Faculty of Business, Economics and Accounting

Department of Business Studies

HELP Bachelor of Business (Hons) Year 2
HELP Bachelor of Economics (Hons) Year 2
HELP Bachelor of Management (Hons) Year 2
HELP Bachelor of Business Psychology (Hons) Year 2
HELP Bachelor of Tourism Management (Hons) Year 2

INTERNAL SUBJECT DETAILS

Semester 2, 2016
Subject:

MPU3353
Personal Financial Planning in Malaysia

Subject Lecturer/Tutor: Dr John Murugesu

Telephone: 03-2716 2000
Fax:
03-2093 5311
Email:
john.murugesu@help.edu.my

Consultation:

Please call or email for appointment

PRE-REQUISITE(S):
None
SUBJECT OBJECTIVES
This subject is an overview of personal financial planning and investment advising from
Malaysia perspective. The major aspects of financial planning are reviewed to provide an outline
for a good understanding of the subject which is vital in managing and evaluating financial
alternatives. This subject will help students to create, implement and evaluate financial action
plan.

OBJECTIVES
After studying this subject, the student should be able to do the following:

Provide good knowledge of investment alternatives to potential investors;

Gain some understanding of the ethical, legal and compliance issues relevant to the
Proper Authorities Holders;
Understand characteristics of investment choices in light of risk and return;
Understand the nature of gearing;
Be aware of the issues related to taxation;
Understand the role of superannuation for wealth accumulations;
Introduced to the concept of estate planning
Provide some experience in the creation of a comprehensive financial plan

TEXTBOOK

Kapoor, Diabay& Hughes (2015). Personal Financial Planning, 11th Edition.

McGraw Hill, New York

RECOMMENDED TEXT(S)

Keown (2013). Personal Finance, 6th Edition. Pearson, New Jersey

McKeown, W.,Olynyk, M., Kerry, M., & Bea, D. (2014). Financial Planning. 2nd
Edition. Sydney, John Wiley Australia.

Madura,J (2014). Personal Finance. 5th Edition. Pearson/Prentice Hall, New Jersey

Subject Outline / Teaching Plan

Department
Lecturer
WEEK
1
(30-3/6)

: Business Studies
: Dr John Murugesu

Subject Code : MPU 3353

Subject Title : Personal Financial Planning
In Malaysia
LECTURE TOPIC

TOPIC 1
The Financial Planning Industry in Malaysia
TOPIC 2
Regulatory Controls and Practices Affecting Financial
Planning

2
(6-10/6)

TOPIC 3
The Nature and Scope of Financial Planning
TOPIC 4
Analytical Tools for Financial Planning

3
(13-17/6)

TOPIC 5
Risk Management
TOPIC 6
The management of risk

4
(20-24/6)

TOPIC 7
The insurance industry in Malaysia
TOPIC 8
Types of insurance cover

5
(27-1/7)

TOPIC 9
Investment Planning :
Concepts of investment
TOPIC 10
Primary investment

6
(11-15/7)

TOPIC 11
Managed investments
TOPIC 12
Income tax planning

7
(18-22/7)

TOPIC 13
The retirement planning process
TOPIC 14
The estate planning process

89
(23- 6/8)

FINAL EXAMINATION

ASSESSMENT
There are 3 assessment items for this subject.

Assessment Items

Value

Due Date

1. Presentation / Quiz

20%

To be Advised

2. Assignment

40%

30 June 2016

3. Final Examination (Closed Book)

40%

Examination period: 23
July 6 August 2016**

REQUIREMENTS:
To gain a pass in this subject, students must:

Achieve a total result of 50% or better overall.

** - Please check on the notice board and My Acel for the actual date. HELP
University reserves the right to make any changes to the above where appropriate.

ASSESSMENT DETAILS
ITEM 1: In-class short quiz
There will be 2 Sections in short quiz.

10%

Rational
The in-class short quiz is designed to:
Allow you to demonstrate your understanding of the subject topics;
Give you wider scope in answering and in interpreting different concepts and
practical problems in Financial Planning;
Assess whether you have clearly understood and remembered essential concepts,
knowledge and terms covered in the subject topics.

Marking criteria

Correctness of your answers.

Supporting documents.
Demonstrated evidence of clear understanding of the subject topics and the
specific questions.
Ability to write your answers in a clear and targeted manner

ITEM 2: Presentation

10%

Tutorial Group oral presentation

Students are expected to provide a 10 minutes Group presentation.

Each group must consist of min 3 and max 4 students.
Candidates will be evaluated in terms of their effectiveness of presentation in
terms of creativity, style and usage of visual aids.

ITEM 3: Assignment
Due date:
Terms:
Turnitin:

Citing references:

40%

30 June 2016
Group assignment.( min 3, max 4 persons in a group)
All Assignment submission MUST include the Turnitin Original
Report.
Turnitin I.D and Password will be distributed during lecture classes.
Appropriate referencing is required.
You should include in your reference list only those articles and
books that you have actually cited.
You may have read other articles and books but these should be
included only in the bibliography.
You may lose up to a maximum of 10% of the marks allocated for
this assignment without proper referencing.

Assessment rationale:

Assist in the learning process and to develop an understanding in the current

development of the financial planning industry;
To understand some of the applicable rules and laws pertaining to financial planning;
Develop your understanding of risk in the financial planning process;
Enhance your skill in written communication.

Marking criteria
Answers to the questions will be marked according to:
the clarity and thoroughness with which you answered the questions;
the inclusion of essential information in your answer;
for questions involving calculations - the accuracy of your answers with supporting
workings
ASSIGNMENT QUESTION
Jeff and Ann are both 30 years old. They have been married for 7 years. They got married
immediately after graduating from university and have two children aged 5 and 6 years.
Jeff works as an engineer and currently earns $5,000 per month after tax and other
deductions while Ann works as a bank officer and earns $3,000 per month net. Jeff
anticipates to receive a promotion and his new income is expected to be about $6,000 per
month. Jeff and Ann purchased a house for $80,000 two years ago and their housing loan
outstanding is currently at $70,000. The mortgage on their main residence is an
adjustable-rate mortgage with 18 years remaining.
Jeff & Ann both drive their own cars. Both car loans have been fully paid however Anns
car is old and will need to be replaced soon. Ann would really like to purchase a new car
within the year and intends to save $550 each month until she has enough for the $4,000
down-payment and to meet the monthly car loan repayments.
The Jeff and Ann are also concerned about how they will pay for their childrens
university education. Ann plans to save an additional $300 each month that will be set
aside for this purpose.
Jeff has purchased a life insurance policy with a current cash value of $20,000 and death
benefit of $100,000. Jeff has named his wife Ann as beneficiary.
The Jeff and Ann also know they need to save for their retirement over time. Yet they do
not have a plan right now to achieve that goal because they are focused on saving for a
new car and their childrens education.
Reviewing their financial records from last month, Jeff and Ann identify the following
monthly household payments/expenses:
- $900 for the house loan payment ($700 loan payment plus home insurance and property
taxes).
- $150 for cable TV.
6

- $200 for electricity and water.

- $100 for telephone expenses.
- $100 insurance premium for term life policy
- $1,000 for groceries.
- $200 for a health care plan provided by Jeffs employer (this expense is deducted
directly from Jeffs salary).
The Jeff and Ann also review several credit card bills to estimate their other typical
expenses on a monthly basis:
- About $400 for clothing.
- About $800 for car expenses (insurance, maintenance, and gas).
- About $200 for school expenses.
- About $1,000 for recreation and programs for the children.
Jeffs employer contributes $500 per month in premiums for his health and disability
insurance. To determine their net worth, the Jeff and Ann also assess their assets and
liabilities, which include the following:
- $300 in cash.
- $1,700 in their bank current account.
- Home is currently valued at $95,000.
- $10,000 in a mutual fund. When the shares were purchased the Net Asset Value
(NAV) per share was $50 and the NAV per share is now $60 per share.
- Furniture worth about $3,000.
- Anns car, which needs to be replaced soon, is worth about $1,000. Jeffs car is
worth approximately $8,000.
- They owe $70,000 on their home mortgage and about $5,000 on their credit cards.
- Jeff has a credit card balance outstanding of $5,000.
Required:
i)
ii)

iii)
iv)
v)

vi)

vii)

Explain to Jeff and Ann the stages of the financial life cycle and identify the
financial concerns that they need to address at each stage. (20 marks)
If the worst happened and they both lost their jobs, Jeff and Ann want to know
how long they would be able to continue paying their bills. Identify and
calculate the ratio that would be most useful to them. (10 marks)
Prepare a current balance sheet for Jeff and Ann and determine their
combined net worth. (10 marks)
Based on their current financial circumstances, do you expect that their net
worth to increase or decrease in the future? Justify your answer. (10 marks)
Jeff has a RM5,000 balance outstanding on his credit card that charges 18.9%
interest compounded monthly and his minimum payment is 3% of his debt
balance. How many months will it take Jeff to pay off his credit card if he
pays the current minimum payment of RM150 at the end of each month? (10
marks)
If Ann goes ahead with the purchase of a new car, what is the highest price
she can afford? Assume their car loan is for 4 years at 7.5% interest per annum
and that the trade-in-value is zero. (10 marks)
Jeff & Ann are considering taking additional life, health, disability and long
term care insurance. Based on the information given above, justify how you
7

viii)

would prioritise/rank the different types of insurance that they might need.
(15 marks)
Jeff and Ann intend to retire when they are 60 and what to have enough
income to live on for 20 years after retirement. They estimate that their
combined retirement income after taking into account their accumulated
savings and EPF will fall short by $27,000 per annum before inflation.
Calculate the amount that Jeff and Ann must start saving now to ensure that
they have enough when they retire. Assume that their savings will earn a
return of 8%pa and that inflation is running at an annual rate of 3%pa. (15
marks)

ITEM 4: Final Examination

40%

This will be of three hours duration, and will cover all topics studied in the subject. See
sample exam for guidance.

Rationale
This assessment is designed to test your understanding of the concepts and theories
covered in this subject.

Requirements
To receive a passing grade or higher in this subject, students are required to obtain a
mark of 20/40 or higher.

Marking criteria
Marks will be awarded for your ability to write clearly and to apply the appropriate
concepts or theories to given questions or scenarios.

Assessment Information
Pass Requirements
Your assessment in this subject will be based on two assessment items worth a total of
60 % and a final examination worth 40%. In order to meet terms in this subject you must
submit all assessment items. To receive a passing grade you must pass the final
examination. In order to achieve a passing grade in this subject, a student must attain a
minimum passing standard in both the overall total mark and the examination. You must
sit for your final examination as scheduled in the final examination period unless serious
misadventure prevents you from doing so.

EXTENSIONS AND LATE SUBMISSIONS

If you are having difficulty in completing work in time due to illness or unusual
circumstances, you may request an extension through your lecturer with supporting
documentation eg. medical certificate. Applications for extensions on or after the due
date of the assessment items will not be considered. NO extensions will be given without
documentary evidence of inability to meet deadlines. A deduction of 10% of the marks
awarded per day late applies if a piece of work is submitted late without approved
extension.

Penalties for Late Submission

The assessment in this subject are sequential in the sense that there are generally
questions pertaining to each topic. For this reason assessment extensions for medical
reasons will generally not cover the entire assessment - rather you will be required to
submit by the due date some proportion of the assessment as agreed to with the lecturer.
You should contact the lecturer well before the due date of the assessment. Note that in
fairness to other students, requests for extensions on the basis of excessive work or
personal commitments will not be granted. You should make every effort to ensure that
your assessment arrives on time. If you are unwell and require an extension for your
assessment, you must contact your lecturer prior to the due date. Assessments submitted
late with no valid medical reason will lose marks. The penalty for late submission of an
assessment without obtaining approval for an extension will be 10% deduction per day
including weekends, of the maximum marks allocated for the assessment, i.e. 1 day late
- 10% deduction, or 2 days late - 20% deduction.
For example, for an assessment worth 20 marks, the calculations depending on the
penalty given are as follows:
Marks received (before penalty): 18 marks
Less 1 day late penalty: 2 marks
Student's final mark: 16 marks

Assignment No.: __

Assignment Cover Sheet

Student Information (For group assignment, please state names of
all members)
Name

Grade/Marks

ID

Office
Acknowledgement

Module/Subject Information
Module/Subject Code
Module/Subject Name
Lecturer/Tutor/Facilitator
Due Date
Assignment Title/Topic
Intake (where applicable)
Word Count

Date/Time

Declaration
. I/We have read and understood the Programme Handbook that explains on plagiarism, and I/we testify
that, unless otherwise acknowledged, the work submitted herein is entirely my/our own.
. I/We declare that no part of this assignment has been written for me/us by any other person(s) except
where such collaboration has been authorized by the lecturer concerned.
. I/We authorize the University to test any work submitted by me/us, using text comparison software, for
instances of plagiarism. I/We understand this will involve the University or its contractors copying my/our
work and storing it on a database to be used in future to test work submitted by others.
Note:1) The attachment of this statement on any electronically submitted assignments will be deemed
to have the same authority as a signed statement.
2) The Group Leader signs the declaration on behalf of all members.

Signature:

Date:

mail:

10

Feedback/Comments*
Main Strengths

Main Weaknesses

Suggestions for improvement

Student acknowledge feedback/comments

Graders signature

Students signature:

Date:

Date:

Note:

1)A soft and hard copy of the assignment shall be submitted.

2)The signed copy of the assignment cover sheet shall be retained by the marker.
3)If the Turnitin report is required, students have to submit it with the assignment. However, departments may allow
students up to THREE (3) working days after submission of the assignment to submit the Turnitin report. The
assignment shall only be marked upon the submission of the Turnitin report.
*Use additional sheets if required.

11

Department of Business Studies

ACADEMIC INTEGRITY
Honesty and Responsibility
Academic integrity is an important tenet for HELP University. In pursuit of the highest
standards of academic integrity, the Department of Business Studies holds it students to
the highest ethical standards defined by the Rules and Regulations section of the
Academic Handbook. All students at the Department of Business Studies are subjected
to and are bound by the Student Academic Misconduct Rule to assure academic honesty.
Students are required to sign a pledge on the assignment cover sheet before submitting
your assignments to the Administration Office of the Faculty of Business, Economics &
Accounting.
What is Plagiarism?
Plagiarism is academic dishonesty or academic theft, and it is a serious academic offence.
Plagiarism includes, but is not limited to, the followings:
1. quote, paraphrase or summarize someone elses ideas, theories or data, in whole
or in part, without appropriate acknowledgement
2. borrow ideas, opinion or words, in whole or in part, from other sources without
properly crediting the author(s)
3. use any facts, statistics, diagrams or graphs, in whole or in part, without
acknowledging the source clearly
4. claim or imply original authorship of someone elses ideas, theories or data, in
whole or in part, as your own
5. employ or allow someone to help to revise, amend or write your work and pass
off as your own original work
6. collaborate with or allow other students to copy your work
7. draw on sources more than what you have acknowledged by citations
While a student is not discouraged to discuss an assignment with his/her friends or
classmates, the work he/she submits must be done by the student alone. If a student shares
his/her assignment with other students and they plagiarize it, the student is as guilty as
those students who plagiarized his/her assignment. All parties to plagiarism are
considered equally guilty. Under no circumstances should a student be involved in
collusion with other students unless he/she is permitted to work on an assignment jointly
by the lecturer/tutor. If a student is unsure what constitutes plagiarism, he/she is obliged
to consult the lecturer/tutor on the matter before submission of his/her assignment.
When and How to Reference?
Knowing when and how to cite is a students responsibility. If he/she is in doubt or need
more help on this matter, the student may consult the lecturer/tutor. The following list
comprises some of the sources a student will need to reference. The list is by no means
exhaustive, but simply consists of the most common sources used by students to complete
their work.
1. Books
2. Chapters in books
12

3.
4.
5.
6.
7.
8.

Journal articles
Conference papers
Newspaper articles
Magazines
Websites
Study guide

Students are advised to cite in the following cases [1]:

1. When he/she quotes two or more words verbatim, or even one word if it is used
in a way that is unique to the source
2. When he/she introduce facts that he/she have found in a source
3. When he/she paraphrase or summarize ideas, interpretations, or conclusions that
he/she find in a source
4. When he/she introduce information that is not common knowledge or that may
be considered common knowledge in your field, but the reader may not know it
5. When he/she borrow the plan or structure of a larger section of a sources
argument (for example, using a theory from a source and analyzing the same
three case studies that the source uses)
6. When he/she build on anothers method found either in a source or from
collaborative work in a lab
7. When he/she build on anothers program in writing computer code or on a notcommonly-known algorithm
8. When he/she collaborate with others in producing knowledge
In general, a referencing system requires two parts:
1. In-text citations
This is information about a source within the text of an assignment.
2. List of references
This is a list of all sources a student has used to research his/her assignment. It is
alphabetically arranged by author surname and appears immediately after the last
page of an assignment.
Different faculties or departments may have different requirement on how referencing
for an assignment should be done. The various formats used for in-text citations and list
of references are available in the following websites:
1. Harvard System (http://www.adelaide.edu.au/library/guide/gen/harvard.html)
2. Chicago Style (http://www.chicagomanualofstyle.org/index.html)
3. American Psychological Association or APA Style (http://www.apastyle.org)
4. Modern Language Association of America or MLA Style (http://www.mla.org)
Once a student has selected a referencing style for his/her assignment, he/she must follow
the same style consistently throughout the assignment. We strongly suggest that the
student consults the lecturer/tutor about which method to use before submission of
his/her assignment.

http://www.yale.edu/bass/writing/sources/plagiarism/warning.html, accessed May 18, 2008.

13

What are the Procedures and Penalties for Plagiarism?

When a lecturer/tutor encounters a possible case of plagiarism, the lecturer/tutor shall
report the matter to the Head of the Department, who then initiates an investigation on
the matter. The following procedures would be carried out:
1. The lecturer/tutor shall provide evidence that substantiates an academic offence
has occurred. The following documentations must be ready prior to reporting of
alleged plagiarism:
a. Copy of the alleged plagiarized assignment
b. Copy of the source material (e.g. articles, websites, newspaper, etc.)
c. Report of plagiarism
d. Any other information that would support the claim of plagiarism
2. If the evidence warrants an accusation of academic offence, the Head of
Department shall establish a Board of Inquiry comprising 3 academic staff. The
Department shall provide all necessary documentations, including report on prior
academic offences if applicable, to the Board of Inquiry.
3. The Board of Inquiry shall put the matter to the student in writing and give
him/her an opportunity to respond to the accusation within 3 working days.
4. The student will be required to attend a meeting with the Board of Inquiry. After
meeting the student, the Board of Inquiry shall decide whether or not the alleged
plagiarism has occurred. The following documentations shall be submitted to the
Head of Department at the end of the meeting:
a. Findings of the investigation
b. Recommended action(s) to be taken or imposed
5. The Head of Department shall review the Board of Inquirys report with
supporting evidence and shall decide on an appropriate action(s) based on the
recommendation of the Board of Inquiry.
6. The decision of the Head of Department shall be put in writing to the student.
Copies of all documentations will be retained in the Department.
7. If the student feels that he/she has been unfairly accused or treated, the student
may appeal to the Head of Department within 5 working days.
8. The Head of Department shall review the appeal and the final decision will be
communicated to the student in writing and a copy will be kept with the
Department. Once a determination of plagiarism and penalty has been made by
the Head of Department, the investigative process will be deemed to have ended
and the student will not be allowed to appeal.
Possible penalties for plagiarism range from mark reduction for the assignment to
expulsion from the University. The student will not be allowed to make up the
assignment. If plagiarism has been found to have occurred, the Department will take
action(s) as determined by the forms of plagiarism implicated:
1. Complete plagiarism
Verbatim copying another persons work without acknowledgement
1st offence : A grade of F in the subject and a warning letter will be
issued
nd
2 offence : Expulsion from the University at the discretion of the Head
of Department
2. Substantial plagiarism
Near-verbatim copying another persons work by simply altering the order of the
sentences or the format of presentation or by changing a few words or phrases
without acknowledgement.

14

1st offence

Zero mark on the assignment and a warning letter will be

issued
nd
2 offence : A grade of F in the subject and a warning letter will be
issued
3rd offence : Expulsion from the University at the discretion of the Head
of Department
3. Minimal plagiarism
Acknowledgement is made but paraphrasing by changing and/or eliminating
some words
1st offence : Deduction of 50% of available marks on the assignment and
a warning letter will be issued
nd
2 offence : A grade of F in the subject and a warning letter will be
issued
3rd offence : Expulsion from the University at the discretion of the Head
of Department
4. Unintentional plagiarism
Insufficient acknowledgement by not applying citation or quotation marks
correctly
1st offence : Deduction of up to 50% of available marks on the assignment
and a warning letter will be issued
nd
2 offence : A grade of F in the subject and a warning letter will be
issued
rd
3 offence : Expulsion from the University at the discretion of the Head
of Department
Pleading ignorance or unintentional plagiarism does not constitute valid reasons for
plagiarism and will not avoid the penalties from being imposed. Excuses for acts of
plagiarism such as the following, but not limited to, will not be entertained:
1. I dont have time to do the assignment
2. I have too many assignments due on the same day
3. I dont know, I really didnt do it
4. I am not aware
5. I dont understand what plagiarism means
6. I have no intention to plagiarize
7. I forgot to cite the reference
8. I forgot to include the bibliography
9. My English is not good
10. My lecturer/tutor did not explain to me
11. In my country, it is alright to copy someone elses work
12. My friend copied my assignment when I let him/her to look at my assignment
13. My friend copied my assignment when I allow him/her to use my laptop
14. I did my assignment in the computer lab, someone must have copied my work
15. I asked my friend to submit my assignment and he/she copied my work
16. I discussed my assignment with my friends, so our answers are the same/similar
17. Even though I do not have in-text citation but I have bibliography/reference list
Students should be reminded that it is their responsibilities to take due care throughout
their written work to effectively reference or cite when they use others ideas from any
source.

15

DEPARTMENT OF BUSINESS STUDIES

SEMESTER X, 20XX
SAMPLE FINAL EXAMINATION

Subject Code

MPU3353

Subject Name

PERSONAL FINANCIAL PLANNING IN MALAYSIA

This examination carries 40% of the total assessment for this subject.
Time allowed :

2 HOURS

INSTRUCTION(S):
1. This examination consists of TWO (2) sections:
SECTION A: FORTY (40) - consists of FORTY (40) questions. Answer ALL questions in the multiple
choice answer sheet provided. Use a 2B pencil and mark on the answer sheet.
SECTION B: consists of ONE (1) question. Answer the question in the answer book provided.
2. This is a CLOSED BOOK examination.
3. Students are NOT permitted to retain this examination paper.

(This examination paper consists of 2 sections in XX printed pages, including cover page)

16

SECTION A: MULTIPLE CHOICE QUESTIONS (80 MARKS)

Choose the one alternative that best completes the statement or answer the question.
1. The body responsible for the formulation and implementation of monetary policy in
Malaysia is ________.
A. Bank Negara Malaysia.
B. Securities Commission.
C. Bursa Malaysia.
D. Malaysian Institute of Economic Research.
2. It is likely that achieving financial goals
A. hinders your effort to achieve non-financial goals.
B. helps your effort to achieve non-financial goals.
C. is burdensome and lowers the quality of life.
D. turns people into cynics.
3. Which alternative below is not true of current consumption?
A. It refers to goods and services used in the current time period.
B. Generally, more of it leads to greater levels of satisfaction.
C. It can increase through current borrowing.
D. It is usually less desirable than future consumption.
4. A building-block approach to financial planning refers to
A. pursuing conservative investments and activities first.
B. linking all investments and activities into one plan.
C. a guide for achieving maximum wealth with limited resources.
D. phases of the financial life cycle.
5. You are planning a vacation tour to Pulau Tioman and trying to choose between the
5-day and 7-day package. You are using marginal analysis when
A. you decide the benefits from either package are worth their respective costs.
B. compare the added benefits of the 7-day package to its added cost.
C. you select one package over the other.
D. you had the foresight to plan your vacation.
6. You have just put RM1,000 in an investment that offers a 12% annual yield, using a
simple interest calculation. At the end of two years your interest earned will be
A. RM120.00.
B. RM144.00.
C. RM240.00.
D. RM254.40.
7. With an interest rate of 9%, RM5,000 will grow to RM10,000 in approximately
A. 8 years.
B. 4 years.
C. 12 years.
D. 24 years.

17

8. Assuming a discount rate of 10%, the present value of RM1,000 received two years
from now is
A. RM800.00.
B. RM826.45.
C. RM899.90
D. RM900.00
9. You will buy a lottery ticket. If you win, you have a choice of receiving RM995,000
now or three equal end-of-year payments of RM400,000. You should take the
payments
A. because RM1,200,000 is greater than RM995,000.
B. if you earn 20% or more on your investments.
C. if you earn 11% or more on your investments.
D. if you earn less than 10% on your investments.
10. Gross income consists of
A. income from all sources.
B. only earned income.
C. all income less tax credits.
D. all income subject to the federal income tax.
11. If parents claim a child as an exemption on their tax return, the child on his or her
tax return
A. may take an additional exemption, regardless of how much the child has earned.
B. may take an additional exemption, only if the child has earned less than a specified amount.
C. may not claim an additional exemption.
D. may only claim an additional exemption if he or she is under age 16.
12. A future return is described most appropriately as
A. dividends or interest.
B. a total return.
C. a contractual promise to pay.
D. price appreciation.
13. A risk averter is someone who
A. never takes risks.
B. expects adequate compensation for undertaking risky investments.
C. limits his or her investments to insured savings accounts.
D. avoids risk by simply not investing.
14. An organized exchange refers to
A. a physical place where securities transactions are made.
B. a swap of common stock for bonds arranged by a broker.
C. a group of investors investing in limited partnerships.
D. criminal influences in the securities markets.
15. A short position refers to
A. inadequate margin in a margin account.
B. securities you have sold but do not own.
C. an order to sell stock at a price below its current market price.
D. securities you purchased but have not yet taken delivery of the shares.

18

16. If you tell your broker to buy securities at the best possible price, you have placed a
A. market order.
B. limit order.
C. stop-loss order.
D. price order.
17. Which explanation below is most appropriate in explaining why diversification can
reduce investment risk?
A. The greater the number of assets held, the greater the portfolio return.
B. The greater the risk taken, the greater the portfolio return.
C. Asset returns are often poorly correlated.
D. Asset returns tend to be stable over time.
18. The returns on Asset A are strongly, positively correlated with Asset B's returns;
thus, holding the two assets together will
A. significantly reduce portfolio risk.
B. significantly increase portfolio risk.
C. have little or no effect on portfolio risk.
D. significantly increase portfolio return.
19. Assume that you are considering investing in MAS common stock. You have found
that its beta is +1.2 and you think a market risk premium should be 8%. If you could
earn 12% on risk-free Treasury securities, MAS has a required return of ________%.
A. 24.0
B. 14.4
C. 21.6
D. 22.4
20. If you believe a company will grow rapidly in the future, you should buy its
A. common stock.
B. preferred stock.
C. bonds.
D. notes.
21. Voting rights are typical ly held by
A. only common stockholders.
B. only preferred stockholders.
C. both common and preferred stockholders.
D. common and preferred stockholders and bond holders.
22. AirAsia declared a two-for-one stock split. Assuming you presently own 100 shares
means that you
A. will receive another 100 shares.
B. will receive 200 more shares.
C. will receive two more shares.
D. can convert your 100 shares of common stock into 200 shares of preferred stock.
23. TNB stock expects to earn $3.00 a share next year and pay a cash dividend of
RM2.00 a share.
If the stock is selling for RM20.00 a share, its current return is
A. 15%.
B. 10%.
19

C. 25%.
D. 5%.
24. A mutual fund is an organization that
A. invests its funds in securities issued by corporations and governments.
B. is part of an insurance company that invests policyholders' premiums.
C. a partnership of corporate investors.
D. sets money aside to absorb potential stock market losses.
25. The difference between a load fund and a no-load fund is that
A. load funds invest in a variety of securities while no-load funds limit their
investments to common stocks.
B. load funds borrow money to increase their portfolio, while no-load funds do not.
C. you buy no-load funds at their net asset values, but you pay more than net asset
value when you buy load funds.
D. no-load funds can be purchased anywhere, but load funds must be purchased
through a stockbroker.
26. One difference between open-end and closed-end funds is that
A. open-end funds have no maturities, while closed-end funds are dissolved after a
given number of years.
B. shares of an open-end fund are bought and sold directly from or to the fund, while
closed-end shares are bought and sold like the shares of any corporation.
C. open-end shares can be purchased by the general public, while closed-end shares are
available only to fund directors.
D. closed-end funds control and manage open-end funds.
27. Which service below is usually not provided by a mutual fund?
A. Fund switching within a family of funds
B. Transactions by telephone
C. Reinvestment plans
D. Insurance to protect against market losses
28. Maybank Mutual Fund had NAV values of RM9, RM10, and RM12 at the
beginning, middle, and end of last year, respectively. It made a RM1.00 per share
distribution at mid-year. The average annual total return of the fund for the year is
A. 33.33%.
B. 44.44%.
C. 46.67%.
D. 55.55%.
29. Personal liability coverage
A. protects you against the financial harm caused by the negligence of others.
B. protects you only from financial damages for the bodily injury your negligence has
caused others.
C. protects you only from financial damages for the property loss your negligence has
caused others.
D. protects you against legally-obligated expenses for the bodily injury or property
damage your negligence has caused others.
30. The primary difference between entering into a gamble and purchasing insurance is
that
A. in a gamble the odds are known with certainty.
20

B. with all types of insurance you are always financially better off, whereas, with
gambles, you are always financially worse off.
C. a gamble involves pure risk, whereas insurance involves speculative risk.
D. gambling is in many circumstances illegal and insurance is legal.
31. "Basic health care" coverage consists of
A. hospital insurance, surgical insurance, and medical insurance.
B. hospital and accident insurance.
C. dreaded disease insurance.
D. heart and cancer insurance.
32. Cancer insurance
A. is high-cost insurance that makes little financial sense.
B. can fill an important gap in traditional health care coverage.
C. is specifically provided young adults under special provisions in the Medicare
program.
D. should be supplemented by additional policies covering other major illnesses.
33. There are many reasons why people buy life insurance. Of these
A. the best reason is the protection provided your beneficiaries.
B. the best reason is the forced savings generated by term life insurance.
C. the best reason is the interest return on ordinary life.
D. none have proven important for most families.
34. A good rule of thumb is that an emergency fund should
A. not be separately included in your estimate of insurance needs, if you have properly
accounted for those needs elsewhere in your maintenance estimate.
B. equal about three to six months of survivors expenses.
C. equal annual pre-injury family income.
D. equal the difference between annual pre-injury family income and annual post-injury
family income.
35. One of the two major purposes of estate planning is to
A. transfer your assets at death in a manner consistent with your wishes.
B. accumulate as much wealth as possible.
C. avoid leaving a death estate by engaging in life transfers.
D. avoid transfers of assets that pass through probate.
36. To die "intestate" means to die
A. while a resident of more than one state.
B. without an heir apparent.
C. without estate.
D. without a valid will.
37. Which one of the following is not accomplished during probate?
A. The validation of the will
B. Payment of claims against the estate
C. Distribution of property in joint tenancy
D. Determination of legal heirs

21

38. Of those assets distributed at death, which one of the following must pass through
probate?
A. Assets distributed through the will
B. Assets distributed through a living trust
C. Assets distributed through a contractual transfer
D. All of the assets described above must pass through probate.
39. Some pension plans guarantee a specific benefit at retirement. These are known as
A. defined benefit plans.
B. defined contribution plans.
C. qualified pension plans.
D. non-adjustable pension plans.
40. You may be entitled to receive the funds in your retirement plan under which of the
following conditions?
I. retirement.
II. disability.
III. termination of employment.
IV. financial hardship.
A. only I
B. only I and II
C. only I, II, and IV
D. I, II, III, or IV

SECTION B (20 MARKS)

Answer ONE compulsory question.
Students are required to provide detail calculation working, explanations and
diagram if necessary.

Question:
Explain your rights and return potential as a common stockholder, bondholder, or
preferred stockholder. Discuss whether one of these is better than the other two.

*** END OF EXAMINATION PAPER ***

22

24

25

26