FIN 346 Chapter 1 Quiz

Explain the financial market overview

• It is a contracts to buy or sell a specific underlying asset at a set future date. The underlying asset can be a commodity, a security, or some other financial instrument.

• It is divided into 2 (capital & money market).
  Capital (long term investment)
  Money market (short term investment).
  Capital divided into 2
  Primary (new securities issued)
  secondary market (issued securities traded

• It is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury

What is Money Market?

• Invest & trade by lending & borrowing.

• Primary & secondary Market

• Long-Term more than 1 year.

What is Capital Market?

• Government can fund their debts and central bank can implement their monetary policy.

• Lending, borrowing funds, purchase & sale of money market investments

• Classified as primary & secondary markets

Examples of capital market?

• bonds

• T-bills

• Commercial paper

• Repurchase agreements (repos)

Securities Market is a place that allows suppliers and demanders to make types of financial transactions which include capital & money market.

• True

• False

Financial Market Participants

• Central Banks

• Retail Traders

• Government

• None

Money Market Instruments

(a)  

Role and Key functions of Investment Banks

• Investment banks facilitate capital raising and provide advisory services for M&A.

• Investment banks are responsible for managing government budgets.
• Investment banks primarily focus on retail banking services.
• Investment banks only deal with personal loans and mortgages.

Role of Stock Broking Companies

(a)  

What are the securities traded in Malaysia?

• Real Estate Investment Trusts (REITs)
• Commodities
• Foreign Exchange (Forex)
• Bonds