1. Mobilisation of Savings and channeling them into the most
productive uses : Financial market facilitates the transfer of savings from savers to investors and thus helps to channelize surplus funds into the most productive use.
2. Helps in Price Determination : Financial Market helps in interaction of savers and investors which in turn helps in the determination of prices of the financial assets such as shares, debentures etc.
3. Provides Liquidity to Financial Assets : Financial market facilitates easy purchase and sale of financial assets. Thus, it provides liquidity to them so that they can be easily converted into cash whenever required.
4. Reduces the Cost of Transactions : Financial market provides valuable information about securities which helps in saving time, efforts and money and thus it reduces cost of transactions.
