Which of the following is true of a securities exchange?
A) It serves as an intermediary by channeling the savings of individuals, businesses, and governments into loans or investments.
B) It borrows funds directly from the financial institutions.
C) It is an association of banks who meet to buy and sell stocks and bonds.
D) It provides a marketplace in which firms can raise funds through the sale of new securities and purchasers can resell securities.

Question

Quizplus · Accepted Answer

A securities exchange provides a marketplace where firms can raise funds by issuing new securities (such as stocks and bonds), and where purchasers can resell their securities to other investors. This is the main function of a securities exchange, which distinguishes it from other types of financial institutions such as banks or investment firms (which may also participate in the exchange). Option A describes the role of financial intermediaries, while options B and C are incorrect descriptions of securities exchanges.

Which of the Following Is True of a Securities Exchange