Question
Usually, basic financial markets have five basic functions in a capitalistic economy: For each of the functions cited below, explain how financial markets perform each
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Usually, basic financial markets have five basic functions in a capitalistic economy:
For each of the functions cited below, explain how financial markets perform each function in detail.
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They make it possible for corporations and governmental units to raise capital. (2 marks)
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They help to allocate capital toward productive uses. (2 marks)
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They provide an opportunity for people to increase their savings by investing in them.
(2 marks)
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They reveal investors judgments about the potential earning capacity of corporations, thus
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giving guidance to corporate managers. 5. They generate employment and income.
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