Podcast
Questions and Answers
What defines equity securities in the context of the capital market?
What defines equity securities in the context of the capital market?
Which of the following is a key difference between Islamic and Conventional Equities?
Which of the following is a key difference between Islamic and Conventional Equities?
In Islamic equities, how must earnings from prohibited activities be treated?
In Islamic equities, how must earnings from prohibited activities be treated?
What is one of the requirements for Islamic equities concerning sources of income?
What is one of the requirements for Islamic equities concerning sources of income?
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How do Islamic equities differ in their investment screening process compared to conventional equities?
How do Islamic equities differ in their investment screening process compared to conventional equities?
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Conventional equities typically allow investment in which of the following sectors?
Conventional equities typically allow investment in which of the following sectors?
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What primary factor influences the ethical considerations in conventional equities?
What primary factor influences the ethical considerations in conventional equities?
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What is NOT a characteristic of Islamic equity investments?
What is NOT a characteristic of Islamic equity investments?
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What is the first step in the Syariah compliance review process?
What is the first step in the Syariah compliance review process?
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What is the role of the remisier in the trading procedure?
What is the role of the remisier in the trading procedure?
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What does T+2 refer to in the delivery and settlement process?
What does T+2 refer to in the delivery and settlement process?
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Which organization finalizes the results of the Shariah compliance review?
Which organization finalizes the results of the Shariah compliance review?
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What is included in the trade confirmation for an investor?
What is included in the trade confirmation for an investor?
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How is the order placed by the investor in the trading procedure?
How is the order placed by the investor in the trading procedure?
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What happens to orders in the matching order step of the trading procedure?
What happens to orders in the matching order step of the trading procedure?
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What does the Central Depository System (CDS) use to keep track of shares?
What does the Central Depository System (CDS) use to keep track of shares?
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What is the primary legislation that established the Securities Commission as the regulatory authority for Malaysia's capital market?
What is the primary legislation that established the Securities Commission as the regulatory authority for Malaysia's capital market?
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Which act operates under the supervision and enforcement of the Securities Commission?
Which act operates under the supervision and enforcement of the Securities Commission?
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What is one of the primary roles of Bursa Malaysia?
What is one of the primary roles of Bursa Malaysia?
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What type of investors could be attracted through the Shariah compliance review process?
What type of investors could be attracted through the Shariah compliance review process?
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Why are Shariah-compliant investments seen as less risky?
Why are Shariah-compliant investments seen as less risky?
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Who does the Securities Commission report to?
Who does the Securities Commission report to?
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What was the effective date of the Capital Market and Services Act?
What was the effective date of the Capital Market and Services Act?
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Which of the following is NOT a benefit of the Shariah compliance review process?
Which of the following is NOT a benefit of the Shariah compliance review process?
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What defines the ownership structure of ordinary shares?
What defines the ownership structure of ordinary shares?
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Which type of shares allows for the payment of dividends that may or may not accrue interest in the future?
Which type of shares allows for the payment of dividends that may or may not accrue interest in the future?
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Which characteristic is true for preference shares?
Which characteristic is true for preference shares?
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Which type of preference share can be exchanged for ordinary shares?
Which type of preference share can be exchanged for ordinary shares?
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What is the commonality shared by all types of preference shares?
What is the commonality shared by all types of preference shares?
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What is a feature of cumulative preference shares?
What is a feature of cumulative preference shares?
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Which statement about redeemable shares is true?
Which statement about redeemable shares is true?
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What distinguishes preference shares from ordinary shares in terms of voting rights?
What distinguishes preference shares from ordinary shares in terms of voting rights?
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Which type of equity security is generally characterized by a claim on assets after all creditors are paid?
Which type of equity security is generally characterized by a claim on assets after all creditors are paid?
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Which form of shares might have dividends that depend on a combination of cumulative or non-cumulative status?
Which form of shares might have dividends that depend on a combination of cumulative or non-cumulative status?
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Study Notes
Equity Securities
- Equity securities represent ownership in a company
- Investors can buy and sell these shares on the stock exchange.
- Initial Public Offerings (IPOs) allow investors to buy new shares.
- Ownership is commonly known as stocks or shares.
Syariah Compliance vs Conventional Equities
- Islamic Equities: Investment activities adhere to Shariah principles, avoiding activities deemed unethical in Islam (e.g., alcohol, gambling).
- Conventional Equities: No restrictions on investment sectors. Ethical considerations vary based on individual or institutional investor preferences.
Types of Equities Securities
- Ordinary Shares: Represent undivided ownership in a company. Shareholders receive dividends (if declared) and have voting rights on corporate policies and board members.
- Preference Shares: Also represent ownership, but with a contractual dividend and often no voting rights. Types include cumulative, non-cumulative, convertible, redeemable, and exchangeable.
Legal and Regulatory Framework
- Securities Commission Act (SCA) 1993 governs the Malaysian capital market. This includes regulating activities, licensing market participants, and setting standards for financial reporting.
- Bursa Malaysia is the stock exchange in Malaysia. It is responsible for overseeing listed companies and trading activities to ensure transparency and fairness.
- Securities Commission (SC) ensures compliance with Islamic law and ethical investments.
Syariah Compliance Review Process
- The process involves extracting financial data, reviewing if activities are in line with Shariah compliance.
- Data is compared to Shariah benchmarks.
- Results are presented to the Securities Commission for final decisions.
Trading Procedure
- Investors open accounts with participating organizations or brokers to trade on the stock exchange.
- Orders are placed through automated trading systems or brokers.
- Trade confirmations and contract notes outline transaction details, such as prices, quantities, and brokerage fees.
- Delivery and settlement, typically within two trading days, transfer ownership of purchased shares.
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Description
This quiz explores the fundamentals of equity securities, including their representation of ownership in companies and the distinctions between Islamic and conventional equities. It covers types of equity securities such as ordinary and preference shares, along with their characteristics and implications for investors.
