2.2 Role and Function

The market's functions (the exam's list): (1) capital formation (the savings-to-investment channel); (2) price discovery (the continuous auction's collective judgment — the price as the aggregated information); (3) liquidity (the exit's assurance — the investment's reversible promise); (4) risk allocation-and-transfer (the hedging faces; the diversified portfolios); (5) thecorporate governance's discipline (the market's verdict on the management — the takeover- and-price signals, Unit 7); (6) the wealth's democratisation (the ordinary saver's ownership share); and (7) the state's-and-institutions' financing (the government securities' market — the debt's organised home).