Role of stock exchange in economic development, Finance Basics

Role of Stock Exchange in Economic Development

The Roles of Stock Exchange in Economic Development are as follow:

1. Raising Capital for Businesses

The Stock Exchange offers companies along with the facility to increase capital for expansion by the selling shares to the investing public.

2. Mobilizing Savings for Investment

While people draw their invest and savings in shares, it leads to a more rational distribution of resources since funds that could have been consumed, or remained in idle deposits through banks are mobilized and redirected to promote industry and commerce.

3. Redistribution of Wealth

Through giving a wide spectrum of people a chance to buy shares and consequently become part-owners of profitable enterprises, the stock market facilitates to decrease large income inequalities because many people obtain a chance to share in the profits of business such were set up via other people.

4. Improving Corporate Governance

Through having a wide and varied scope of owners, companies commonly tend to develop on their management standards and efficiency in sequence to satisfy the demands of these shareholder. It is evident that usually, public companies tend to contain better management records rather than private companies.

5. Creates Investment Opportunities for Small investors

As opposed to other business such requires huge capital outlay, investing in shares is release to both the small and large investors since a person buys the number of shares they are able to afford. Consequently the Stock Exchange offers an extra source of income to small savers.

6. Government Raises Capital for Development Projects

The Government and even if local authorities same to municipalities may decide to borrow money in sequence to finance huge infrastructural projects as like sewerage and housing estates or water treatment works with selling another category of shares identified as Bonds.  These bonds can be increased through the Stock Exchange whereby members of the public buy them. While the Government or Municipal Council obtains this alternative source of funds, it no longer has required overtaxing the people in sequence to finance progress.

7. Barometer of the Economy

On the Stock Exchange, share prices increase and fall depending there largely, on market forces. Share prices tend to increase or stay stable while the economy companies and Barometer in commonly show symbols of stability. Consequently their movement of share prices can be an indicator of the usual trend in the economy.

Posted Date: 2/1/2013 12:48:16 AM | Location : United States







Related Discussions:- Role of stock exchange in economic development, Assignment Help, Ask Question on Role of stock exchange in economic development, Get Answer, Expert's Help, Role of stock exchange in economic development Discussions

Write discussion on Role of stock exchange in economic development
Your posts are moderated
Related Questions
Sapp Trucking's balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%. This debt currently has a marke

Suppose the current yield curve is as follows: (a) Calculate the current market prices of two bonds with the following annual cash flows: Bond A: A coupon of $60 is due

Example of Asset Based Valuation Extracted information from the books of Kent Limited.   Current liabilities Bank overdraft    Sh. 300,000

You buy a SML Bond for $980.  The bond has a face value of $1000 and an yearly  coupon rate of 8%.  There are five years left until maturity. a. What is the yield to maturity on

Problem 1 a) Explain Trade Liberalisation and give your views whether emerging economies should adopt trade liberalization protectionist measures to attain economic growth.

I need help with financial econometric questions, i got stuck in finding answers for my homework, Can you provide engineering level financial econometric homework help? I need expe

BAC is considering an issue of preferred stock.  The dividends are 8.12% of the $25 par value. a.    If the present price is $26.25 per share, what is the return on the preferre

AsStudents will analyze and synthesize the financial reports of an organization of their choice and present their findings in a PowerPoint presentation (with completed Notes sectio

Show that for any constant 0=a=1, C(aK1 + (1-a)K2) = aC(K1) + (1-a)C(K2) where C(k) is the European option price with strike K. All the options in this question are assumed to be

Example of Quantity Discounts Consider illustration one and suppose that a quantity discount of 5 percent is given whether a minimum 200 units is ordered. Required Fin