What is the primary function of a stock exchange?

The primary function of a stock exchange is to facilitate the buying and selling of securities. Stock exchanges serve as a centralized platform where investors can trade shares of publicly listed companies, allowing for liquidity and price discovery. This function is crucial because it helps ensure that transactions can occur smoothly and transparently, enabling investors to purchase and sell securities according to market conditions.

In this context, the exchanges provide a marketplace that connects buyers and sellers and establishes rules and procedures that govern the trading process, ensuring fair and efficient trading. This role is essential for maintaining investor confidence and stimulating investment in the stock market.

While other options mention important financial activities, such as providing loans, issuing new securities, or regulating institutions, these are not the core function of a stock exchange. Loans are typically provided through banks and financial institutions, the issuance of new securities falls under the purview of investment banks and public offerings, and regulation is the domain of specific governmental bodies or regulatory agencies rather than the stock exchanges themselves.