What is the primary function of a stock exchange?

The primary function of a stock exchange is to facilitate the buying and selling of stocks and securities. This platform allows investors to trade shares of publicly traded companies, making it possible for individuals and institutions to invest in businesses and for those businesses to access capital from the public. Stock exchanges provide a regulated environment where prices are determined by supply and demand, enabling transparency and efficiency in the trading process.

In contrast, providing loans to investors and companies pertains to financial institutions such as banks, which offer lending services rather than facilitating stock trades. Offering insurance services relates to the insurance industry, which helps mitigate financial risks rather than involving the buying or selling of securities. Guaranteeing returns on all investments made is unrealistic, as stock markets inherently operate under a principle of risk, where returns can vary and there is no assurance of profit from any investment. Thus, the correct answer underscores the exchange's role in enabling the flow of capital and investment activities.