Cima F2 Exam Question No 7

Question No 7:

What  is the Capital markets functions?

Primary function: The primary function of a stock market is to enable companies to raise new finance (either equity or debt). Through the stock market, a company can communicate with a large pool of potential investors, so it is much easier for a company to raise finance in this way, rather than contacting investors individually. Note that in the UK, a company must be a plc before it is allowed to raise finance from the public on the stock market.
Secondary function: The secondary function of a stock market is to enable investors to sell their investments to other investors. A listed company's shares are therefore more marketable than an unlisted company's, which means that they tend to be more attractive to investors