CONFIDENTIAL BA/DEC 2019/FIN435

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UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE FINANCIAL MARKET AND BANKING SERVICES

COURSE CODE FIN435

EXAMINATION DECEMBER 2019

TIME 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of five (5) questions.

2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

3. Do not bring any material into the examination room unless permission is given by the
invigilator.

Please check to make sure that this examination pack consists of:

i) the Question Paper

ii) an Answer Booklet - provided by the Faculty

Answer ALL questions in English.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 3 printed pages

© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL
 CONFIDENTIAL 2 BA/DEC 2019/FIN435

QUESTION 1

a) Financial institutions comprise of banking institutions and non-banking institutions.

Choose two (2) non-banking institutions and describe their roles and activities.
(10 marks)

b) Banking system in Malaysia operates in dual system where conventional banking runs
in parallel with Islamic banking. Distinguish between conventional banking and Islamic
banking.
(10 marks)

QUESTION 2

a) Initial public offering (IPO) is a form of invitation to the public to become shareholder of
a company. Outline four (4) reasons why a company would offer part of its securities to
the public to be listed on an exchange.
(10 marks)

b) Common stocks are sensitive to factors such as changes in domestic or foreign

economic situation and uncertainties in a political scenario. Describe four (4) types of
common stocks available to investors.
(10 marks)

QUESTION 3

a) Identify the key areas that Labuan International Business and Financial Center (IBFC)
can focus on in developing Labuan as a reputable offshore financial center.
(5 marks)

b) A derivative instrument is defined as an instrument whose value depends on the

underlying instrument/asset. Explain two (2) types of derivative trading.
(5 marks)

c) Bank Negara Malaysia (BNM) is responsible in promoting monetary stability and

managing the banking system in Malaysia. BNM carries out the roles using various
measures. Explain one (1) qualitative measure and one (1) quantitative measure to
achieve this objective.
(10 marks)

) Hak Cipta Universiti Teknologi MARA CONFIDENTIAL

CONFIDENTIAL 3 BA/DEC 2019/FIN435

QUESTION 4

a) In order to maintain liquidity, financial institutions will hold cash and short term
securities as assets. They also maintain lines of credit as liability for the purpose of
additional demand for cash. Identify four (4) various sources of liquidity to meet liquidity
needs.
(10 marks)

b) Bank with good asset quality refers to banks with low non-performing loans. Interpret
how bank can detects problem loan (red flag) from operations of the accounts and
operations of the business.
(10 marks)

QUESTION 5

a) There are always risks involved when trading in any type of financial market. Describe
two (2) risks involved in money market trading and explain briefly how the risks can be
managed and controlled.
(10 marks)

b) Banks offer many types of specialized financial services to cater to both individuals and
corporate clients. Discuss what bridging loan and end financing are as one of the
specialized financial services and products offered to clients. Illustrate the relationship
using a diagram.
(10 marks)

END OF QUESTION PAPER

© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL