The basic purpose of financial markets is to:
A) match people who want money to spend now with people who want to save their money for later.
B) buy and sell different currencies to make a profit.
C) sell commodities to firms as inputs.
D) trade stocks and bonds.

Question

Quizplus · Accepted Answer

Financial markets are designed to match those individuals who have funds (surplus) with those who require funds (deficit). This facilitates the effective allocation and distribution of resources in an economy. Financial markets enable investors to invest their funds into various securities - stocks, bonds, mutual funds, etc. - and thereby earn returns on their investments. At the same time, the demand for funds is met by firms, governments, and various other entities that require access to funds to finance their projects or operations.

The Basic Purpose of Financial Markets Is To