Question :
Identify the function performed by Financial Maret from the following statement :
"Holders of assets can readily sell their financial assets through the mechanism of the financial market'
Option 1: Reduce the cost of transactions
Option 2: Provide liquidity to financial assets
Option 3: Facilitate price discovery
Option 4: Mobilisation of savings and channelising them into the most productive uses
Correct Answer: Provide liquidity to financial assets
Solution :
Providing liquidity to financial assets: Because financial markets enable the buying and selling of financial assets, financial assets can be quickly turned into cash. Hence, providing liquidity to financial assets is the function performed by the financial market in the given statement.