Financial Environment

____________ are intermediaries that channel the saving of individuals, businesses, and governments into loans or investments.

• Financial institutions

• Kuala Lumpur Stock Exchange

• Money markets

• Financial markets

Who are the parties involved in the financial market? (can choose more than 1)

• Borrowers

• Investors

• Lenders

• Financial institutions

____________ occurs when a business sells its stocks or bonds directly to savers without going through any types of financial institutions.

• Indirect transfers through a financial intermediary

• Direct transfer of funds

• Indirect transfer through investments bankers

____________ occurs when a business sells its stocks or bonds to investors going through the financial institution.

• Indirect transfers through a financial intermediary

• Direct transfer of funds

• Indirect transfer through investments bankers

Which of the following are the financial intermediaries?

• Commercial banks

• Investment banks

• Mutual funds

• All of the above

__________ is concerned with establishing the prices of capital market securities and states that the prices of securities fully and fairly reflect all relevant available information.

• Efficient Market Hypothesis

• Primary market

• Secondary market

• Capital allocation process

Market efficiency refers to both the speed and the quality of the price adjustment to new information. Which of the following are the three types of Efficient Market Hypothesis? (can choose more than 1)

• Weak form efficiency

• Semi-strong form efficiency

• Large-form efficiency

• Strong-form efficiency

WEAK FORM efficiency exists when share prices reflect all available information about PAST CHANGES in the share prices.

• TRUE

• FALSE

Which of the following refers to SEMI-STRONG FORM efficiency?

• It exists when share prices reflect all PAST price movements ONLY.

• It exists when share prices reflect all PAST price movements and all knowledge that is available PUBLICLY.

• It exists when share prices reflect all PAST price movements, all knowledge that is available PUBLICLY and PRIVATELY.

It exists when share prices reflect ALL information, even "inside" information is embedded in the share prices.

• Weak form

• Semi-strong form

• Strong form

• None of the above