), enabling efficient allocation of resources and price discovery for financial assets.

A.To facilitate the transfer of funds from savers to borrowers and enable price discovery [✓ Correct]

B.To provide employment to investment bankers and brokers

C.To generate tax revenue for the government through securities transactions

D.To regulate the money supply in the economy through open market operations

EXPLANATION

Financial markets channelise surplus funds from savers/investors to those who need capital (borrowers/issuers), enabling efficient allocation of resources and price discovery for financial assets.

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