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what is the purpose of a stock exchange? Answer:

A stock exchange is the place where people go to buy/sell shares. It is an organized platform for people to buy/sell shares.

Earlier there was no concept of organized exchanges & trading. When someone wanted to sell a share they had to find a prospective buyer and the trading would happen face to face and then the payment & shares would be settled in paper format.

There are a lot of drawbacks in this system. The price in which a share is sold is not controlled, nobody can keep track of who is buying what etc.

So the concept of Organized stock exchanges came up. Here when two people want to buy a share of a company at the same time, then the price they buy would be exactly the same. This helps the governing bodies for securities trading to keep track of the buying/selling activity and most importantly to identify malicious activities.

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