Q1.

A)

The Securities Commission (SC) has released the new Malaysian Code on Corporate
Governance (MCCG), Its roles is to strengthen corporate culture anchored on accountability and
transparency. The MCCG introduce to strengthen the corporate culture of accountability and
transparency. The new set of best practices places greater emphasis on the internalization of
the culture of corporate governance, not only among listed companies but also among non-
listed entities, including small and medium-sized enterprises, licensed intermediaries and state-
owned enterprises to apply the code. This new code is important in Malaysia in order to
continue promoting a good governance to ensure the sustainability and resilience of the capital
market. The new code serves as a scope for boards to guide their companies forward and
deepen understanding of the importance of corporate governance. The key feature of the new
code is the introduction of the Comprehensive, Apply and Report (CARE) approach and the shift
from "comply or explain" to "apply or explain alternatively". This is proposed to encourage listed
companies to give more thought and consideration when adopting and reporting on their
corporate governance practices.

Q1.B)

One of the theories in finance is the M&M Theory, or the Modigliani-Miller Theorem. The theory
was developed 1958. The main idea of the M&M theory is that the capital structure of a
company does not affect its overall value. The first version of the M&M theory was full of
limitations as it was developed under the assumption of perfectly efficient markets, in which the
companies do not pay taxes, while there are no bankruptcy costs or asymmetric information.
Subsequently, Miller and Modigliani developed the second version of their theory by including
taxes, bankruptcy costs, and asymmetric information. This is the first version of the M&M
Theorem with the assumption of perfectly efficient markets. The assumption implies that
companies operating in the world of perfectly efficient markets do not pay any taxes, the trading
of securities is executed without any transaction costs, bankruptcy is possible but there are no
bankruptcy costs, and information is perfectly symmetrical.
Q2.A)

Scammers are very common now and then. They use many tactics to fool and tricks their prey.
They are everywhere in this world and they also targeting people who doesn’t know much about
how finance actually works. There are many ways one can undertake to prevent themselves
from being scam and one of it is avoid dealing if the prospectus is too good to be true. This is
the common techniques use by scammer to make their investment scheme looks interesting by
promising cheaper prices and miracle return. The rule of thumb of investment is, low risk, and
low return, and high risk, high return. One should pay big amount of money in order to get a
higher return in the future.

Q2.B)

AI plays importance roles in the financial institution. It has many advantages and disadvantages
of AI. The three advantages and disadvantages of AI are as below:

AI can be used in banks to decrease financial risk. The advanced fraud detection can prevent
the risk of financial crime. Banks use big data and machine learning to prevent cyber-crime
activities and they can also monitor any threats to customers.

Secondly, AI has makes work easier and faster. Meaning to say, everything will be done
automatically and safer. There will be less time taken for the bank to arrange their data.

Thirdly, Artificial intelligent will identify any suspicious pattern that human cannot observe. One
area where this capacity is relevant is in fraud prevention, Artificial intelligence and machine
learning solutions are used by many financial services mainly to detect fraud in real time.

The first disadvantage of AI is, carries the risk and takes control away from humans while
degrading actions in several ways, if AI carried by dishonest individual, it can be a serious threat
to people because those dishonest people can generate wealthiness from this action.

Second disadvantage, AI will replace the workforce with machines that lead to unemployment, if
the use of AI becomes widespread, then a country rate of unemployment will increase.

Last but not least, AI needs huge cost of maintenance because of its complexity. The AI
advanced software programs of AI need regular updates to meet environment changing.
Q3.A)

The current issue related in finance that affect the monetary programme in Malaysia is related to
COVID-19. Since the pandemic outbreak, there are variety of Malaysia sectors now in distress
due to that. One of the sectors that has been greatly affected is oil and gas by the global crude
oil which indirectly causes the oil prices to drop massively in 2020. With Malaysia imposed the
MCO and several countries imposing lockdown, the pandemic had destroyed the world’
economies including Malaysia. Exchange rate and stock market are being terribly affected also
which led to drop in value of Malaysia Ringgit. Overall, Malaysia also faces issue with
bankruptcies, unemployment, stock market tumbling and the global supply chain. Malaysia had
lost billion losses during this pandemic and this also makes the financial institution tumble.

Q3.B)

There are three stages in the money laundering activities and the first one is which are
placement, layering, and integration. In the first stage of placement, it represents the initial
entry of the money into the financial system and it was carried out through bank complexity
happens when the bank is controlled or on by dishonest individual.

The second stage is layering. It is the process of separating the money into series of techniques
and transaction and they are also hiring professionals as an intermediary to wire transfer the
dirty money.

The third stage is integration stage. This is the process where the laundered money is
withdrawn from the account and the dishonest individual now will use the money for his or her
personal purposes.