Q.‘Stock Exchange is playing a vital role in ensuring wider share ownership by regulating new issues, better trading practices and taking effective steps in educating the public about investments.’ The above lines highlight which function of stock exchange from the following ? (A) Providing Scope for Speculation (B) Spreading of Equity Cult (C) Safety of Transactions (D) Contributes to Economic Growth
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Start your 14-day free trial to unlock the full solution →The passage describes how stock exchanges promote broader public participation in equity markets through regulation, education, and better practices — the essence of spreading equity culture.
Financial markets, and stock exchanges in particular, serve multiple functions beyond the simple buying and selling of securities. They act as institutions that shape investor behavior, build confidence, and democratize access to capital markets. Understanding these functions helps us see why stock exchanges are not merely trading platforms but vital economic institutions.
The passage in question emphasizes three specific activities: regulating new issues, improving trading practices, and educating the public about investments. Each of these points toward a larger goal — making equity investment accessible, understandable, and attractive to a wider population. When a stock exchange regulates new issues, it ensures that companies coming to the market meet certain standards, protecting potential investors. Better trading practices mean transparency, fairness, and efficiency, which build trust. Public education removes the mystery and fear that often keep ordinary people away from stock markets.
This combination of activities serves a particular purpose. It encourages people who traditionally kept their savings in fixed deposits or gold to consider equity as a legitimate investment avenue. The term "equity cult" refers precisely to this cultural shift — a society where share ownership is not limited to a wealthy elite but spreads across middle-class households, salaried employees, and small savers. The stock exchange becomes an instrument of financial inclusion.
Let's consider why the other options don't fit:
- Providing scope for speculation relates to the stock exchange allowing short-term trading and price discovery through speculative activity, which is a different function altogether.
- Safety of transactions focuses on the settlement mechanism, clearing systems, and the guarantee that trades will be honored — important, but not what the passage emphasizes. …
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