STUDENT ID NO

MULTIMEDIA UNIVERSITY

ONLINE TEST
TRIMESTER 2, 2022/2023 (TERM ID: 2220)

BBF2154 – INVESTMENT
(All sections / Groups)

(1 Hour)

INSTRUCTIONS TO STUDENT

1. This Question paper consists of 2 pages with 2 Questions.

2. Attempt ALL questions. The distribution of the marks for each question is given.

3. Students are allowed to use non-programmable scientific and financial calculators.

4. Please print all your answers in Microsoft Word file and upload your answer on
MMLS under ASSIGNMENT tab:
• Font type: Times New Roman, size 12, 1.5 spacing
• Save your file as STUDENT ID_YOUR NAME
Example: 1021100777_ONG SHUK WERN
BBF2154 INVESTMENT

QUESTION 1

(a) Assume you buy 100 shares of Rainbow stock at RM70.00 per share on margin
40%.

(i) If price increases to RM80.00 per share, what is the percentage gain or loss on
initial equity?
(1 mark)

(ii) What would be the percentage gain or loss on initial equity if the price decreased
to RM60.00?
(1 mark)

(b) Based on the table below, assume BrainPower has a taxable income of RM40,000.00.

Taxable Income (RM) Tax Rate (%)

0 – 7,300 10
7,301 – 29,700 15
29,701 – 50,000 25

(i) How much is the tax obligation?

(2 marks)
(ii) What is the average tax rate?
(2 marks)

(c) Fiscal policy aims to address concerns such as rising unemployment rates, inflation
control, stabilization of business cycles, and influencing interest rates in a country. When
the economy is experiencing a slowdown, there will be an increase in unemployment
rates and a decrease in consumer spending. Discuss TWO (2) fiscal policy tools that can
be utilized to help to improve the economy slowdown.
(4 marks)

(Total: 10 marks)

Continued …….

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BBF2154 INVESTMENT

QUESTION 2

Geneyus Company expects a non-constant growth pattern for dividends. Dividends at the
end of year 1 are RM2.00 per share and are expected to grow by 10% per year until the
end of year 4. After year 4, dividends are expected to grow at 6% as far as the company
can see into the future. All dividends are to be discounted back to present at a 14% rate.

(a) Compute the dividend for year 2 until year 4.

(2 marks)

(b) Solve the Net Present Value (NPV) for all dividends from year 1 until year 4.
(3 marks)

(c) Calculate the dividend in year 5.

(1 mark)

(d) Calculate the present value of stock price in year 4.

(3 marks)

(e) Compute the total present value of stock.

(1 mark)

(Total: 10 marks)

End of Page.

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