State any four functions of financial market.

Answer: Functions of financial market:

1. Mobilisation of savings: It collects the savings of households and others and channels them into productive investment in industry and trade.
2. Price discovery: The prices of financial securities are determined by the forces of demand and supply in the market.
3. Liquidity: It provides a ready market where investors can easily sell their securities and convert them into cash.
4. Reduction of cost of transactions: It provides information about securities and brings buyers and sellers together, saving time, effort and money.
5. Capital formation: By linking savers and investors it helps capital formation and economic growth.
6. Facilitates credit: Through the money market, it meets short term financial needs of businesses and the government.