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Exchange

Meaning: 

An exchange is defined as a system where something is given and something is received in return. In the financial context, it refers to an organized marketplace where
financial instruments such as shares, commodities, currencies, and derivatives are bought and sold. Examples of exchanges include the NSE and BSE for stocks, MCX for commodities, and Forex for currency trading.

Example:

For example, when you trade shares of a company on the NSE, you are using a  stock exchange to buy or sell those shares.

How to understand Exchange:

Exchanges provide liquidity, making it easy for investors to buy and sell their assets.
They ensure transparent pricing, which is determined by the forces of demand and supply.
 

Importance of Exchange:   

Exchanges protect investors through established rules and surveillance, making trading safer.
They enable global trade by facilitating currency exchanges for international transactions.

Uses of Exchange:
Buying or selling shares, bonds, or ETFs.
Trading commodities like gold, silver, and crude oil.
Participating in IPOs or converting currency for travel.



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