What is the definition of a stock exchange?

A stock exchange is defined as a market where shares are bought and sold. This definition encompasses the primary function of a stock exchange, which is to provide a platform for investors to trade ownership in publicly listed companies through buying and selling shares. Stock exchanges facilitate the process of price discovery and liquidity, allowing investors to easily enter and exit their positions in various securities.

In the context of the options provided, it's important to note that while other choices may relate to aspects of finance or regulation, they do not accurately define what a stock exchange is. For example, a financial instrument refers to the actual shares or securities being traded, not the venue itself. A government regulatory body oversees the functions of financial markets, including stock exchanges, but is distinct from the marketplace. Finally, an organization that sets market prices refers to entities like index providers or market makers, but again, this does not capture the essence of what a stock exchange is. Therefore, the definition reflecting the characteristics and purpose of a stock exchange is that it is a market where shares are bought and sold.