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In what ways does the Nairobi Stock exchange support business and economic growth in a country?

Explain ways in which the Nairobi Stock exchange supports business and economic growth in a country.

Answers

(i) Provides the government with the outlet for selling securities to obtain funds for its projects.

(ii) Encourages share prices stability ( through speculation) thereby promoting trading of shares/ securities/ avoiding wide variations in share prices.

(iii) Provides market for existing shares/ Boosts investment in shares/ securities-by facilitating transfer of shares from one shareholder to another.

(iv) Helps quoted companies raise additional capital through initial public offer (IPO)/ selling/ floating of new shares/ introduction of new shares.

(v) Provides a measure of performance of quoted companies through ( having) records of share price fluctuations.

(vi) Provides a measure/ indicator of economic performance by establishing the stock exchange index.

(vii) Provides information to potential investors by publishing data on performance of shares in stock exchange.

(viii) Provides data to the government which is used in national/ economic planning.

(ix) Promotes good management of (quoted) companies by setting requirements companies must meet the criteria/ threshold of being quoted.

(x) Mobilizes savings/ Encourages saving habits by channeling funds to viable investments ( thereby building confidence on performance of quoted companies).

maurice.mutuku answered the question on July 11, 2017 at 14:59

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