STUDENT AWARENESS PROGRAM (SAP)

MULTIPLE CHOICE QUESTIONS

Name: ___________________________

Program: ___________________________

Signature: ___________________________

Instructions:

 This paper carries a total of 25 questions with multiple choices to choose from

 The total time allowed to take the test is 45 minutes.

 Try to answer ALL the questions

 Read each question carefully and tick the correct answer

 It is desirable to use a PEN only to tick answers

 Make sure you only mark one answer for each question

 Make sure all your details are correct and that you have signed the exam sheet

 Only complete as many answers as there are questions

BEST OF LUCK!

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1. The Stock Exchanges (Corporatization, Demutualization & Integration) Act, 2012 ("Demutualization
Act") was promulgated by the Government to:

 Allow three stock exchanges in Pakistan to open branches in different cities

 Set aside conflict of interest wherein its Members had trading as well as ownership rights

 Allow opportunities to investors to trade without involving any broker

 To allow banks/financial institutions to provide leverage to investors

2. The operations of Pakistan Stock Exchange (PSX) are governed by:

 The Legal and Operations Department of PSX

 The designated employees of the Securities and Exchange Commission of Pakistan

 The Board of Directors of PSX

 The Brokers of the PSX

3. The Securities and Exchange Commission of Pakistan (SECP) acts as the ________ of PSX:

 Working Partner

 Apex Regulator

 Principle Financier

 Technology Provider

4. Electronic trading in PSX is done through:

 On-line trading system (OTS)

 Karachi automated trading system (KATS)

 PSX Trading System (PTS)

 None of the above

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5. If I wish to invest in any listed Security of PSX:

 I place my order directly in the trading system of PSX

 I appoint NCCPL to execute my trade

 I appoint CDC to execute my trade

 I need to open an account with Broker

6. Stock Market Index generally represents:

 Tracking the performance of underlying securities

 Increase/decreased in the number of investors

 Profit and Loss statement of Securities

 Corporate entitlements announced by a Company

7. Trades are entered in the system with:

 Full name of a client as per CNIC

 Mobile Number of a client provided at the time of registration

 By putting CNIC Number of a client

 None of the above

8. In a Ready Market, listed securities are bought and sold for:

 Immediate delivery and payment

 Future delivery and future payment

 Immediate delivery and future payment

 Future delivery and immediate payment

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9. Ready Delivery Contracts in a Book-entry Securities are settled under:

 T + 2 Settlement Cycle

 T + 1 Settlement Cycle

 T + 30 Settlement Cycle

 T + 45 Settlement Cycle

10. Blank Sales generally refers to a Sale in a Market:

 That does not own shares or the sale does not constitute a sale with pre-existing interest

 Where Broker will deliver shares from the account of any other investor

 That selling client is holding shares in his own account before making a sale

 Where seller will not get payment from the buyer

11. Which of the following is NOT a component of Risk Management framework of the capital
market?

 Exposure Margins & MtM Losses Management

 Collateral Management

 Client Level Margining Regime

 Capital Gain Tax (CGT) collection by NCCPL

12. The Regular Market timings at PSX from Monday to Thursday are:

 9:32 am – 3:30 pm

 10:30 am – 3:30 pm

 11:32 am – 3:30 pm

 12:30 pm – 3:30 pm

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13. Final Settlement of Deliverable Future Contracts (DFC) occurs:

 15 days after the contract is executed

 30 days after the contract is executed

 45 days after the contract is executed

 60 days after the contract is executed

14. If I want to invest in capital market without buying individual securities, I should trade in:

 Stock Index Future Contract (SIFC) Market

 Ready Market

 Provisional Listed Market

 Debt Market

15. The National Clearing Company of Pakistan Limited was incorporated to provide:

 Safe custody of Securities

 Back office and accounting operations of Broker

 Centralized Clearing & Settlement Services

 Automated trading platform to the Brokers

16. Which one is not a Clearing Member Category of NCCPL:

 Commodity Exchange Member

 Broker Clearing Member

 Non-Broker Clearing Member

 Custodian Clearing Member

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17. Which Market from the following is not provided by NCCPL:

 Margin Trading

 Debt Market

 Margin Financing

 Securities Lending and Borrowing

18. Unique Identification Number (UIN) Registration is a mechanism made available by NCCPL to:

 View Margins/MTM Losses Reports through System

 Place order in the Trading System of PSX

 Register the investor's with specific UIN in NCSS

 Register complaints

19. Who is a TRE Certificate holder in Stock Exchange?

 Non-Broker Clearing Member

 Broker Clearing Member

 Custodian Clearing Member

 Founder Member

20. If an Investor wants to avail financing for market purchase from unknown financier, such investor
will approach to:

 Margin Trading

 Securities Lending and Borrowing

 Deliverable Future Market

 Cash Settlement Futures Market

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21. The motivation for Lender to lent Securities in SLB to:

 Make a short sell in ready market

 To earn income on their Idle Securities

 To segregate assets of its clients

 Become shareholder of PSX

22. Collection of CGT, a service provided by NCCPL stands for:

 Capital Government Tax

 Capital Gain Tax

 Capital Growth Tax

 Capital Goods Tax

23. National Custodial Services (NCS) of NCCPL facilitates capital market investors to:

 Avail clearing, settlement and custodial services

 File annual return to FBR

 Obtain loan from banks

 To reserve on-line air travel booking

24. UIN Information System of NCCPL facilitates investors:

 To pay utility bills on-line

 To book railway ticket on-line

 To view their trading & settlement activities

 To make on-line shopping

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 25. SMS-E-Alert System of NCCPL provides:

 Trading alerts to the Investors

 Flight ticket conformation

 Credit card billing information

 Utility bill outstanding status

26) When the exchange rate changes from 1.0 euros to the dollar to 1.2 euros to the dollar, the euro has
________ and the dollar has ________.
A) appreciated; appreciated
B) depreciated; appreciated
C) appreciated; depreciated
D) depreciated; depreciated

27) Which of the following statements is true?

A) A bank's assets are its sources of funds.
B) A bank's liabilities are its uses of funds.
C) A bank's balance sheet shows that total assets equal total liabilities plus equity capital.
D) All of the above are true.

28) A bank's balance sheet

A) shows that total assets equal total liabilities plus equity capital.
B) lists sources and uses of bank funds.
C) indicates whether or not the bank is profitable.
D) does all of the above.
E) does only A and B of the above.

29) Checkable deposits and money market deposit accounts are

A) payable on demand.
B) liabilities of the banks.
C) assets of the banks.
D) only A and B of the above.
E) only A and C of the above.

30) Because of their ________ liquidity, ________ U.S. government securities are called secondary
reserves.
A) low; short-term
B) low; long-term
C) high; short-term
D) high; long-term

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31) The most important category of assets on a bank's balance sheet is
A) discount loans.
B) securities.
C) loans.
D) cash items in the process of collection.

32) Which of the following bank assets are the least liquid?
A) Reserves
B) Mortgage loans
C) Cash items in process of collection
D) Deposits with other banks

33) Loans
A) are the largest category of bank assets.
B) provide most of the bank's revenues.
C) earn the highest return of all bank assets.
D) do all of the above.
E) are only A and B of the above.

34) Banks earn profits by selling ________ with attractive combinations of liquidity, risk, and return, and
using the proceeds to buy ________ with a different set of characteristics.
A) loans; deposits
B) securities; deposits
C) liabilities; assets
D) assets; liabilities

35) When you deposit $50 in the First National Bank,

A) its liabilities decrease by $50.
B) its assets increase by $50.
C) its reserves increase by $50.
D) only B and C of the above occur.

36) A foreign exchange intervention with an offsetting open market operation that leaves the monetary
base unchanged is called
A) an unsterilized foreign exchange intervention.
B) a sterilized foreign exchange intervention.
C) an exchange rate feedback rule.
D) a money-neutral foreign exchange intervention.

37) Because sterilized interventions mean offsetting open market operations,

A) there is no impact on the monetary base.
B) there is no impact on the money supply.
C) there is no effect on the exchange rate.
D) all of the above occur.
E) only A and B of the above occur.

38) The current account balance plus the capital account balance equals
A) the amount of unsterilized exchange market intervention.
B) the trade balance.
C) the net change in government international reserves.
D) both A and C of the above.

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39) What kind of exchange rate system did the Bretton Woods agreement establish?
A) Floating
B) Managed float
C) Dirty float
D) Fixed

40) Under a fixed exchange rate regime, if the domestic currency is initially ________, that is ________
par, the central bank must intervene to sell the domestic currency by purchasing foreign assets.
A) overvalued; below
B) overvalued; above
C) undervalued; below
D) undervalued; above

41) Policymakers may not want to see their country's currency appreciate because
A) this would hurt consumers in their country by making foreign goods more expensive.
B) this would hurt domestic businesses by making foreign goods cheaper in their country.
C) this would increase inflation in their country.
D) this would decrease the wealth of the country.

42) When the Bundesbank raised German mark interest rates in September 1992,
A) there was a massive sell-off of German marks, requiring intervention to support the value of the mark.
B) there was a massive sell-off of British pounds, requiring intervention to support the value of the pound.
C) there was a gradual sell-off of German marks, which avoided the need for intervention to support the
value of the mark.
D) there was a gradual sell-off of British pounds, which avoided the need for intervention to support the
value of the pound.

43) A disadvantage of dollarization is that it

A) prevents a central bank from creating inflation.
B) avoids the possibility of a speculative attack on the domestic currency.
C) does not allow a country to pursue its own independent monetary policy.
D) is a strong commitment to exchange rate stability.

44) A balance of payments ________ is associated with a ________ of international reserves.

A) deficit; loss
B) deficit; gain
C) surplus; loss
D) balance; gain

45) ________ is when the domestic currency is backed 100% by a foreign currency and in which the
note-issuing authority establishes a fixed exchange rate to this foreign currency and stands ready to
exchange domestic currency for the foreign currency at this rate whenever the public requests it.
A) dollarization
B) currency board
C) devaluation
D) revaluation

46) Checkable deposits and money market deposit accounts are

A) payable on demand.
B) liabilities of the banks.

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C) assets of the banks.
D) only A and B of the above.
E) only A and C of the above.

47) Bank loans from the Federal Reserve are called ________ and represent a ________ of funds.
A) discount loans; use
B) discount loans; source
C) fed funds; use
D) fed funds; source

48) A bank manager has which of the following concerns?

A) To acquire funds at low cost
B) To minimize risk by diversifying asset holdings
C) To have enough ready cash to meet deposit outflows
D) All of the above

49) On a bank's income statement, the amount available to keep as retained earnings or pay to the
stockholders in dividends is the bank's
A) net income.
B) net operating income.
C) net extraordinary items.
D) net interest margin.

50) Bank capital

A) is raised by selling new equity.
B) is a cushion against a drop in the value of its assets.
C) comes from retained earnings.
D) is all of the above.

*END*

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