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ISLAMIC FINANCIAL SYSTEM & CAPITAL MARKET

ISLAMIC FINANCIAL SYSTEM & CAPITAL MARKET

ISLAMIC FINANCIAL SYSTEM & CAPITAL MARKET


NAME :

CLASS :

DATE :

1. Which of the following assets is traded only in an over-the-counter market?

A stocks B treasury bonds

C debt instruments D commodities


2. Which of the following statements about the characteristics of debt and equity are true?

A They can both be long-term financial instruments.

B All of the above.

C They both enable a corporation to raise funds.

D They both involve a claim on the issuer’s income.


3. Which of the following are primary markets?

A The options markets B None of the above

C The over-the-counter stock market D The New York Stock Exchange


4. The process of indirect finance using financial intermediaries is called

A direct lending. B resource allocation.

C financial liquidation. D financial intermediation.


5. Who are the main issuers in the Malaysian bond market?

A central bank B unit trust

C cagamas berhad D maybank


6. Who are the major investors in the Malaysian bond market?

A unit trust B pension fund

C discount houses D EPF


7. Which of the following statements about the characteristics of debt and equities is true?

A Bond holders are residual claimants.

B The income from bonds is typically more variable than that from equities.

C Bonds pay dividends.

D They can both be long-term financial instruments.


8. Which of the following are investment intermediaries?

A Life insurance companies B Mutual funds

C State and local government retirement funds

D Pension funds


9. Which of the following can be described as involving direct finance?

A A corporation buys a short-term security issued by another corporation.

B A corporation takes out a loan from a bank.

C An insurance company buys shares of common stock in the over-the-counter markets.

D People buy shares in a mutual fund.


10. Which of the following instruments are traded in a money market?

A Banker’s acceptances B Bank commercial loans

C Residential mortgages. D State and local government bonds


11. An important function of secondary markets is to

A make it easier to sell financial instruments to raise cash.

B create a market for bank demand deposits.

C raise funds for corporations through the sale of securities.

D make it easier for governments to raise taxes.


12. Which of the following can be described as involving direct finance?

A An insurance company buys shares of common stock in the over-the-counter markets.

B A corporation issues new shares of stock.

C A pension fund manager buys a shortterm corporate security in the secondary market.

D People buy shares in a mutual fund.


13. Securities are _____ for the person who buys them, but are _____ for the individual or firm that issues them.

A non-negotiable; negotiable B assets; liabilities

C liabilities; assets D negotiable; non-negotiable


14. Which of the following is a contractual savings institution?

A A credit union B A life insurance company

C A mutual fund D A savings and loan association


15. Which of the following can be described as direct finance?

A You buy shares in a mutual fund. B You borrow $2500 from a friend.

C You take out a mortgage from your local bank.

D A pension fund lends money to General Motors.


16. Which of the following financial intermediaries is not a depository institution?

A A commercial bank B A credit union

C A finance company D A savings and loan association


17. An important financial institution that assists in the initial sale of securities in the primary market is the

A stock exchange. B investment bank.

C brokerage house. D commercial bank.


18. Which of the following can be described as involving indirect finance?

A A pension fund manager buys a shortterm security from the issuing corporation.

B Both (a) and (b) of the above.

C A corporation buys a short-term security issued by another corporation.

D A corporation’s stock is traded in an overthe- counter market.


19. Every financial market has the following characteristic:

A It determines the level of interest rates. B It allows common stock to be traded.

C It channels funds from lenders-savers to borrowers-spenders.

D It allows loans to be made.


Answer Key

1. b 2. b 3. b 4. d

5. a 6. d 7. d 8. b

9. a 10. a 11. a 12. b

13. b 14. b 15. b 16. c

17. b 18. d 19. c

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