QUESTION 1

1. Briefly explain any TWO (2) categories of systematic risks and unsystematic risks

2. Briefly explain the significance of Time Value of Money concept.

3. Explain the organizational form of sole proprietorship, partnership, and corporation with examples.

QUESTION 2

1. ZAMANI has just bought a new HONDA ACCORD that costs RM 89,000. She took a 9-year loan from ABC Bank that requires her to pay 10% of the cost, as down payment. Determine amount of ZAMANIs annual payment if the ABC Bank interest is 4% per annum.

2. How much will RM 2,000 deposited in a current account earning a compound annual interest rate of 6% be worth at the end of 4 years?

3. We are going to deposit $5,600 at the end of each year for the next 10 years in a bank where it will earn 10% interest. How much will we get at the end of 10 years?

4. We are going to deposit $1,000 at the beginning of each year for the next 5 years in a bank where it will earn 5% interest. How much will we get at the end of 5 years?

5. Differentiate between

• Non-Current Assets and Current Assets.

• Non-Current Liabilities and Current Liabilities.

6. Big Mom Sdn. Bhd is evaluating an investment with different probabilities. Based on the following information, calculate the expected return if the Treasury Bills carries a return of 5.5%

	Probability	Market Return
1	0.17	7%
2	0.33	8%
3	0.43	11%
4	0.18	15%
5	0.22	12%

QUESTION 3

1. Differentiate between Investment Decisions and Financing Decisions.

2. Nasi Kandar Corp. is considering an investment in one of the two common shares. Given the information that follows, which investment is better, based on risk and return?

COMMON SHARES LA		COMMON SHARES TI
Probability	Return	Probability	Return
0.30	12%	0.20	-6%
0.40	16%	0.30	7%
0.30	20%	0.30	15%
0	0	0.20	23%

3. Briefly explain characteristics Common Shares and Preferred Shares