Mixed Deck — All CME-1 Topics Flashcards
100 cards from real CME-1 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 20 Mixed Deck — All CME-1 Topics flashcards as text
What is the CMA's enforcement power when it detects a securities law violation?
Answer: Issue fines, suspend licenses, refer for criminal prosecution, and seek disgorgement of profits
The CMA has broad enforcement powers including issuing fines, suspending or cancelling licenses, banning individuals from the market, and referring criminal cases for prosecution.
Under the Qualified Foreign Investor (QFI) program, what is the maximum ownership limit for a single foreign investor in a listed Saudi company?
Answer: 10% of the company's shares
A single QFI can own up to 10% of a listed company's shares. The total foreign ownership limit (including swap agreements and QFIs) is 49% unless the company's articles specify a lower limit.
What is a Rights Issue (Haq Al-Awalawiya) in the Saudi capital market?
Answer: An offering of new shares to existing shareholders at a discounted price
A Rights Issue allows existing shareholders to purchase additional shares proportional to their current holdings at a discounted price. In Saudi Arabia, these rights are tradeable on Tadawul during the subscription period.
What is the daily price fluctuation limit for stocks on the Main Market of Tadawul?
Answer: 10% up or down
Stocks on the Main Market of Tadawul have a daily price fluctuation limit of ±10% from the previous day's closing price. This circuit breaker mechanism helps prevent extreme volatility.
What is the primary regulation governing investment funds in Saudi Arabia?
Answer: Investment Funds Regulations issued by the CMA
The Investment Funds Regulations (IFR) issued by the CMA govern the establishment, management, and operation of investment funds in Saudi Arabia. These regulations cover both public and private funds.
Which entity operates the Saudi Exchange (Tadawul) and is overseen by the CMA?
Answer: Saudi Exchange (Tadawul)
The Saudi Exchange (Tadawul) is the national stock exchange of Saudi Arabia and operates under the oversight of the Capital Market Authority.
What is the Capital Asset Pricing Model (CAPM) used for?
Answer: Estimating the expected return of an asset based on its beta and market risk premium
CAPM determines the expected return of an asset: Expected Return = Risk-Free Rate + Beta × (Market Return − Risk-Free Rate), linking risk to required return.
What does the term 'liquidity risk' mean in investment management?
Answer: Risk of being unable to sell an investment quickly at a fair price
Liquidity risk is the risk that an investor cannot exit a position quickly without significantly moving the price or accepting a large discount to fair value.
What is the significance of 'trading volume' as a market indicator?
Answer: It represents the number of shares or value of securities traded during a specific period
Trading volume measures the total quantity of shares or the monetary value of securities exchanged during a given timeframe, indicating market activity and liquidity levels.
What is the main stock exchange in Saudi Arabia?
Answer: Saudi Exchange (Tadawul)
The Saudi Exchange (Tadawul) is the sole authorized stock exchange in Saudi Arabia. It was formally established as a joint-stock company in 2007 and is one of the largest exchanges in the Middle East by market capitalization.
Which type of order instructs a broker to buy or sell a security immediately at the best available current price?
Answer: Market order
A market order is executed immediately at the prevailing best available price without specifying a price limit.
What obligation does a CMA-licensed research analyst have regarding personal trading in covered securities?
Answer: Must comply with restricted period rules and disclose personal holdings to prevent conflicts of interest
Research analysts must observe blackout periods around report publication, disclose personal holdings in covered companies, and manage conflicts of interest in their recommendations.
What is the CMA requirement for a 'Know Your Customer' (KYC) process?
Answer: Mandatory obligation for authorized persons to identify and verify client identity and suitability
KYC is a mandatory obligation under CMA Anti-Money Laundering and client protection rules for all authorized persons before onboarding clients.
What is an 'Exchange Traded Fund' (ETF) listed on the Saudi Exchange?
Answer: An open-ended fund whose units trade on the exchange like shares, tracking an index or basket of assets
ETFs are open-ended investment funds listed on the Saudi Exchange that track an index or asset basket, offering intraday tradability and typically lower fees than active funds.
What is 'front running' in securities markets?
Answer: A broker trading for its own account ahead of a large client order, profiting from the anticipated price movement
Front running occurs when a broker or trader executes trades in their own account ahead of a client's order they know will move the price, violating their duty to the client.
What is the Saudi Exchange's pre-opening session used for?
Answer: Collecting orders to determine the opening price through an auction mechanism
The pre-opening session (8:00-10:00 AM) collects buy and sell orders to determine the opening price through a call auction mechanism. This helps establish a fair opening price based on supply and demand.
If an offeror obtains 90% or more of the shares subject to the offer, what right may the offeror exercise under CMA regulations?
Answer: The compulsory acquisition (squeeze-out) right to acquire remaining shares at the offer price
When the offeror acquires 90% or more of the offer shares, CMA regulations allow the offeror to compulsorily acquire the remaining minority shares at the offer price.
What is the maximum percentage stake that requires a mandatory tender offer (MTO) in a Saudi listed company?
Answer: 33%
Under CMA Merger and Acquisition Regulations, acquiring 33% or more of voting shares in a listed company triggers a mandatory tender offer to all remaining shareholders.
Under CMA regulations, when must a fund manager report a material event to the CMA?
Answer: Immediately upon occurrence
Fund managers must notify the CMA immediately upon the occurrence of any material event that may affect the value of fund units or the ability of unitholders to exercise their rights.
What distinguishes 'preferred shares' from ordinary shares in Saudi Arabia?
Answer: Preferred shares typically have priority on dividends and/or assets in liquidation but may have restricted or no voting rights
Preferred shares confer dividend priority and/or liquidation preference over ordinary shareholders, but often come with limited or no voting rights.
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