FIN250 Analysis
CHAPTER 2 CHAPTER 3 CHAPTER 6
PYQ YEAR Q1
(FIN250) a) Bank Negara Malaysia
(BNM) is a statutory body
FEB 2023
that started operations on
January 26, 1959. Discuss
the four (4) principal
objectives of BNM.
(10 marks)
b) There are three (3)
responsibilities of BNM as
a financial advisor, banker,
and financial
agent of the government.
Describe the
responsibilities.
(6 marks)
c) List any four (4)
legislative powers used by
BNM to regulate and
supervise financial
institutions.
(4 marks)
CHAPTER 7 CHAPTER 8
Q2 Q3 Q4 Q5
a) One of the main a) Briefly describe a) Derivatives are a) Labuan is an active offshore
functions of a the following capital financial instruments financial center in Malaysia that
commercial bank is market regulatory used to manage helps support the increasing
to provide funds to bodies: one's exposure to demands of the domestic
the government. i) Securities today's volatile economy. Describe four (4)
Describe the other Commissions markets. Describe characteristics of the offshore
four (4) functions of ii) Bursa Malaysia four (4) participants financial center.
the bank. Securities Berhad in the Malaysian (10 marks)
(10 marks) (10 marks) Derivative Market.
(10 marks) b) Provide any three (3)
b) Discuss any two b) Discuss any two functions of the Labuan FSA.
(2) differences (2) differences b) Describe any two (6 marks)
between between primary and (2) differences
conventional and secondary markets. between futures and c) List any two (2) key areas in
Islamic banks. (6 marks) options. which the Labuan International
(6 marks) (6 marks) Business and Financial
c) Give any four (4) Centre (Labuan IBFC) has
c) State any four (4) advantages of c) List any four (4) focused its effort to develop
commercial banks in investing in common derivative products. Labuan as a reputable offshore
Malaysia. stock. (4 marks) financial center.
(4 marks) (4 marks) (4 marks)
 (FIN250)
FEB 2023 (ANSWER)
Q1
a) Principal objectives of BNM :
i) To promote monetary stability and financial stability
conducive to the sustainable growth of the Malaysian
economy.
ii) To carries out its principal functions.
- include issuing currency, and holding and managing
the country’s foreign reserves.
- The Bank is also the financial adviser, banker and
financial agent of the Government.
iii) To have all the power necessary, incidental or to give
effect to its objects and carry out its functions.
iv) To give effect to its objects and carry out its functions
under this Act shall have regard to the national interest
Q2
a) Functions of the commercial bank :
i) Mobilization of Savings
- Accepting deposits through current account, saving account,
fixed deposit account, and negotiable instrument of deposits
(NIDs)
ii) Provision of Facilities
- Provide various banking facilities to enable their customers in
making payments and receiving money thru cheque, credit
card, ATM, cash deposit machine, and others.
iii) Granting Loan and Advances
- Provide loan and advances to business entity and individual
for working capital, investment and consumption.
iv) Financing of Government
- Provide fund to government by purchasing the government
securities such as treasury bills and Malaysian Government
Securities (MGS).
v) Provision of Finance
- Provide various finance business such as trade finance
facilities, cross boarder payment services, custody services
and foreign exchange transaction.
b) Responsibilities of BNM as a financial advisor, banker,
and financial agent :

i) Manage Government accounts

- BNM keep account of Government moneys that is
received and disbursed.
- undertake the issue and management of securities,
Treasury bills issued by the government.

ii) Temporary financing to Government b)

- BNM provides temporary financing to the Government
to cover temporary deficiencies of budget revenue. c) Commercial banks in Malaysia :
- All financing shall be payable not more than 3 months i) Affin Bank Berhad
after the end of the financial year. ii) Alliance Bank Malaysia Berhad
iii) Advise for Government
- To advise or enquiry into any matter affecting iii) AmBank Berhad
monetary, financial, banking or currency matters in
Malaysia or outside Malaysia. iv) EON Bank Berhad

v) Hong Leong Bank Berhad

c) Legislative powers used by BNM :
vi) Malayan Banking Berhad
i) Central Bank of Malaysia Act (2009)
ii) Financial Services Act (2013) vii) Public Bank Berhad
iii) Islamic Financial Services Act (2013)
iv) Development Financial Institutions Act (2002) viii) RHB Bank Berhad
v) Currency Act 2020
 Q3
a) i) Securities Commision
- Regulating all matters relating to derivatives
- Supervising the operator of the exchange (BMDB) and
clearing house (BMDC)
- Licensing and supervising all licensed persons
- Maintaining confidence of investors in the derivatives
market by ensuring adequate investor protection
- Promoting proper conduct amongst participants
ii) Bursa Malaysia Securities Berhad
- As a market place for the trading of derivatives
contracts
- Development of new derivatives products
- Ensure fair an orderly market place
- Determine and ad it members
- Enforce and formulate new business rules
b) i) Primary Market
- The primary market is for trading freshly issued
securities, i.e., first-time trading.
- Enables an Initial Public Offering. It is also known as
the new issues market.
Q4
a) Participants in the Malaysian Derivative Market :
i) The Investment Bankers
- To hedge own portfolios or clients portfolio against stock
market and interest rates movements.
ii) The Fund Managers
- To hedge porfolios against stock maket and interest rate
fluctuations.
- To speculate on future stock marke or interest rate
movements.
iii) The Financial Institutions
- To hedge portfolios against stock market and interest rate
movements.
iv) The Derivatives Exchange
- The Derivatives Exchange It provides the trading facilities.
v) The Derivatives Clearing House
- It provides financial stability by guaranteeing the performance
of all contracts as it acts as the counterparty to all contracts
traded.
 ii) Secondary Market
- The trading of old securities occurs in the secondary
b) Differences between futures and options :
market, which occurs after transacting in the primary
Futures Options
market.
- Both stock markets and over-the-counter trades come - Full obligation to execute the - No obligation to execute the
contract contract
under the secondary market.
- High risk - The risk is restricted to the amount
of premium paid
c) Advantages of investing in common stock :
- Complete obligation by seller - If the buyer chooses, then the
i) Marketable at Bursa Malaysia seller will have to abide by it
ii) Better hedge against inflation
iii) Can vote during AGM c) Derivative products :
- Gold Futures (FGLD)
iv) Entitle for pre-emptive rights - Crude Palm Oil Features (FCPO)
- Single Stock Futures (SSFs)
- USD Tin Futures (FTIN)

Q5

a) i) Low tax environment. c) Key areas that Labuan IBFC will be focused on :
- An offshore financial center provides a low or tax-free
i) Highly flexible tax framework
regime as compared to the non-offshore center.
ii) Minimum exchange control requirements. ii) Competitive operating costs
- Offshore financial center provides a less strict control
iii) Strategic location
as compared to the non- offshore jurisdiction.
iii) Many financial institutions.
 - Large number of financial institutions from all over the
world opened in any offshore financial centers.
iv) Maximum confidentiality.
- This is obtained through the appointment of nominee
owners and directors.

b) Functions of the Labuan FSA :

i) To develop national objectives, polices and priorities

ii) To focus on the development and promotion

iii) To supervise the business and financial activities and

operations

.
 PYQ Q1 Q2 Q3 Q4 Q5

(FIN250) a) Describe four (4) a) Company XYZ a) Describe the roles a) Describe four (4) benefits of
JULY 2023 Quantitative Qualitative differences between wants to issue bonds of four (4) the offshore market
measure measure conventional and to raise funds for participants in the (10 marks)
Islamic banks in a their large-scale derivatives market.
Statutory Base Rate
Reserve
table. project. In a diagram, (10 marks) b) Explain any two (2)
Requirement (10 marks) illustrate the process characteristics of the offshore
(SRR) involved in the bond b) Discuss three (3) market.
a) Explain how the above b) Discuss Al-Wadiah market types of derivatives (6 marks)
measures work during tight Yad Dhamanad and (10 marks) products.
monetary policy. Al-Mudharabah as (6 marks) c) List any four (4) Labuan
(10 marks) the principles of b) Explain three (3) business activities.
Islamic banking features of common c) State four (4) types (4 marks)
(6 marks) stock. of financial market
(6 marks) (4 marks)
To promote and conduct
monetary policy in Malaysia. c) List four (4)
commercial banks c) State four (4)
To keep and manage the operating in Government
foreign reserve of Malaysia. Malaysia. securities in
(4 marks) Malaysia.
To promote an exchange
rate regime consistent with
(4 marks)
the fundamentals of the
economy.

b) Elaborate each of the

functions of Bank Negara
Malaysia (BNM) above
(6 marks)

c) State two (2) sources

and two (2) uses of Bank
Negara Malaysia (BNM).
(4 marks)
 (FIN250)
JULY 2023 (ANSWER)

Q1 Q2

a) i) Statutory Reserve Requirement (SRR) :

- SRR is a monetary policy instrument for liquidity
management and hence credit creation in the banking
system.
- If the financial system is seen to have excess liquidity
(fund), BNM will increase the SRR rate for the banking
system to keep more money (EL) with BNM in order to
reduce lending activity to control inflation.
Tight Monetary Policy : ↑ SRR → ↓ Lending Ability → ↓ Liquidity
a)
ii) Base Rate :
- The principal role for lending. b) i) Al-Wadiah Yad Dhamanad :
- Base rate is always the same for each bank. - Safekeeping deposit with guarantee.
- Wadiah is a trust.
- Lending Rate = Base Rate + Specific Interest rate of - Guarantor : Depository (bank) guarantee the payment of
borrowers deposit on demand.
- Depositary (customer) may receive a gift (Al-Hibah) for
Tight Monetary Policy : Base Rate ↑ interest rate ↑ (Borrowing more contributing
expensive) ii) Al-Mudharabah :
- Profit sharing between two parties.
- One party will provide capital (bank) another party will
provide entrepreneur (agent).
- If loss will only borne by the bank.
b) i) To promote and conduct monetary policy in Malaysia : c) commercial banks operating in Malaysia :
- Conduct monetary policy operations to promote the
i) Affin Bank Berhad
monetary stability. ii) Alliance Bank Malaysia Berhad
iii) AmBank Berhad
- Refer to any operation undertaken by BNM to manage
iv) EON Bank Berhad
liquidity in the financial system. v) Hong Leong Bank Berhad
vi) Malayan Banking Berhad
- Policy tools : Quantitative & Qualitative measures
vii) Public Bank Berhad
ii) To keep and manage the foreign reserve of Malaysia : viii) RHB Bank Berhad
- BNM shall hold and manage the foreign reserves in
accordance with the policies and guidelines
established.
- Foreign reserves consist of gold, foreign currency,
financial securities, bills of exchange and other securities.
iii) To promote an exchange rate regime consistent with the
fundamentals of the economy :
- The exchange rate regime (floating, fixed, or pegged) for
the ringgit shall be determined by the Ministry of
Finance on the recommendation of the BNM.
- BNM shall conduct foreign exchange operations for
the efficient and effective functioning of the exchange
rate regime and the foreign exchange market.
 c) i) Sources
- Capital
- Reserve
- Profit
- Borrowings
ii) Uses
- Deposits with other financial institutions
- Loans and advances
- Securities
- Gold and Forex reserve

Q3 Q4

a) Participants in the derivatives market :

i) The Investment Bankers

- To hedge own portfolios or clients portfolio against stock
market and interest rates movements.
ii) The Fund Managers
- To hedge porfolios against stock maket and interest rate
fluctuations.
- To speculate on future stock marke or interest rate
movements.
iii) The Financial Institutions
- To hedge portfolios against stock market and interest rate
movements.
iv) The Derivatives Exchange
- The Derivatives Exchange It provides the trading facilities.
a)
b) Features of common stock : v) The Derivatives Clearing House
i) Claim on income - It provides financial stability by guaranteeing the
- Usually in the form of dividends or capital gains. performance of all contracts as it acts as the counterparty
- In case of the residual claim, the common stockholders to all contracts traded.
are the last party that entitled to the income after all
bondholders and preferred stockholders have received b) Types of derivatives products :
their shares.
- If there is nothing left, the common stockholders will i) Commodity Derivatives
- Based on values of agriculture & precious metal
receive nothing.
- Trading session: 10.30am – 6.05pm
ii) Claim on assets ii) Equity Derivatives
- Similar as claim on income, common stockholders will be - Based on underlying equity market
the last party to claim on the assets if the firm is insolvent. - Single stock futures contracts is based on equity
iii) Limited liability derivatives products that are available on BMD.
- In case of bankruptcy, the common stockholders’ liability - Trading session: 8.45am – 5.15pm
is limited to the amount of their shares value or iii) Financial Derivatives
- Based on Malaysian short-term interest rate instruments
investments.
traded in money market.
- Trading session: 9.00am – 5.00pm
c) Government securities in Malaysia :

i) Malaysian Government Securities (MGS) c) Types of financial market :

ii) Malaysian Government Investment Issues (MGII) i) Money Market

iii) Malaysian Treasury Bills (MTB) ii) Foreign Exchange Market

iv) Malaysian Islamic Treasury Bills (MITB) iii) Capital Market

iv) Derivatives Market

 Q5

a) Benefits of the offshore market : c) Labuan business activities :

i) Asset Protection
- An offshore company is the more effective in protecting - Banking
business’s hard-earned assets (such as real estate
- Insurance / Reinsurance
investments and intellectual property) from frivolous and
vengeful lawsuits. - Trust Companies
- E.g. A person transfers assets to a trust located in a
country that has strong asset protection and privacy laws. - Funds / Assets Management

ii) Tax Savings - Capital Market

- An offshore company can legally minimize the business
- Islamic finance
tax obligations due to the offshore’s low/zero tax
jurisdiction. - Captive Insurance
- E.g. A corporation registered in a country that has
favorable tax laws for foreign investors. - Leasing

ii) Enhanced Confidentiality - Factoring

- Offers the benefit of anonymity and privacy. Important
- Wealth Management
information such as the shareholders, directors or
beneficiaries of the company will not be disclosed by the - Money Broking / Forex
registrar nor will they be publicly published.
- E.g. A third-party entity that acts as the legal
representative of the offshore company on official
documents and records.
b) Characteristics of the offshore market :

i) Low tax environment

- An offshore financial center provides a low or tax-free
regime as compared to the non-offshore center.
- Like in the case of Labuan International Business and
Financial Center The tax rate is 3 % of net profit or zero
tax depending on whether it is operating as an 'offshore
trading company' or 'offshore non-trading company.

ii) Minimum exchange control requirements

- Offshore financial center provides a less strict control
as compared to the non- offshore jurisdiction.
- Movement funds are loosely controlled by the
authority; therefore, this will enable the offshore banks to
mobilize funds among market participants with a
greater degree of flexibility even in a volatile market
condition.
 PAST YEAR QUESTION/ EXERCISE FIN250

Chapter 2 (Bank Negara Malaysia)

1. Discuss any four (4) functions of BNM. (10m)
2. Describe two (2) quantitative measures used by BNM in promoting monetary and financial stability in the country. (6m)
3. State four (4) uses of funds of BNM. (4m)
4. Describe the following monetary policy:
a) Open market operations. (3m)
b) Direct borrowing and lending. (3m)
5. State four (4) sources of funds for BNM. (4m)
6. Discuss the functions of BNM as a financial advisor, banker, and financial agent of the
government. (10m)
7. Discuss three (3) tools that can be used by BNM in promoting monetary and financial stability in the country. (6m)
8. Describe three (3) main objectives of the Central Bank as spelled out in the ordinance. (6m)
9. Elaborate on the following two (2) major functions of BNM. a) Keeper of International Reserve b) Promote monetary policy and sound
financial structure. c) Statutory Reserve Requirement (10m)

Chapter 3 (Banking Institution)

1. Explain the banking business. (10m)
2. Explain three (3) functions of the commercial bank. (6m)
3. State four (4) commercial banks operating in Malaysia. (4m)
4. Describe any three (3) banking business activities offered by commercial banks in Malaysia.(6m)
5. State any four (4) sources of funds for commercial banks. (4m)
6. Elaborate on any three (3) commercial banking products and services available in Malaysia.(6m)
7. List three (3) uses and three (3) sources of a fund by commercial banks in Malaysia. (6m) 8. Briefly explain the following concepts as
practiced by Islamic banks.
a) Al Hiwalah
b) Ar-Rahn
c) AL Murabahah
d) Al-Musyarakah
 e) Al-Mudharabah
- If possible for any Islamic principles (10m)
9. Differentiate between Islamic and Conventional banking. (10m)
10. Explain four (4) functions of the investment bank. (10m)
11. State any four (4) Investment banks in Malaysia. (4m)

Chapter 6 (Capital Market)

1. State any four (4) regulatory bodies involved in the capital market. (4m)
2. Describe two (2) types of return investing in equity. (4m)
3. Describe any four (4) characteristics of common stock. (10m)
4. Differentiate between the equity market and bond market. (4m)
5. Discuss any four (4) risks involved in the capital market. (10m)
6. Differentiate between preferred stock and common stock. (6m)
7. Describe any three (3) instruments in the bond market. (6m)
8. List any three (3) features of the bond. (3m)

Chapter 7 (Derivatives Market)

1. Define derivative. (2m)
2. Differentiate between futures and options. (4m)
3. Differentiate between the call option and the put option. (4m)
4. List any four (4) commodity derivatives. (4m)
5. List any four (4) market participants in the derivatives market. (4m)
6. Explain the uses of futures by institutional participants. (10m)
7. There are two (2) types of trading derivatives instruments, which are Exchange-traded andOver-the-counter. What are the differences
between these two types of trading? (6m)
8. List four (4) participants in the derivatives market. (4m)
Chapter 8 (Offshore Market)
1. Explain any four (4) characteristics of the offshore market. (10m)
2. Discuss two (2) types of offshore market companies. (4m)
3. State any four (4) Labuan business activities. (4m)
4. Describe any four (4) benefits of trading an offshore market. (10m)
5. List any four (4) key areas in that Labuan IBFC focused on developing Labuan as a reputable offshore financial center. (4m)
6. Provide four (4) roles of Labuan FSA