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QUESITON 1

a. Differentiate Money Market & Capital Market


Money Market Capital Market
Money market are market dealing with Short – Capital market are markets where securities
term securities , 1 year or less , These securities have a life of more than 1 year. Example of long
are very Liquid , that is they can easily be - term securities common stock , preference
converted into cash without a meeting place . stock and bonds . The capital market
It’s transactions usually take place for example encompasses development of financial
over the telephone or email , and the people institutions , saving and insurance institution ,
involved may never meet one another . employees Provident Fund (EPF) etc . National
development , capital investment of firms and
The money market plays an important role in even financing of consumptionOf durable goods
balancing surplus and shortage of funds among , required long – term funding that can
banks after the cheques are cleared . The obtained through the capital market .
money market enables banks to covert a
portion of their cash reserves into assets that
generated return. The money market also
facilitates firms and institutions in obtaining
short – term loans . Example of short – term
security include commercial paper , banks
acceptance , money market funds and
certificates of deposits.

b. Difference between Primary Market & Secondary Market

Primary Market Secondary Market


New securities are bought and sold at first Existing securities are among traded among
time investors
Directly involved in transaction and receives Securities is not involved in the transaction
the process from the sale of securities . and does not receives the proceeds from the
sales

c. Advantages And Disadvantage Profit Maximization

Advantaged Disadvantaged
 Easy to Calculated Profit  Emphasizes short – term gains
 Easy to determine the link between  Ignores the risk involved when
financial decisions and profit making financial decisions
 Stresses on the efficient use of capital  Ignores timing of return
resources
d. Distinguish Financial Institution & Financial Market

Financial Markets Financial Institution


Financial market represent forums that Financial Institution serves as intermediaries
facilitate the flow of funds among investors , that channel the savings of individual ,
firms government units and agencies . They business and government into loan or
provide a meeting place where supplies and investments. They include commercial bank ,
demanders of loans and investments can saving institutions , insurance companies ,
transact business directly . pension funds , finance companies and
mutual funds . These institution may directly
or indirectly pay serves interest on deposit
funds. Many financial institution charge
depositors for the services provided such as
checking accounts . Example of financial
institution in Malaysia are Malaysia Industrial
Development Financial Berhad ( MIDF ) and
its subsidiary , Malaysia Industrial Estates
Sendirian Berhad ( MIEL ) , Bank
Pembangunan dan Infrastructur Malaysia
Berhad , Bank Industri and Teknologi
Malaysia Berhad ( BITM ) , Sabah Deveplment
Bank Berhad , Borneo Development
Corporation ( Sabah ) , Borneo Develpoment
Corporation ( Sarawak ) and Export- Import
Bank of Malaysia ( Exim Bank )
QUESTION 2

a) FVA = PMT X FVIFA i,n


= 15000 x FVIFA 5%, 5
= 15000 x 5.5256
= 8702.2

b) COST = RM 110 000


DOWN PAYMENT = 10% X 110 000 = 11 000

Cost = 110 000 – 11 000


= 99 000

PVA = PMT X PVIFA I,n


99 000 = PMT X PVIFA 3%, 9
99000
PMT = 7.7861
= RM 2714.97

c) I =?
FV = 5000
PV = 2501
n = 9 years

FV = PV (FVIF I,n)
5000 = 2501 (FVIF I,n)
5000
= (FVIF I,n)
2501
1.999 = (FVIF I,n)
= 8% - 9%

d) PV = FV (PVIF I,n)
PV= 7500 (PVIF 6% , 4)
= 7500 ( 0.7921)
= RM 5940 .75
e) FV = 5000
PV = 4495
n =3

FV = PV (FVIF I,n)
5000 = 4495 (FVIF i,3)
5000
= FVIF I,3
4495
1.1123 = FVIF I,n
= 3% - 4%
f) PMT = 3800
n=9
i=8%

FVA = PMT X FVIFA I,n


= 3800 X FVIFA 8% , 9
= 3800 X 12.488
= RM 47454.40

g) FVA = 4000
n=2
I=5%
FVA = PMT X FVIFA I,n (1 + e)
4000 = PMT X FVIFA 5% ,2 ( 1+ 0.05)
4000 = PMT X 2.0500 X 1.05
4000 = PMT X 2.1525
4000
PMT = 2.1525

= RM 1858.30
QUESTION 3
a) SUTRAJAYA
PROBABILITY RETURN (%) EXPECTED RETURN 𝒂(𝒃 − Ř )𝟐
0.1 - 10% -1 0.1(−10 − 13)2 =
52.9
0.2 5% 1 0.2(5 − 13)2 = 12.8
0.3 10% 3 0.3 (10 − 13)2 = 2.7
0.4 25% 10 0.4 25 − 13)2 = 57.6
Ř = 13
ii) variance = 126
iii) standard
deviation= 126
= √126
= 11.225

θ
iv) CV = Ř
11.225
= 13

= 0.863
b)

PROBABILITY RETURN (%) EXPECTED 𝒂(𝒃 − Ř )𝟐


RETURN
0.25 22% 5.5 0.25(33 − 16.5)2 =
7.5625
0.50 18% 9 0.50(16 − 16.5)2 =
1.125
0.25 8% 2 0.25 (8 − 16.5)2 =
18.0625
Ř = 16.5
ii) variance = 26.75
iii) standard
deviation= 26.5
= √26.75
= 5.172

θ
iv) CV = Ř
26.75
= 16.5
= 0.313
FINANCIAL MANAGEMENT
PFN1203
GROUP ASSIGNMENT
SECTION 2

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MEMBERS ID NUMBER
1 MUHAMMAD IZZA’AZ BIN M.JUHARI PTM160710332
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