ASSIGNMENT 2: RISK & RETURN

Instruction:  Print out the questions and attach with your answers. Please answer with your own handwriting.
Submit on Tuesday, 11 Jan 2011.


Part A:
Question: true / false.

1. The government may seek funding through the issuance of Treasury bills,Treasury bonds, including shares to finance development expenditure.
2. Investment refers to ownership of financial and physical assets.
3. The true speculator is not interested in financial assets that are purchased but they have a profit making motive in their mind.
4. Commercial paper is a medium-term debt notes which serve as collateral on a loan as to avoid a direct loan from the bank.
5. Business and government sectors are the main customers of the financial system.
6. Investors are encouraged to invest in cyclical industries during the economic downturn.
7. The option entitles the holder to buy or sell assets at determined prices during or before maturity.
8. The contribution on financial assets are not much helped as compared to physical assets in developing a country's economy.

Part B:

Essay:
1. Describe the relationship that exists between the physical assets and financial assets. In your opinion which of the assets to give better returns?
2. In your opinion, why individuals should make the investment, whether in physical assets or financial assets?
3. Define the investment. Why does every individual and organization should give serious consideration in decision making on investment? Discuss.
4. Speculation is one of the branches of the investment. Explain why investors are not encouraged to engage in speculative activities. Differenciate between Money and Capital Markets.
5. State four (4) of Money Market instruments, and two (2) of Capital Market instruments.
6. Derivatives Market is among the fastest growing market in Malaysia, and elaborate on the market along with the instruments in it.
7. A company that wants to raise and require additional capital funds can have several alternative ways to increase their capital. Please describe the methods or financial instruments that can be adopted for the long-term financing. A financial instrument is most suitable for a long term financing? Give your reasons.

TQVM.