QUESTION 1

a) There are several contracts in the Futures Market such as "swap" contracts and futures

contracts. Explain the meaning of these two contracts fallowed by an example of each contract. (8 marks)

b) Explain two popular financial futures contracts. (5 marks)

c) Describe 4 types of risk to which traders in financial futures contracts are exposed. (8 marks)

d) Explain how interest rate futures contracts are used to hedge against interest rate risk. (4 marks)

QUESTION 2

a) Islamic Capital Market (ICM) serves as a market in parallel with the conventional capital market in Malaysia. Explain the 5 differences between the Islamic market and the conventional market. (15 marks)

b) Explain the three products available (including real example) in the Malaysian Islamic Capital Market that have been applied to Shariah principles. (10 marks)

Question 3

a) What is the name of the offshore market in Malaysia? Explain TWO advantages and THREE disadvantages of this market. (11 marks)

b) Define call option and put option. What are the major differences between call option and put option? Highlight the difference between options and futures contracts.

(6 marks)

c) List four types of financial institutions in Malaysia and explain how these four institutions use the money market to raise funds. (8 marks)

QUESTION 4

a) Mr. Danial wants to diversify his personal investments by investing in Mutual funds. Please explain (3 facts) what are the characteristics of this type of investment.

(9 marks)

b) Malaysia is one of the leading provider of Islamic banking products globally and its market share is increasing each year. The Islamic Banking products have been used by both the Muslim and non-Muslim customers. Discuss briefly two similarities and three differences between Islamic and Conventional Banking. (10 marks)

c) Commercial banks play a key role in financial institutions. Explain the 3 main sources of funds' commercial bank and the 3 main uses of these funds. (6 marks)

QUESTION 5

a) Please explain the purpose and function of Non-bank financial funds (NBFI). Please list 2 examples of NBFI in Malaysia. (8 marks)

b) Please explain using 3 facts how an investor can determine performance of a bank is better than others. (6 marks)

c) Explain 1 similarity and 2 differences between commercial banks and investment banks. (6 marks)

d) Malaysia (BNM) intends to apply a more rigid monetary policy to address inflationary problems in our economy. Explain how BNM can achieve that goal by using a qualitative measurement method and a quantitative measurement. (5 marks)

QUESTION 6

a) Marina has two (2) bonds in her portfolio that have a face value of RM1,000 and pay a 10% annual coupon. Bond A matures in 15 years, while Bond B matures in 1 year. Calculate the value of Bond A and bond B, if the going interest rate is 9.5%. (6 marks)

b) Explain three factors that affect the pond's rating issued by a company. (6 marks)

c) Explain the 3 differences between common stock and preferred stock. (9 marks)

d) Based on what you know about repurchase agreements, would you expect them to have a lower or higher annualized yield than commercial paper? Why? (4 marks)