Bursa Malaysia BHD - Chapter 3
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Questions and Answers

What is the primary method used to calculate market capitalization?

  • Annual sales figures multiplied by total assets
  • Number of employees multiplied by market price of shares
  • Total assets divided by number of shares
  • Current market price of a share multiplied by shares outstanding (correct)

One of the roles of the stock exchange is to facilitate the growth of companies through what means?

  • Offering tax incentives for startups
  • Providing loans for infrastructure development
  • Acquisition through mergers or takeover bids (correct)
  • Direct government funding

How does the stock exchange help small investors?

  • By providing exclusive access to private equity
  • By allowing investment only in large corporations
  • By guaranteeing high returns on investments
  • By enabling individuals to purchase shares they can afford (correct)

What does a decline in stock prices often indicate about the economy?

<p>Economic recession or financial crisis (A)</p> Signup and view all the answers

What is one function of corporate governance as indicated by public stock exchanges?

<p>Improving management standards and efficiency (C)</p> Signup and view all the answers

How does market capitalization serve the investment community?

<p>It indicates a company's size relative to its sales figures (D)</p> Signup and view all the answers

What is one way that the stock exchange mobilizes savings for investment?

<p>By allowing individuals to invest in shares, leading to resource allocation (D)</p> Signup and view all the answers

What is another term commonly used to refer to market capitalization?

<p>Market value (C)</p> Signup and view all the answers

What is the primary role of Bursa Malaysia Bhd?

<p>To regulate the Malaysian capital market (D)</p> Signup and view all the answers

What type of companies is listed on the Main Market of Bursa Malaysia?

<p>Large and well-established companies (C)</p> Signup and view all the answers

Which of the following is NOT a function of Bursa Malaysia?

<p>Providing loans to participating organizations (A)</p> Signup and view all the answers

What is one of the factors influencing stock market performance according to Bursa Malaysia's objectives?

<p>Government policy and economic conditions (A)</p> Signup and view all the answers

What is the primary objective of implementing a Corporate Disclosure Policy by Bursa Malaysia?

<p>To ensure transparency and fair practices (D)</p> Signup and view all the answers

Which type of market is characterized by listing technology-based companies?

<p>ACE Market (B)</p> Signup and view all the answers

What is the purpose of Bursa Malaysia's enforcement actions?

<p>To maintain fair and orderly market conditions (B)</p> Signup and view all the answers

What is a key reason for companies to consider listing on Bursa Malaysia?

<p>To increase credibility and visibility in the market (A)</p> Signup and view all the answers

What is one of the criteria for a company to be included in the FTSE Bursa Malaysia KLCI?

<p>Must have a minimum free float (C)</p> Signup and view all the answers

Which index is known for tracking the largest companies in the Main Market by market capitalization?

<p>FTSE Bursa Malaysia KLCI (B)</p> Signup and view all the answers

Which factor does NOT influence stock market performance?

<p>Corporate Board Meetings (D)</p> Signup and view all the answers

Which year is considered the base year for the FTSE Bursa Malaysia KLCI?

<p>1977 (B)</p> Signup and view all the answers

What is the purpose of the Corporate Disclosure Policy?

<p>To make necessary information available for informed investing (C)</p> Signup and view all the answers

Which of the following indices focuses on smaller companies within the Malaysian stock market?

<p>FTSE Bursa Malaysia Small Cap Index (C)</p> Signup and view all the answers

What sector index was established in 1992?

<p>Construction Index (B)</p> Signup and view all the answers

Which of the following is a tradable index in Bursa Malaysia?

<p>FTSE Bursa Malaysia Top 100 Index (C)</p> Signup and view all the answers

Which of the following indices is known as a benchmark index?

<p>FTSE Bursa Malaysia Small Cap Index (B)</p> Signup and view all the answers

What aspect of a company is not a consideration for conducting an IPO?

<p>Historical performance of competitors (A)</p> Signup and view all the answers

What is the main responsibility of a listed company regarding the corporate disclosure policy?

<p>To ensure investors have equal access to securities information (D)</p> Signup and view all the answers

Which situation requires immediate public disclosure by a listed company?

<p>Merger or joint venture agreement (B)</p> Signup and view all the answers

What is one exception to the policy requiring immediate public disclosure of material information?

<p>Confidential negotiations (C)</p> Signup and view all the answers

How should material information be disseminated to ensure it reaches the public effectively?

<p>Simultaneously announce it to the Exchange and other media (D)</p> Signup and view all the answers

What does the Policy on Insider Trading specifically address?

<p>The illegal use of non-public information for profit (D)</p> Signup and view all the answers

Which of these policies focuses on managing rumors in the market?

<p>Policy on Clarification of Confirmation of Rumors (A)</p> Signup and view all the answers

What type of information should not be disclosed immediately according to the policy?

<p>Details of confidential negotiations (B)</p> Signup and view all the answers

What is one key aspect of the Policy on Immediate Public Disclosure of Material Information?

<p>Disclosure must be made immediately unless exceptional circumstances arise (B)</p> Signup and view all the answers

What is expected of insiders regarding trading after material information has been released?

<p>Insiders should wait to trade until public dissemination is adequate. (B)</p> Signup and view all the answers

What penalty may be imposed on a listed company for breaching listing requirements?

<p>Delisting the company from the official list of BURSA. (D)</p> Signup and view all the answers

Which measure is NOT considered a penalty for breaches of listing requirements?

<p>Permanent closure of the company's operations. (D)</p> Signup and view all the answers

What must a seller provide to their broker at the time of entering into a sale contract if prohibited from selling shares?

<p>Shares certificate along with a duly executed transfer form. (D)</p> Signup and view all the answers

What type of trading activity is discouraged for insiders even after information has been released?

<p>Trading without sufficient time for public digestion of information. (D)</p> Signup and view all the answers

What must a listed company do upon becoming aware of material information related to a rumour or report?

<p>Immediately public clarify, confirm or deny the rumour or report (C)</p> Signup and view all the answers

In the context of unusual market actions, what should a listed company do?

<p>Inquire into the cause of the unusual market activities (A)</p> Signup and view all the answers

What constitutes unwarranted promotional disclosure activity for a listed company?

<p>Inappropriately worded news releases or exaggerated reports (B)</p> Signup and view all the answers

What is forbidden regarding insider trading?

<p>Trading based on material information not known to the public (A)</p> Signup and view all the answers

Which action is NOT expected of a listed company in response to unusual market activity?

<p>Assuming the unusual activity is temporary (B)</p> Signup and view all the answers

What kind of disclosures should a listed company avoid?

<p>Overly promotional announcements not justified by company developments (A)</p> Signup and view all the answers

How should a listed company handle unverified reports from the public?

<p>Conduct an inquiry and respond appropriately based on findings (C)</p> Signup and view all the answers

What is a critical reason for a listed company to publicly clarify material information?

<p>To maintain market integrity and investor trust (D)</p> Signup and view all the answers

Flashcards

Bursa Malaysia's role

Bursa Malaysia is the Malaysian stock exchange, regulating the capital market and ensuring a fair, orderly securities market.

ACE Market Listing

A listing category for newer or growing companies, particularly technology companies.

Main Market Listing

A listing category for established, large companies on Bursa Malaysia.

Primary Market

The market where new securities (stocks) are offered and sold to investors for the first time through Initial Public Offerings (IPOs).

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Secondary Market

The market where existing securities are traded between investors.

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IPO

Initial Public Offering - the process of offering shares of a company to the public for the first time.

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Stock Market Stability

The maintained order and efficiency of the stock market, ensured by the regulations and oversight of stock exchanges.

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Listing Requirements

Specific rules and standards that companies must meet to list their shares on a stock exchange.

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Market Capitalization

The total dollar value of all a company's outstanding shares.

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Market Stability

The state of a market where prices of assets remain relatively consistent.

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Stock Exchange Function: Raising Capital

Companies sell shares to investors to get money for expansion.

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Stock Exchange Function: Mobilizing Savings

Investors putting money into shares helps efficiently allocate resources for businesses.

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Stock Exchange Function: Facilitating Growth

Companies can buy other companies or merge through the stock market to grow.

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Stock Exchange Benefit: Investment Opportunities

Both big and small investors can participate in buying company shares, not just the large ones.

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Stock Exchange as Economic Indicator

Share prices reflect the overall economic situation, indicating trends like recessions or crises.

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Stock Exchange and Corporate Governance

Many owners helps companies improve efficiency and management standards.

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Material Information

Information that could significantly affect the market price of a company's securities. Examples include mergers, new product launches, and changes in management.

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Immediate Public Disclosure

A listed company must promptly disclose any material information to the public, such as through press releases and stock exchange announcements.

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Public Dissemination

The process of making sure material information is shared widely and effectively with the public.

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Why Immediate Disclosure?

Ensures fairness, allows investors to make informed decisions, and maintains market stability.

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Who Gets the Information First?

When disclosing material information, a listed company must first inform the stock exchange.

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Dissemination Methods

A listed company can use press releases, newswires, and stock exchange announcements to disseminate information to the public.

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Purpose of Disclosure Policy

To protect investors by ensuring they have access to relevant and timely information about listed companies.

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Unwarranted Promotional Disclosure

Disclosure that overstates a listed company's prospects or achievements to try to inflate its stock price. This is unethical and may be illegal.

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What must a listed company do if rumors appear?

A listed company must immediately investigate any rumor or report concerning them, whether true or false, which contains material information, and then publicly clarify, confirm, or deny it.

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Unusual Market Activity

When a listed company's shares experience sudden and significant price fluctuations.

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Company's responsibility during unusual market activity

A listed company must investigate the reason for such unusual activity and determine if any undisclosed information is impacting it.

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Exaggerated Reports and Predictions

A type of unwarranted promotional activity where a company makes inflated claims or predictions about its future without solid evidence.

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Insider Trading

Trading securities based on confidential information that is not publicly known.

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Insider Trading Rule

Insiders are prohibited from trading on confidential information not available to the public.

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Reason for Listing

Companies choose to list their shares on a stock exchange for various reasons, including raising capital to expand operations, improve their company profile, or increase investor confidence.

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IPO Factors

Factors companies consider before going public through an IPO include timing, methods of listing, corporate restructuring, underwriting, and pricing strategies.

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FTSE Bursa Malaysia KLCI

The FTSE Bursa Malaysia KLCI is a major stock market index in Malaysia, representing the 30 largest listed companies based on market capitalization.

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FTSE Bursa Malaysia Index Series

A comprehensive set of indices covering various market segments in Malaysia, categorizing companies by size, sector, or theme.

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Tradable Indices

Specific indices that have underlying securities that can be traded by investors, allowing investors to track and invest in specific market sectors.

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Benchmark Indices

Indices that serve as a reference point for measuring the overall performance of the stock market or specific sectors.

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Corporate Disclosure Policy

Companies are required to release public information to ensure transparency and provide investors with necessary insights for informed decision-making.

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Economic Performance

The overall health of the economy significantly influences stock market performance, as company earnings and investor sentiment are tied to economic growth and stability.

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Interest Rates

Changes in interest rates affect borrowing costs for businesses and the attractiveness of investments, influencing stock prices and market volatility.

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Reported Earnings

Companies' earnings reports are crucial for investors to assess their financial performance, driving stock price movements and market sentiment.

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Penalties for Listing Breaches

Actions taken by Bursa Malaysia against companies that violate listing rules (e.g., public reprimand, trading suspension, delisting).

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Study Notes

Bursa Malaysia BHD - Chapter 3

  • Objectives of the chapter include: explaining the structure of Bursa Malaysia Bhd; functions and roles of the stock exchange (primary and secondary markets); reasons for listing; Bursa Malaysia Indices; factors influencing stock market performance; factors related to initial public offerings (IPOs); listing requirements for Main Market and ACE Market; and corporate disclosure policy.

Bursa Malaysia - Description

  • Bursa Malaysia (KLSE) is a stock exchange in Kuala Lumpur, Malaysia. It's one of the largest bourses in ASEAN.
  • It regulates the Malaysian capital market, ensuring a fair and orderly securities and derivatives market.
  • It maintains orderly dealings in securities; clear and efficient clearing and settlement processes; issuing rules for regulated entities (issuers, directors, advisers, etc.); and administering compliance with those rules.
  • It actively monitors listed issuers and brokers, conducting surveillance over trading activities.

Structure of Bursa Malaysia

  • Bursa Malaysia Berhad (100%): Established in 2003, responsible for providing and managing the securities exchange.
  • Bursa Malaysia Securities Berhad (100%): Established in 2003, involved in providing and managing securities exchange activities.
  • Bursa Malaysia Derivatives Berhad (75%): Established in 1993, managing futures and option exchanges.
  • Bursa Malaysia Derivatives Clearing Berhad (100%): Established in 1995, providing clearing house services for futures and option exchange.
  • Labuan International Financial Exchange Inc. (100%): Established in 1999, involved in offshore financial exchanges.
  • Other entities mentioned include Bursa Malaysia Depository Sdn. Bhd., Bursa Malaysia Depository Nominees Sdn. Bhd.; Bursa Malaysia Information Sdn. Bhd.; Bursa Malaysia Bonds Sdn. Bhd.; Bursa Malaysia Islamic Services Sdn. Bhd. and listed companies trading on the Main and ACE Markets.

Listing Under Bursa Malaysia

  • Main Board: For large, well-established companies (e.g., Petronas, Nestle).
  • Main Market: For established companies.
  • ACE Market: For technology-based and emerging companies.
  • MESDAQ: A segment of the Main Market.
  • KLCI: A key index for performance measurement.
  • FTSE Bursa Malaysia KLCI: Comprises the largest 30 companies in the Main Market, based on market capitalization and meeting eligibility requirements from FTSE Bursa Malaysia Ground Rules.

Market Capitalization

  • The total market value of all a company's outstanding shares.
  • Calculated by multiplying the shares outstanding by the current market price of a share.
  • Used by investors to assess company size.

Roles & Functions of Stock Exchange

  • Raising money for businesses: Stock exchanges provide a platform for companies to raise capital by selling shares.
  • Mobilizing savings for investment: Individuals investing in shares leads to rational allocation of resources and promotes business activities.
  • Facilitating company growth: Takeovers and mergers are common ways for companies to expand using stock markets.
  • Creating investment opportunities for small investors: Smaller investors can also participate in buying and selling shares.
  • Barometer of the economy: Share prices reflect the broader economic climate; movements can indicate economic trends.
  • Corporate Governance: Companies' ownership structures and shareholder expectations result in improved management standards to satisfy needs.

Reason for Listing

  • Confidence
  • Expansion
  • Additional Funds
  • Higher Profile.

Factors to Consider for IPOs

  • Timing
  • Corporate/Capital restructuring
  • Pricing
  • Method of Listing
  • Underwriting the issue

Bursa Malaysia Index Series

  • FTSE Bursa Malaysia KLCI (formerly KLCI): Various indexes exist, focusing on industries and sectors, for tracking performance.

Tradable Indices

  • FTSE Bursa Malaysia KLCI Index
  • FTSE Bursa Malaysia Mid 70 Index
  • FTSE Bursa Malaysia Top 100 Index
  • FTSE Bursa Malaysia Hijrah Shariah Index
  • FTSE Bursa Malaysia Asian Palm Oil Plantation Index (USD & MYR)

Benchmark Indices

  • FTSE Bursa Malaysia EMAS Index
  • FTSE Bursa Malaysia Small Cap Index
  • FTSE Bursa Malaysia Fledging Index
  • FTSE Bursa Malaysia EMAS Shariah Index
  • FTSE Bursa Malaysia ACE Index
  • FTSE Bursa Malaysia Palm Oil Plantation Index

Factors Influencing Stock Market Performance

  • Economic Performance
  • Interest Rates
  • Reported Earnings
  • Oil Prices
  • Political Environment
  • International Environment
  • Entry of Institutional Investors

Corporate Disclosure Policy

  • Providing public information for informed investing.
  • Ensuring equal access to information for investors.
  • A duty for listed companies to adhere to corporate disclosure policies.
  • 6 Policies are mentioned: 1. Policy on Insider Trading 2. Policy on Immediate Public Disclosure of Material Information 3. Policy on Public Dissemination 4. Policy on Clarification of Rumors 5. Policy on Response to Unusual Market Action 6. Policy on Unwarranted Promotional Disclosure

Penalties for Listing Requirements Breach

  • Public reprimand
  • Suspension of trading (temporary)
  • Prohibition of sales unless the seller delivers required documentation.
  • Delisting of companies.
  • Other penalties as decided by Bursa Malaysia authorities

Additional Information

  • Specific dates and parts of various chapter discussions.
  • URLs are also mentioned.

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Chapter 3 Bursa Malaysia BHD PDF

Description

This quiz covers Chapter 3 of Bursa Malaysia BHD, detailing the structure and functions of the stock exchange, including its primary and secondary markets. Explore the reasons for listing, Bursa Malaysia Indices, and the factors influencing stock market performance, particularly regarding IPOs and listing requirements. Gain insights into corporate disclosure policies and market regulations in Malaysia.

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