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CFGB6308 Capital Markets and Investments

Quiz Test Questions 1. The means by which individuals hold their claims on real assets in a welldeveloped economy are A) Investment assets. B) Depository assets. C) Derivative assets. D) Financial assets. E) Exchange-driven assets. 2) Which of the following is NOT a financial asset? A) Securities B) Loan C) Equipment D) Hybrid Securities E) Derivatives 3. A debt security pays A) a fixed level of income for the life of the owner. B) a variable level of income for owners on a fixed income. C) a fixed or variable income stream at the option of the owner. D) a fixed stream of income or a stream of income that is determined according to a specified formula for the life of the security. E) All of the above. 4.Which of the following is NOT a basic function of a stock market in the economy? A) It provides a place and mechanism for corporations to raise capital. B) It allocates capital towards productive users. C) It provides opportunities for corporations to increase savings. D) It reveals investors' judgements about potential earning capacity of corporations. E) It generates income for certain people. 5. Which of the following are roles of financial assets? I. II. III. IV. V. to transfer funds from those parties who have surplus funds to invest to those who need the funds to invest in tangible assets. To transfer funds in such a way as to redistribute unavoidable risk associated with cashflow generated by tangible assets amongst those seeking and those providing the funds. To provide employment to the investors. To provide information to the investors. To provide a market place for real assets.

A) B) C) D) E)

I, II I, III I, IV I, V All of the above.

6. Which of the following is NOT a role of financial markets? A) To provide the mechanism for fair and competitive price discovery, including narrowing the gap between the buyer's price, bid and the seller's price, offer. B) To provide the mechanism and place for the owner to sell a financial asset, providing liquidity to the market. In the absence of liquidity, the owner must hold a debt instrument until it matures and an equity investment until the company either the company voluntarily or involuntarily liquidates. C) To reduce the search costs of transacting. D) To reduce the information costs of transacting E) To provide a place and mechanism for the exchange of physical goods.

7) Which of the following is NOT a basic function of the stock market in the economy. A) the stock market makes it possible for corporations and governments to raise capital. B) the stock market allocates capital towards productive users. C) the stock market provides an opportunity for people to increase the savings by investing them. D) the stock market generates employment and income. E) All of the above. 8) Under the Capital Markets and Services Act 2007, which of the following is NOT a power of the Minister of Finance? A) To grant and revoke the approvals of stock exchange, futures exchange and clearing house. B) To prescribe regulations under the Capital Markets and Services Act 2007. C) To close the markets in an emergency. D) To hear the appeals against the decisions of the Securities Commission in respect to licensing. E) To hear the appeals against the decisions of the Securities Commission in respect to insider trading. 9). Which of the following is NOT responsibility of the Securities Commission? A) licensing securities and futures market participants (holders of a CMSL and their representatives). B) approving the business rules of the stock and futures exchanges and the clearing house.

C) Daily operations and management of the stock and futures exchanges and the clearing house. D) Enforcement and prosecution E) Advising the Minister of Finance in matters pertaining the securities and futures industry. 10) Which of the following is NOT an essential characteristics of a financial market like stock market? A) Transparent competitive bid-offer spread (and the process of achieving competitive pricing) B) Liquidity for marketability, price continuity and depth C) Low transaction costs internal efficiency D) Matching specific tailor-made requirement of each and every investor E) Rapid adjustment of prices to new information external efficiency 11) Which of the following is NOT a financial market? A) Capital Market B) Money Market C) Futures Market D) Property Market E) Foreign Exchange Market 12) Securities Commission ensures the integrity of the following markets except: A) Securities market. B) Futures market. C) Derivatives market D) Options market E) Foreign exchange market. 13) Which is NOT one of the functions of stock and futures exchanges? A) Price discovery B) Market place for buyers and sellers C) Secondary market for buyers and sellers D) Provide specialised contracts for individual needs E) Lower transaction costs 14) The client tells the dealer representative to sell 1,000 ABB shares at RM9.00. The market is trading at RM8.79. What type of order is that? A) Market Order B) Limit Order C) Stop Loss Order D) Stop Limit Order E) Good-till-Cancelled Order 15) Which of the following are true? I) Market Orders are matched first. II) Limit Orders are matched first. III) Orders are matched according to the priority of time first and then price. IV) Orders are matched according to the priority of price first and then time. V) Good-till-Cancelled orders are valid until they are cancelled.

A) I, III, V B) II, III, IV C) I, IV, V D) II, IV, V E) I, II, IV 16) The following are the major roles of Bursa Malaysia EXCEPT: A) It provides a virtual 'central market place' for buyers and sellers to transact business shares. B) It provides the regulatory structure. C)It provides a trading system. D) It provides a margining and marked to market system. E) It provides a settlement system. 17) Your remisier can do all the following except: A) buy and sell stocks for his own account B) buy and sell stocks for clients C) provide liquidity to the marketplace D) buy and sell odd lots for clients E) advise on the purchase and sell of stocks 18) In the event of the firms bankruptcy, which of the following gets priority to claim against the assets of the company? A) Directors B) Managers C) Common Shareholders D) Preferred Shareholders E) General Public 19) If you are short 1 FKLI Sep12 futures contract at 1790, and you want to cut loss if FKLI Sep12 futures contract bounces back up 1800, which of the following order will you put in? A) Market Order B) Limit Order C) Stop Limit Order D) Stop Order E) Day Order 20) If you want to be filled immediately, what order do you key into the trading platform? A) Market Order B) Limit Order C) Stop Limit Order D) Stop Order E) Day Order

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