QUESTION 1

By referring to the seven (7) steps in investing, you as an Investment Advisor, explain eachstepforMissLili,a35yearsold,servingasaPrimarySchoolteacher,whowould like to start for an investment. Describe each step by using your investment fundamentals, to guide her on this investment process.

Step 1: Meeting Investment Prerequisites

Step 2: Establishing Investment Goals

Step 3: Adopting an Investment Plan

Step 4: Evaluating Investments

Step 5: Selecting Suitable Investments

Step 6: Constructing a Diversified Portfolio

Step 7: Managing the Portfolio

QUESTION 2

Claudia had met her broker and discuss about her new trading. She bought 2,000 unitsofSyaminBhdshareslastmonth,10Sept2020,atRM5perunit,withamarginof65%. With this trading, the banks required a maintenance margin of 70%. Based on this information above, answer the followingquestions:

a)Calculate the value ofClaudia'sinvestment. (3marks)

b)Calculate how much does Claudia provide her own money for thetrading.

(3 marks)

c)Calculatetheamountthatsheborrowedbasedonthistrading. (3marks)

d)If Syamin Bhd's share price falls by RM 0.50 per share, what will be the new marginposition? (5marks)

e)Will there be a margin call in (d)? If yes, how much is the new debit balancein order for Claudia to maintain the70%margin? (5marks)

f)CalculatethetotalreturnoninvestedcapitalforClaudiaifshesellsSyaminBhd sharesatthepriceofRM6.50withtheassumptionof1.20%interestchargedon margin,anddividendreceivedwereRM0.80pershare. (6marks)