MODULE 19: ADVISORY SERVICES (RULES & REGULATIONS)

This examination is designed to test candidates’ knowledge and understanding of the rules and regulations governing advisory services in the Malaysian capital market. It is one of the examinations to be passed by individuals who:
(a) intend to apply for a Capital Markets Services Representative’s Licence (CMSRL) to carry on the regulated activities of advising on corporate finance or investment advice; or
(b) intend to be employees of registered persons who carry out the capital markets activities as stipulated in Item 2 and 3 of Schedule 4 of the Capital Markets and Services Act 2007.
Candidates are advised to refer to the Licensing Handbook for the detailed combination of examinations required for each regulated activity.
Candidates are expected to possess good knowledge and understanding of the subject matter provided in the study outline and specified references. In addition, candidates are expected to have relatively strong capability in the application, analysis and evaluation of information in this study outline and its references. It is estimated that this module will require a minimum of 200 hours of study time. Candidates may need less or more depending on the education background and work experience.

Type of Questions Multiple-Choice
Number of Questions: 60 questions
Passing Mark: 70%
Time Allocated: 90 minutes

What are the different types of investment securities?

Securities are commonly thought of as tradable financial assets. Although that’s an oversimplification, illiquid securities that don’t trade are not of interest to or suitable for the majority of investors. Most securities are issued by institutions (typically corporations and governments) for the purpose of raising capital.

Because investment securities cover a wide range of assets, they’re divided into broad categories, two of which will be our main focus:

Equity securities, for example, common stocks.
Fixed income investments, including debt securities, such as bonds, notes, and money market instruments. Some fixed-income investments, such as certificates of deposit, may not be securities at all.

What are equity securities?

Equity securities are financial assets that represent ownership of a corporation. The most prevalent type of equity security is common stock. And the characteristic that most defines an equity security—differentiating it from most other types of securities—is ownership.

If you own an equity security, your shares represent part ownership of the issuing company. In other words, you have a claim on a percentage of the issuing company’s earnings and assets. If you own 1% of the total shares issued by a company, your ownership piece of the controlling company is equivalent to 1%.

Other assets, such as mutual funds or ETFs, may be considered equity securities as long as their holdings are composed of pooled equity securities.

Example 1
A prudent person who carries on the business of investment advice and/or advising on corporate finance should be aware of the relevant laws and principles regulating his conduct and actions, in particular.
A. Contract law
B. Tort
C. Securities law
D. All of the above

Example 2:
Without consent, there can be no agreement and no contract. The giving of consent must be given freely and cannot be secured through unlawful means, such as fraud, coercion, undue influence or misrepresentation. Section 14 of the CA provides that consent is said to be free when it is not caused by:
A. coercion, as defined in section 15 of the CA
B. undue influence, as defined in section 16 of the CA;
C. fraud, as defined in section 17 of the CA;
D. All of the above

Example 3:
The consideration or object of an agreement is lawful unless:
A. It is forbidden by law and It is fraudulent
B. It is of such nature that, if permitted, it would defeat any law
C. It involves or implies injury to the person or property of another; and
he court regards it as immoral or opposed to public policy.
D. All of the above

Equity Securities (Best Overview: All You Need To Know)

Example 4:
Equity investment is buying shares directly from companies or other individual investors with the expectation of earning dividends or reselling the same to make gains when the prices are high. Investors can increase their profits as the value of equity investment rises.
The above statement is: TRUE or FALSE.

Example 5:
There are typically two types of equity securities companies issue from their capital stock: common shares and preferred shares.
The above statement is: TRUE or FALSE.

Example 6:
Below are several hybrid types of equity securities such as:
A. Convertible bonds (callable bonds)
B. Convertible stocks and Stock options
C. Warrants or equity warrants
D. All of the above

Example 7
Some equity securities will grant the security holder all the three rights mentioned above and some may carve out some of these rights. Common shares offer typically offer the following rights to the shareholders. Which of the following statements is true?

I the right to vote in the company affairs and elect the board of director
II the right to receive dividends if the board declares dividends
III the right to receive residual value proceeds once all the creditors of the company and company debt have been paid off in the event of liquidation or bankruptcy.

A. I only
B. I and II only
C. I, II and III
D. None of the above

Example 8
A callable bond (redeemable bond) is a type of bond that provides the issuer of the bond with the right, but not the obligation, to redeem the bond before its maturity date. The callable bond is a bond with an embedded call option.
The above statement is: TRUE or FALSE.

Example 9
A putable bond (put bond or retractable bond) is a type of bond that provides the holder of a bond (investor) the right, but not the obligation, to force the issuer to redeem the bond before its maturity date. In other words, it is a bond with an embedded put option. Putable bonds are directly opposite to callable bonds.
The above statement is: TRUE or FALSE.

Example 10
All of the following statements are true about the preferred shares EXCEPT?
A. The shares are bought and sold on the stock market during open hours and share prices fluctuate up and down based on investor demand.
B. The shares provide their holders with priority over common stock holders to claim the company’s assets upon liquidation.
C. The shares provide dividend payments to shareholders. The payments can be fixed or floating, based on an interest rate benchmark such as LIBOR.
D. Preferred shareholders have a priority in dividend payments over the holders of the common stock.

Example 11
Common shares, also known as common stock, are a type of security that represents ownership, or equity in a company. Common shares can not be purchased by individual investors on a stock market.
The above statement is: TRUE or FALSE.

SELF-ASSESSMENTS
MODULE 19 / SET 1
LEGAL CONSIDERATION AND CODE OF CONDUCTS

TYPE OF INVESTMENT SECURITIES/EQUITY SECURITIES/ORDINARY SHARES/PREFERANCE SHARES/PLACEMENT AGREEMENT

1. The voting rights of a shareholder of ordinary shares is proportionate to the number of _________ held by the shareholder.
A. Ordinary shares
B. Preference shares
C. Ordinary and preference shares
D. Voting contracts.

2. The total number of issued ordinary shares ________ the total number of issued preference shares.
A. Can exceed
B. cannot exceed
C. must exceed
D. must be equal

3. If there are insufficient investors subscribing for shares, which of the following entities will be obliged to subscribe for the shares not taken by investors?
A. Issuer
B. Underwriter
C. Both of the above
D. None of the above

4. Which of the following is proposed at the start of a deal and sets out the main terms of the issue of equity securities?
A. Placement agreement
B. Offering documents
C. Contract Letter
D. Mandate letter

5. Which at the following document contains the payment of commission to the underwriter by the issuer for the issuance of equity securities?
A. Placement agreement
B. Offering documents
C. Contract Letter
D. Mandate letter

6. Which of the following documents contain the agreement between the issuer and the underwriter for the issuance of equity securities?
A. Placement agreement
B. Offering documents
C. Contract Letter
D. Mandate letter

7. Which of the following documents contain information about the issuer of equity securities and are provided to potential investors for their perusal?
A. Placement agreement
B. Offering documents
C. Contract Letter
D. Mandate letter

8. Which of the following contain information necessary to allow shareholders to make an informed decision on the proposal to authorise the issue of new shares?
A. Circular of Shareholders
B. Offering Document
C. Comfort Letter
D. Depository Service Agreement

BOND: Type of bonds/Bond Characteristics/Issuer/Trustee/Investors:
9. Which of the following types of bonds provide the issuer with flexibility to control financing costs if interest rates decline?
A. Callable Bond
B. Non-Callable Bond
C. Putable Bond
D. Covered Bonds.

10. Which of the following types of bonds gives the bondholder the right to sell the bonds back to the issuer at par value on designated dates?
A. Callable Bond
B. Non-Callable Bond
C. Putable Bond
D. Covered Bonds.

11. Under which of the following situations is a bond issuer required to deal with its bondholders directly?
A. Under a fiscal agency structure
B. When a trustee is appointed
C. Both of the above
D. None of the above.

12. If a trust structure is used, a bond issuer must do all of the following except:
A. Provide Securities Commission with the profit and loss accounts and balance sheet.
B. Provide the trustee with the profit and loss accounts and balance sheet.
C. Have their bonds rated by credit-rating agencies before offering them to investors.
D. All of the above.

13. Which of the following types of trustees acts for and on behalf of the bondholders and deals directly with the issuer?
A. Bond trustee
B. Security trustee
C. Acting trustee
D. Depository trustee

14. Which of the following types of trustees is appointed to hold the bonds pn behalf of the bondholders?
A. Bond trustee
B. Security trustee
C. Acting trustee
D. Depository trustee

15. Which of the following entities are not allowed to receive interest payments and principal from the issuer and pass them on to the bondholders?
A. Fiscal agent
B. Trustee
C. Principal paying agent
D. All of the above

16. If a trust structure is used for a bond issuance, which of the following entities will make interest payments to bondholders?
A. Fiscal agent
B. Trustee
C. Principal paying agent
D. Lead Manager

17. Under which of the following situations is a Deed of Covenant required for bond issuance?
A. A central depository is used
B. A trust structure is used
C. Both of the above
D. None of the above

18. When a company is seeking new listing, the Securities Commission will take into consideration its:
A. Exceptional income
B. Non-recurrent income
C. Extraordinary items
D. Pre-tax profit.

19. Which of the following factors of a company is taken into consideration before it can be listed?
A. Operating tract record
B. Market capitalisation
C. Operating revenue
D. All of the above

20. Which type of debt by a company need not be settled prior to its listing?
A. Debts owing to the company by its directors.
B. Debts owing to the parent company by its subsidiaries.
C. Debt incurred by the company for the benefit of directors.
D. Debts owing to the company by its substantial shareholders

21. Which types of Operating revenue can be used for the assessment of the listing of a company?
A. Actual operating revenue
B. Pro Forma operating revenue
C. Both of the above
D. None of the above

22. Which of the following methods can be employed by a listed company to increase shareholding spread requirements after its IPO?
A. Giving away its shares
B. Offering loans to prospective shareholders to buy its shares
C. Both of the above
D. None of the above.

23. Which of the following shareholders can be included as part of the required proportion of public float immediately after IPO?
A. Substantial shareholders
B. Controlling shareholders
C. Existing public shareholders of the issuer prior to its IPO?

D. All of the above

24. The interests payments of corporate bonds and the profits of SUKUK must be paid periodically on specified intervals from their issue date, except for:
A. zero-coupon corporate bonds
B. sukuk without specific periodic distribution.
C. Both of the above
D. None of the above.

25. All of the following entities are considered promoter of issuers except:
A. Controlling shareholders
B. Executive directors holding at least 5% of issued share capital
C. A person who can exercise control over the issuer
D. A consultant to issuer for the IPO

26. The securities Commission imposes a moratorium for IPOs so as to:
A. maintain the promoters; commitment to the issuer and align their interests with that of public shareholders
B. promote a fair and ordinary market
C. Both of the above
D. None of the above A consultant to issuer for the IPO

27. Which person is NOT subject to any moratorium requirements after acquiring shares in an IPO?
A. Promoters
B. Pre-IPO investors
C. Investors who are connected to the issue manager
D. A consultant to the issuer for the IPO

28. Once the offer period of an IPO ends, the issuer is required to do all of the following except, make an announcement of the:
A. subscription rate
B. basis of allocation and allotment
C. issuance of the shares
D. outcome of the offer

29. An IPO prospectus must contain information that allows an investor to make an informed assessment of the:
A. rights and liabilities of the shares being offered
B. assets and liabilities of the issuer
C. Both of the above
D. All of the above

30. If the IPO prospectus was intentionally written with false and misleading information, which of the following person will be found guilty of criminal offence?
A The offeror
B. The issuer controlled by the offeror
C. The issue manager
D. All of the above

31. Which of the following persons is guilty of criminal offence?
A. An underwriter who had accidentally omitted material information from an IPO prospectus.
B. An issuer manager who fails to take remedial action after knowing that material information was omitted from an IPO prospectus.
C. Both of the above
D. None of the above

32. Which of the following persons is NOT guilty of criminal offence if they had intentionally made a false statement in an IPO prospectus?
A. Underwriter.
B. Sub-underwriter.
C. A person named in the prospectus with his consent as having made that statement.
D. A person who recklessly made that statement.

33. A person who has made a misleading statement in an IPO prospectus is NOT liable for a criminal offence if he placed reasonable reliance on the information provided by his/her:
A. director
B. employee
C. advisor for the IPO
D. All of the above

34. If the offeror of an IPO lodges a replacement prospectus with the Securities Commission, it should then:
A. Treat the issue of shares as valid
B. Provide investors with an option to return the securities
C. Either of the above
D. None of the above

35. The Securities Commission can serve a stop order on an IPO if it is of the opinion that:
A. the registered IPO prospectus does not comply with its requirements.
B. it is in the public interest to do so.
C. the registered IPO prospectus contains a false or misleading statement.
D. All of the above.

36. Which of the following statements regarding IPO is true?
A. Offering marketing material cannot be released until registration of the prospectus with the Securities Commission is completed.
B. Securities can be offered to investors on the basis of a preliminary prospectus.
C. Both of the above
D. None of the above

37. A preliminary IPO prospectus is not allowed to be distributed to:
A. institutional investors
B. accredited investors
C. public investors
D. All of the above

38. A preliminary IPO is allowed to be distributed to:
A. any person whom a recipient intends to give it to.
B. any person who subscribes to receive it.
C. any person who is acquiring shares of the securities
D. None of the above

39. IPO marketing material cannot contain:
A. information that is in audio form
B. information that is included in the prospectus
C. an application form to subscribe to the securities
D. All of the above

40. Which of the following documents can be included together with the preliminary prospectus?
A. A statement on the front page stating that it cannot be circulated
B. An application form to subscribe to the securities
C. Both of the above
D. None of the above

41. Which of the following entities is responsible for the accuracy of IPO information submitted to the Security Commission?
A. Issuer
B. Issuer’s directors
C. Issuer Manager
D. All of the above

42. Which of the following characteristics of SUKUK is NOT TRUE?
A. It must be a fixed term
B. It must be denominated in RM
C. It must have a fixed rate of return or profit rate
D. The principal and any accrued profits must be payable upon expiration

43. Which of the following can be issued on scrip basis?
A. Sukuk
B. Corporate bonds
C. Both of the above
D. None of the above

44. Which of the following statements is true regarding an exchange traded fund (ETF) seeking listing?
A. It must be denominated in Ringgit
B. It cannot be incorporated in a foreign currency
C. It can be listed on a foreign securities exchange that is acceptable to the securities Commission
D. All of the above

45. To stabilised the price of an IPO, the issuer can provide the Stabilising Manager an option to purchase shares at the IPO price even if the market price has risen above the IPO. This option is also known as the:
A. greenshoe option
B. blackshoe option
C. whiteshoe option
D. redshoe option

46. Which of the following statements regarding IPO price stabilisation is false?
A. If the market price of the shares is below the IPO, the stabilising manager can purchase shares on the open market.
B. If the market price of the shares is above the IPO price, the stabilising manager can exercise an over-allotment option to acquire the shares at the IPO price.
C. Shares acquired by the stabilising manager through an over-allotment option must be retired
D. Underwriters of an IPO can borrow shares from the issuer for the purposes of price stabilisation.

47. Which of the following entities is considered an institutional investor?
A. Pension funds
B. Collective Investment Schemes
C. Persons who have been declared by the Securities Commission as institutional investors.
D. All of the above.

48. Institutional investors can comprise of individuals who carry on the business of dealing in bonds with:
A. accredited investors
B. expert investors
C. Both of the above
D. None of the above

49. The issue of bonds should have majority of its subscription made by:
A specified investors
B. institutional investors
C. retail investors
D. accredited investors

50. An issuer offering bonds to retail investors is required to announce the:
A. subscription rate of the offer
B. level of subscription
C. basis of allotment and allotment
D. All of the above

51. An issuer offering bonds to retail investors is required to announce the outcome of the offer ________ the listing of the bonds.
A. before
B. during
C. After
D. at anytime of

52. Which of the following entities must an issuer appoint to represent the holders of the bonds.
A. Issue manager
B. Custodian
C. Trustee
D. Sponsor

53. The trustee of a bond must take action on behalf of the bondholders in the event of a:
A. default
B. enforcement event
C. event that would accelerate the repayment of the principal amount of the bonds
D. All of the above

54. A bond Issuer must promptly notify the Trustee if it is aware of:
A. any event of default
B. any condition of the Trust Deed that cannot be fulfilled
C. Both of the above
D. None of the above

55. Which of the following documents is required for the application of the listing of bonds?
A. Auditor’s report
B. Trust Deed
C. Memorandum and Articles of Association
D. All of the above

56. Which of the following details must be declared to the Securities Commission before the listing of the bonds can take place?
A. The manner of determining the offer price
B. The amount of expense charged to the subscriber
C. The number of shares owned by each substantial shareholder
D. All of the above

57. An issue manager will not be liable for false or misleading statements found in the Offer Information Statement if he can prove that he:
A. placed reasonable reliance on the information given to him by the issuer’s director.
B. placed reasonable reliance on the information given to him by the issuing’s employees
C. publicly withdrew his consent to being named in the Offer Information Statement due to the false or misleading statements
D. All of the above

58. A person can claim damages if they can prove that:
A. an Offer Information Statement contains false or misleading statements.
B. they suffered any loss or damage as a result of an Offer Information Statement containing false or misleading statements
C. Both of the above
D. None of the above

59. The principle of Mudharabah can be described as a contract made between two parties to enter into a venture, consisting of the rabb al-mal (capital provider), who shall contribute capital to finance the venture, and the mudharib (enterprenuer) who will arrange the venture. If the venture is profitable, the profit will be distributed:
A. solely to mudharib
B. solely to the rabb al-mal
C. based on a pre-agreed ratio
D. equally to all parties involved

60. The principle of Mudharabah can be described as a contract made between two parties to enter into a venture, consisting of the rabb al-mal (capital provider), who shall contribute capital to finance the venture, and the mudharib (enterprenuer) who will arrange the venture. In the event of a loss, the loss shall be borne:
A. Solely by the mudharib
B. solely to the rabb al-mal
C. based on a pre-agreed ratio
D. equally by all parties involved

MODULE 19

LEGAL CONSIDERATION AND CODE OF CONDUCTS

Set 2

1. A listed Issuer can withhold material information if the disclosure would result in:

A. a branch of law

B. a breach of contractual duty of confidentiality

C. the listed Issuer being unable to fulfil its corporate objective

D. All of the above.

2. Which of the following conditions must be met to allow a Listed Issuer to temporary withhold material INFORMATION?

A. The disclosure would result in a leak of trade secrets.

B. The disclosure would cause the Listed issuer to be unable to fulfil its corporate objective.

C. The disclosure would result in a leak of confidential information

D. All of the above conditions must be met.

3. Which of the following conditions if met allows a Listed Issuer to temporarily withhold material information?

A. The information pertains to an incomplete negotiation

B. The information pertains to an internal earnings estimate.

C. The information contains a trade secret

D. None of the above

4. Specific shareholders’ approval by ordinary resolution in a general meeting is required for the issue of equity securities:

A. which exceed the thresholds in general mandate

B. to transfer a controlling interest

C. at an issue price which exceeds the discount limit

D. all of the above

5. Specific shareholders’ approval by ordinary resolution in a general meeting is required for the issue of equity securities to:

A. its directors

B. accredited investors

C. institutional investors

D. all of the above

6. Which of the following situations requires the need for specific shareholders’ approval by ordinary resolution in a general meeting?

A. Rights issues which are non-renounceable and at an issue price which exceeds the discount limit.

B. Rights issues where sub-underwriting arrangements with controlling shareholders are contemplated

C. Both of the above

D. None of the above

7. A director of a Listed Issuer can participate in an issue of equity securities if:

A. It is a listing rules compliant share plan

B. the shareholders in a general meeting have approved the specific allotment.

C. Both of the above

D. None of the above.

8. Under which of the following situations is a prospectus not required?

A. Offering securities through private placements

B. Offering securities to institutional investors

C. Offering securities to accredited investors

D. All of the above.

9. When a Listed Issuer undertakes a pro-rate issue of equity securities to its shareholders for cash, this is known as:

A. warrants issue

B. rights issue

C. convertible shares issue

D. book-building

10. Fees to be paid for a rights issue sub-underwriting arrangement entered into with controlling shareholders and substantial shareholders must be approved by:

A. directors

B. controlling shareholders

C. substantial shareholders

D. way of an ordinary resolution

11. Which of the following statements regarding a rights issue is false?

A. A Listed Issuer cannot announce any rights issue without the announcement of the latest quarter results.

B. A rights issue must be underwritten prior to commencement of ex-rights trading.

C. The purpose of a rights issue must be announced.

D. A right issue cannot be withdrawn after commencement of ex-rights trading.

12. If there is a leakage of information on rights issue, the Listed Issuer must:

A. announce the rights issue immediately

B. Request for a trading halt

C. withdraw the rights issue

D. Any of the above

13. A listed Issuers may purchase its own shares after it has obtained approval by its:

A. Directors

B. Chief Financial Officer

C. Shareholders in a general meeting

D. Any of the above

14. A listed Issuer can perform a share buy-back at any share price if it is an:

A. on-market purchase

B. off-market purchase

C. Both of the above

D. None of the above

15. A listed Issuer is allowed to capitalise:

A. any surplus from the revaluation of fixed assets

B. any amounts standing in the revaluation reserve account

C. Both of the above

D. None of the above

16. with regards to “Interested Person Transactions”, which of the following persons is classified as an “interested person” in relation to a Listed Issuer or Investment Fund Issuer?

A. Director

B. Trustee

C. Chief Executive Officer

D. All of the above

17. For the purpose of acquisition or disposal of shares, the valuation of the shares is based on the market is based on the market value of the shares or the net asset value of the shares, whichever is:

A. lower

B. higher

C. Both of the above

D. None of the above

18. A listed Issuer does not require shareholders’ approval if it intends to:

A. make an acquisition which would result in a significant increase in earnings.

B. expand its business to a new geographical market

C. make an acquisition which would result in a change in control of the listed issuer.

D. venture into a new v=business sector.

19. A listed Issuer does not require shareholders’ approval if it intends to:

A. dispose its core business

B. dispose a substantial part of its core business

C. make any acquisition that would result in a higher gearing ration

D. make any acquisition that would result in a higher working capital.

20. Shareholders’ approval is required if a listed issuer intend to make any acquisition or disposal that would result in a material change in its:

A. risk profile

B. nature of business

C. Both of the above

D. None of the above

21. if a reverse takeover is rescinded, the lister issuer must announce the:

A. financial impact of the rescission

B. reasons for the rescission

C. possible course of action to protect the interests o=f shareholders

D. All of the above

22. A listed Issuer must seek approval its shareholders if it intends to conduct a:

A. non-disclosable transaction

B. disclosable transaction

C. major transaction

D. All of the above

23. A listed issuer does not need to make an announcement if it intends to conduct a _____.

A. non-disclosable transaction

B. disclosable transaction

C. major transaction

D. All of the above

24. A listed issuer needs to make an announcement if it intends to conduct a non-disclosable transaction which involves:

A. material information which is required to be annou8nced

B. an interested person transaction

C. securities for which listing is sought

D. All of the above

25. A shareholders’ approval for a major transaction can be waived if:

A substantial shareholders vote in favour of the transaction

B. the cost of convening a shareholders’ meeting is too high

C. Both of the above

D. None of the above

26. Which of the following pieces of information should appear in a circular to shareholders?

A. information necessary to shareholders to make a properly informed decision.

B. Opinion of the board with the concurrence of the audit committee on the adequacy and effectiveness of internal controls

C. The aggregate amount of fees paid to auditors

D. A description of the Lister Issuer’s corporate governance practices

27. All of the following pieces of information should appear in the annual report to shareholders except:

A. A list of all investments made

B. Remuneration of directors and executives

C. Financial performance

D. A status report on the use of proceeds from any offerings or IPO

28. Directors of a listed issuer should not deal in its own securities:

A. on short term considerations

B. just after the announcement of its financial statements

C. when there are high fluctuations in its stock price.

D. All of the above

29. An annual report must include a statement from the chairman of the board providing a summary of the Listed Issuers’ performance and prospects. If this statement does not represent the collective view of the board, the annual report:

A. should not be published

B. should not be published until the collective view of the board is unified

C. Should be published with the view of each dissenting director disclosed in the report

D. Should be published as the chairman’s view represents the board.

30. Which of the following person’s renumeration must be disclosed in an annual report of an Investment Fund issuer?

A. Directors

B. Investment Manager

C. Investment Adviser

D. All of the above

31. A person holding voting securities in a Listed Corporation in which another person has an interest, is required to notify the Beneficial Owner of any acquisition or disposal of any voting securities except where he is holding the voting securities as a _______ on behalf of the Beneficial Owner.

A. Custodian

B. Bare trustee

C. Nominee

D. All of the above

32. A listed Issuer will be delisted under all of the following circumstances except where:

A. it has insufficient free float

B. trading of its shares is suspended

C. it voluntarily delists itself

D. it becomes a cash company and is unable to meet the requirements for a new listing.

33. Which of the following types of securities are taken into consideration in determining the free float requirement a Listed Issuer has to comply with?

A. Issued shared

B. Convertible shares

C. Warrants

All of the above

34. Which of the following is a consequence of a forced delisting of a Listed Issuer?

A. The Listed Issuer may be unable to assess its financial position.

B. The market may lose transparency

C. It may trigger a take-over offer

D. Minority shareholders may have difficulty selling their shares

35. A listed Issuer may place out which of the following types of securities to the public to meet the minimum public free float requirement?

A. Existing shares

B. Preference shares

C. Treasury shares

D. Convertible equity securities

36. Which of the following types of shares/entities are not allowed to vote for a Listed Issuer’s Voluntary Delisting resolution?

A. Controlling shareholders

B. Treasury shares

C. Preference shareholders

D. All of the above

37. Which of the following types of information must a Listed Issuer immediately announce?

A. An appointment of a replacement trustee

B. The details of interest payments to be made on any debt securities

C. The redemption or cancellation of any debt securities

D. All of the above

38. The requirement to make a general offer can be waived for the underwriting of an issue of new shares if:

A. there has been independent vote of shareholders

B. the underwriter puts in place clear and effective arrangements not to exercise the voting rights attached to those shares

C. Both of the above conditions are met

D. None of the above as a general offer must be made for an issue of new shares

39. The obligation to make a general offer can be waived by way of an independent vote at a shareholders’ meeting for which of the following situations?

A. The issue of new securities as consideration for an acquisition

B. The acquisition of voting rights

C. The exercise of subscription rights in respect of new shares

D. All of the above

40. Which of the following types of offers must not contain any condition other than the condition that the condition that the offer is subject to the offeror having received acceptances which result in the offeror holding more than 50% of the voting shares?

A. Mandatory offer

B. Voluntary offer

C. Both of the above

D. None of the above

41. Which of the following types of offers must be conditional upon the offeror receiving acceptances which will result in the offeror holding more than 50% of the voting rights?

A. Mandatory offer

B. Voluntary offer

C. Both of the above

D. None of the above

42. Which of the following types of offers must not be made subject to any condition whose fulfilment depends on the subjective judgement by the offeror?

A. Mandatory offer

B. Voluntary offer

C. Both of the above

D. None of the above

43. The price offered for voting rights of the offeree company must not be less than the highest price paid by the offeror if the offer is a:

A. mandatory offer

B. voluntary offer

C. Both of the above

D. None of the above

44. All of the following methods can be used for the takeover of a company except:

A. Scheme of arrangement

B. Selective capital reduction

C. Amalgamations

D. Stock repurchase

45. Non-public-sensitive information concerning any securities refers to:

A. information which is not generally available

B. information which is generally available and might have a material effect on the price of the securities.

C. Both of the above

D. None of the above

46. Which of the following are signs of a suspicious transaction?

A. Transactions that do not make economic sense

B. Transactions involving large amounts of cash deposits and withdrawals

C. Wire transfers to overseas beneficiaries

D. All of the above.

47. Which of the following types of transactions are suspicious transactions?

A. Transactions that cannot be reconciled with the usual activities of the customer

B. The intensive use of a bank account that was previously inactive

C. Frequent transfers between a large number of accounts

D. All of the above.

48. Which of the following types of transactions are suspicious transactions?

A. Provision of bank guarantees are collateral for loans between third parties

B. Unexpected repayment of an overdue credit

C. Cash was withdrawn at one location immediately after cash was deposited at another location

D. All of the above

49. Which of the following types of transactions are suspicious transactions?

A. Exchanging an unusually large amount of small-denominated notes for those of higher denomination

B. Frequent withdrawal of large amounts by cheque

C. Purchasing of foreign currencies in substantial amounts by cash settlement

D. All of the above

50. Which of the following types of transactions are suspicious transactions?

A. A customer deposits cash by using many credit slips small amounts of which add up to a substantial amount.

B. A customer deposits large amounts of cash using night safe facilities

C. A customer makes large and frequent cheque payments to an individual not normally associated with their business.

D. All of the above

51. Any communication with a client that would result involve __________ is not allowed.

A. front-running activities

B. parallel running activities

C. perceived insider trading

D. All of the above

52. Which stage of money laundering process does a syndicate repay loans or credit cards with illegal proceeds?

A. Placement

B. Layering

C. Integration

D. None of the above

53. Which stage of the money laundering process does a syndicate purchase foreign money with illegal funds through foreign currency exchange?

A. Placement

B. Layering

C. Integration

D. None of the above

54. Which of the following reduces the liquidity and efficiency of the market?

A. Public confidence in a fair and orderly capital market

B. A capital market that reflects the forces of genuine supply and demand

C. Creating misleading impression of trading activity

D. All of the above

55. False trading and market rigging can be described as:

A. The use of artificial means or methods to influence the price of any securities

B. Causing volatility without real basis instead of letting the natural market forces prevail

C. Both of the above

D. None of the above

56. Which of the following is classified as false trading?

A. Buying and selling any securities that do not involve a change in beneficial ownership of those securities so as to cause fluctuations in the market price of the securities

B. Creating transactions that are intended to give a false and misleading appearance with respect of the market price of any securities

C. Having the intention to create an appearance of active trading on any securities

D. All of the above.

57. Market manipulations occur when a person executes trade at prices ________ the previous traded price and has the effect of artificial increasing the price of that security.

A. below

B. at

C. above

D. All of the above

58. Insider information is information that is generally available and if known:

A. would influence persons to subscribe or sell certain securities

B. may influence persons to subscribe or sell certain securities

C. Both of the above

D. None of the above

59. Which of the following information is false with regards to insider trading?

A. Insider trading is to trade on privileged information in the belief that one can reap profit or avoid a loss from trade.

B. Insider trading results in an unfair market

C. Insider trading does not help one to create an advantage over other investors

D. All of the above

60. Which of the following situations do not constitute to insider trading?

A. Price sensitive information communicated pursuant to legal requirements imposed by court order.

B. Two parties have same information and enter into the transaction with one another

C. Underwriters disclosing price sensitive information in the performance of their roles

D. All of the above