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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