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As a financial planner, one of your tasks is to prescribe the allocation of available funds across money market securities, bonds and mortgages. Your philosophy is to take positions in securities that will benefit most from your forecasted changes in economic conditions. As a result of recent event in Malaysia, you expect that in the next month foreign investors will reduce their investment in Malaysian Treasury securities and shift most of their funds into other countries securities. You expect that this shift in funds will persist for at least a few years. You believe this single event will have a major effect on economic factors in Malaysia, such as interest rates, exchange rates and economic growth in the next month. Because the price of securities in Malaysia are affected by these economic factors, you must determine how to revise your prescribe allocation of funds across securities. You are required to answer the following: 1. How will Malaysian interest rates be directly affected by the event (holding other factors equal)? 2. How will economic growth in Malaysia be affected by the event? How might this influence the values of securities? 3. Assume that day-to-day exchange rate movements are dictated primarily by the flow of funds between countries, especially international bond and money market transactions. How will exchange rates be affected by possible changes in the international flow of funds that are caused by the event? 4. Using your answer to (1) only, explain how prices of Malaysian money market securities, bonds and mortgages will be affected. 5. Now use your answer in (2) along with answer to (1) to assess the impact on security prices. Would prices of risky securities be affected more or less than those of risk-free securities with similar maturity? Why