Continuous Price Formation

The third major function, closely related to the second, discharged by the stock exchanges is the process of continuous price formation, The collective judgement of many people operating simultaneously in the market, resulting in the emergence of a large number of buyers and sellers at any point of time, has the effect of bringing about changes in the levels of security prices in small graduations, thereby evening out wide swings in prices, the ever changing demand and supply, conditions result in a continuous revaluation of assets, with today’s prices being yesterday’s prices, altered, corrected and adjusted, and tomorrows values being again today’s values altered, corrected and adjusted. The process is an unending one stock exchanges thus act as a barometer of the state, of health of the nations economy, by constantly measuring its progress or otherwise. An investor can always have his eyes turned towards the stock exchanges to know, at any point of time, the value of the investments and plan his personal needs accordingly.

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