Final answer:
Securities markets are critical for channelling financial capital from savers to businesses and governments requiring investment, with transparency being vital for investors' decision-making. These markets, consisting of instruments like stocks and bonds, are an efficient information mechanism, allowing individuals to partake in economic activities indirectly. Hence, the statement is true.
Step-by-step explanation:
Securities markets are essential for the effective functioning of the economy by enabling capital flow from those who supply financial capital to those who demand it. These markets include venues for products like stocks, bonds, and bank loans, which collectively contribute to the funding of businesses and governmental entities. When investors supply financial resources in these markets, they can earn returns from the productive uses of their capital, such as when a company profitably expands its operations.
Transparency in these markets is crucial for investors to make informed decisions. Transparent markets mean that the prices of securities reflect all available information, allowing investors to evaluate risks and potential returns effectively. Price controls, by contrast, can obscure true scarcities and lead to resource misallocation. This is why free market prices are seen as an efficient system for the dissemination of information, playing a vital role in the overall efficiency and stability of capital markets.