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Financial instrument can be defined as any contractual agreement between two entities whereby it will give rise to a financial asset to one entity and

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Financial instrument can be defined as any contractual agreement between two entities whereby it will give rise to a financial asset to one entity and financial liability or equity to another entity Apply this definition to the following contractual transactions entered by XYZ Bhd. with other entities by providing a brief explanation (with a justification) on what will be the implications to the financial assets, financial liability and/or equity of XYZ Bhd. and the other respective parties. a. XYZ Bhd. subscribes 10,000 ordinary shares issued by ABC Bhd. at a quoted price of RM1.50 each, payable in full upon application. (4 marks) b. XYZ Bhd. issued 10,000 2% Redeemable Shares with a maturity period of 5 years to DEF Bhd. at RM2 each. (4 marks) XYZ Bhd. acquires 10,000 Bond at 2% discount of a quoted par value of RM100 per unit from RST Bhd. The bond is redeemable in 4 years at a premium of 5%. The bond pays a fixed coupon interest rate of 4% annually on 31 December. (4 marks) c

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