QUESITON 1
a. Differentiate Money Market & Capital Market
Money Market
Money market are market dealing with Short –
term securities , 1 year or less , These securities
are very Liquid , that is they can easily be
converted into cash without a meeting place .
It’s transactions usually take place for example
over the telephone or email , and the people
involved may never meet one another .
The money market plays an important role in
balancing surplus and shortage of funds among
banks after the cheques are cleared . The
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
New securities are bought and sold at first
time
Directly involved in transaction and receives
the process from the sale of securities .
c. Advantages And Disadvantage Profit Maximization
Advantaged
 Easy to Calculated Profit
 Easy to determine the link between
financial decisions and profit
 Stresses on the efficient use of capital
resources
Capital Market
Capital market are markets where securities
have a life of more than 1 year. Example of long
- term securities common stock , preference
stock and bonds . The capital market
encompasses development of financial
institutions , saving and insurance institution ,
employees Provident Fund (EPF) etc . National
development , capital investment of firms and
even financing of consumptionOf durable goods
, required long – term funding that can
obtained through the capital market .
Secondary Market
Existing securities are among traded among
investors
Securities is not involved in the transaction
and does not receives the proceeds from the
sales
Disadvantaged
 Emphasizes short – term gains
 Ignores the risk involved when
making financial decisions
 Ignores timing of return
 d. Distinguish Financial Institution & Financial Market
Financial Markets
Financial market represent forums that
facilitate the flow of funds among investors ,
firms government units and agencies . They
provide a meeting place where supplies and
demanders of loans and investments can
transact business directly .
Financial Institution
Financial Institution serves as intermediaries
that channel the savings of individual ,
business and government into loan or
investments. They include commercial bank ,
saving institutions , insurance companies ,
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

PREPARED BY:
MEMBERS ID NUMBER
1 MUHAMMAD IZZA’AZ BIN M.JUHARI PTM160710332
2 MUHAMAD IKHWAN SHAFIQ BIN NORAHMAN PTM160710235
3 AHMAD HAZIM BIN AHMAD BOSTAMAN PTM160710239

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