(a) State four functions of Money: (b)Explain how the following operators function on a stock exchange

Answer Details

(a) Four functions of money are:

1. Medium of exchange: Money is used as a medium of exchange to facilitate the buying and selling of goods and services.
2. Unit of account: Money serves as a common measure of value, allowing people to compare the relative worth of different goods and services.
3. Store of value: Money can be saved and used at a later time, allowing people to store their wealth in a convenient and secure form.
4. Standard of deferred payment: Money can be used to settle debts and make payments in the future, making it a reliable standard of deferred payment.

(b) The following operators function on a stock exchange as follows:

1. Brokers: Brokers are intermediaries between buyers and sellers of securities on the stock exchange. They facilitate the trading process by matching buyers with sellers and executing trades on behalf of their clients.
2. Market makers: Market makers are firms or individuals who provide liquidity to the market by buying and selling securities. They ensure that there is always a market for the securities being traded and help to maintain stable prices.
3. Specialists: Specialists are individuals who are responsible for maintaining an orderly market for a specific security or group of securities. They ensure that there is always a buyer or seller for the security and help to maintain a fair and efficient market.
4. Investment bankers: Investment bankers are firms or individuals who assist companies in raising capital by underwriting and selling securities. They help companies to navigate the complex process of issuing securities and ensure that the securities are sold at a fair price.