FIN435 Financial Market and Banking Services Sem 01 Assignment 01 Questions | UiTM

Instructions: 

• Read the provided materials and any additional sources you find relevant. To complete this assignment, students may refer to various sources, but not limited to recommended reference books outlined in Course Info, Bursa Malaysia, Bursa Marketplace, SC Malaysia, and Bank Negara websites.
• Answer the following questions clearly and concisely. 
• Support your answers with examples and references where applicable.
• Ensure that your work is original and properly cited. Use APA 7th Edition format in citation and reference list.
• Submit your assignment by Week 6 (Friday) of the semester. Refer to the Course Lesson Plan for the actual date.
• Make sure your report contains: Cover page (Course code, Course Name, Assignment Title, Student name, student ID, class group, lecturer name), Table of Contents, Content, reference list, Turnitin similarity report (1 page) and assignment rubric. 
• Format of report: Microsoft Word document, not more than 10 pages, alignment justified, spacing: single space, Font: Arial, Font size: 11.

Questions: 

• Explain two key differences between the bond market and stock market in terms of instruments and risk levels. (5 marks)
• Describe how exchange rate fluctuations affect multinational corporations operating in Malaysia. Provide a real-world example. (5 marks)
• Discuss two advantages and two disadvantages of offshore markets from the perspective of financial regulations and tax implications. (5 marks)
• Select one money market instrument available in Malaysia. Discuss their functions and risks. (5 marks)
• A company plans to invest RM 500,000 in a 3-month Treasury bill (T-bill) with a discount rate of 3.5% per annum. Calculate the purchase price of the T-bill and the effective yield (annualised return) on the investment. (5 marks)
• A Malaysian company imports raw materials worth EUR 250,000 and needs to make the payment in 90 days. The current EUR/MYR spot rate is 5.00, and the 3-month forward rate is 5.10. Required: 

i. Calculate the amount payable in MYR if the company does not hedge and pays at the future spot rate of 5.15. (2 marks) 

ii. If the company enters a forward contract at 5.10, how much will it save or lose compared to paying at the future spot rate? (3 marks) 

• Table 1 shows the information on two corporate bonds issued in Malaysia:

Assuming the nominal principal value of each bond above is MYR 10,000.

i. Based on Table 2, determine each bond's yearly coupon rate, coupon payment, maturity date, type of issuer, and currency used for issuance. (5 marks) 

ii. Briefly describe the meaning of the above rating given for each bond. Which bond is more stable in fulfilling its debt obligations? Justify your selection. (5 marks) 

8 An investor buys a call option on ABC stock with an exercise price of RM 5.55. The option premium is RM 0.30, and the stock price at expiration is RM 5.70. 

• Calculate the profit or loss per share for the investor. (5 marks)
• If the stock price drops to RM 4.80 instead, what will be the investor's maximum loss? (5 marks)