Merits / Benefits / Advantages of Stock Exchange

The stock exchange is the life blood of country’s economy. There are lots of advantages of stock exchange. Most common and important benefits of stock exchange are as follows:

Advantages of stock exchange

  1. Long Term Finance: Banks may not be willing to provide long-term finance, so, the companies needing such financing turn to the public, inviting people to lend them money or take a share in the business in exchange for future profits. This they do by issuing stocks and shares in the business through stock exchanges. By doing so, they can mobilize the savings of individuals and institutions. Thus, the Stock Exchange exists to provide a channel through which these savings can reach those who need finance.
  2. Unlimited Opportunity of investment: Everyone wants to save or invest in one form or another. The Stock Exchange provides a way in which money can be put to work. When the saver in shares needs his money back, he does not have to go to the company with whom he originally placed it. Instead, he sells his shares to some other who is seeking to invest his money through the Stock Exchange. Stock exchanges have, thus, found different solutions to the problem of providing contiguous and free market insecurities, with varying degrees of success.
  3. Economic Stability: The economic stability of a country is essential for the growth of healthy industrial atmosphere and participations of people in productive economic investments. Capital is the lifeblood for industries. The Government is providing the major equity for further expansion or to survive in a different economic condition. The stock Exchange provides assistance to the enterprises by creating avenues for selling shares and stocks to the public to generate fund. Thus, the Stock exchange is a unique yardstick to assess the industrial activity and investment opportunities of a country.
  4. Investment opportunities to small savers: The Stock Exchange is a system of arrangement which, in combination with other institutions, patterns the capital market of an economy. In a free economy, the stock exchange is the pivot of the money market. It thus provides investment opportunities to small savers.

    Merits/ Benefits / Advantages of Stock Exchange

    Advantages of Stock Exchange

  5. Raising of new capital: Companies, however, do not get their shares listed on the stock exchange automatically and, though the actual listing fees payable to the stock exchange are not big, the cost to the company of meeting the exchanges may be considerable. A company willingly accepts these responsibilities because access to the Stock exchange brings benefits in the form of better marketability for their shares and, thereby, assists in the raising of new capital.
  6. Easy to participate: The Stock Exchange has no statutory authority, or monopoly, over anybody and no legal powers other than those which individual companies freely contract to give. Members of the Stock Exchange agree to abide by its rules as a condition of membership and companies do so by signing the listing agreement or general undertaking.

Related Content of Stock Exchange:

7 comments for “Merits / Benefits / Advantages of Stock Exchange

  1. wasswa hannington
    November 11, 2015 at 5:43 AM

    good info. this is helpful

  2. Makoni Carl
    July 13, 2016 at 5:49 PM

    well answered .but where is the disadvantages?

  3. December 13, 2016 at 12:37 AM

    disadvantagies also to be there

    • rasel
      December 13, 2016 at 9:52 AM

      We will add disadvantages as soon as possible

  4. sanjana
    March 16, 2017 at 5:14 AM

    very good and useful

  5. sai
    March 16, 2017 at 5:16 AM

    okk better

  6. Opili
    May 26, 2017 at 5:10 PM

    Nice answered

Leave a Reply

Your email address will not be published. Required fields are marked *