ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Financial market gives impetus to the savings of the people. This market takes the uselessly lying finance in the form of cash to places where it is really needed. Many financial instruments are made available for transferring finance from one side to the other side.

Detailed explanation-2: -’Mobilisation of savings and channelling them into the most productive uses’ is a function of financial markets.

Detailed explanation-3: -Facilitate price discovery, provide liquidity to financing assets and reduce the cost of transaction are all functions of financial markets.

Detailed explanation-4: -1) Mobilisation of savings and making its best use: A financial market helps to transfer savings from savers to investors. It gives savers the choice of different investments and thus helps to channelize surplus funds into the most productive use.

Detailed explanation-5: -Money markets serve five functions-to finance trade, finance industry, invest profitably, enhance commercial banks’ self-sufficiency, and lubricate central bank policies.