What is the primary purpose of financial markets?

The primary purpose of financial markets is to provide a platform for buying and selling investments. Financial markets serve as an intermediary that enables buyers and sellers to come together to trade various securities, such as stocks, bonds, and derivatives. This trading facilitates capital raising, risk management, and liquidity, allowing investors to allocate their resources efficiently.

Through these markets, participants can determine the prices of financial assets based on supply and demand dynamics. This mechanism supports economic growth by providing businesses access to a variety of funding sources and allowing investors to adjust their portfolios according to their risk preferences and investment strategies.

While the other options touch upon related functions within the broader financial ecosystem, none encapsulates the central role of financial markets as well as the function of providing a trading platform for investments. This trading venue fosters greater transparency and efficiency in financial transactions, making it essential for the smooth functioning of the economy.