Briefly explain the contributions made by the share market to the financial system.

Expert Solution

Share market is a electronic online financial market platform where issued issued securities are bought and sold. It is also called secondary market where issued securities are traded. Share market is a very important part of financial system. Following are the key role of share market in the financial system.

(1) It provides the liquidity to the investors and securities bought through the primary market can be sold in the share market.

(2) It provides a platform where buyer and seller of shares can exchange their securities without apporaching to any one.

(3) It provides the real time based information about the market price of the securities on which securities are bought and sold.

(4) It Provides a common performance measurement index like share market index which shows the average performance of share market int the country and increased volume of trade shows the level of economic activity in the country and it is also called the barometer of economic performance.

Thus in the end in can be said that share market contributed in the development of the financial system of any country for providing a ready made platform for selling and buying of securities and maintaining the liquidity in the system and by providing a unique measurement index like stock marekt index for the evaluation of performance of economy.

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