Equity Funds

Part A: Essay-style Discussion Questions

Please answer each of the discussion questions below in the context of this unit and from a finance and personal finance perspective.

1. Discuss the concept of the risk-return trade-o and how it may apply in different circumstances. (12 marks)

2. Outline the risk-reduction benefits of diversification of an investment portfolio. In your answer, briefly discuss how portfolio diversification works in principle to minimise overall investment risk. (12 Marks)

3. Identify and briefly discuss three different debt products appropriate for different situations. What is the difference between secured and unsecured debt? (12 Marks)

4. What is the purpose and use of personal financial statements and budgets for successful financial planning and wealth management? (12 Marks)

5. Discuss the importance of appropriate and adequate insurance in financial planning. (12 Marks)

Part B: Calculation Questions

In answering each of the calculation questions below, please show all formulas and workings and/or explain approaches and steps taken.

1. Compare the performance of the two equity funds (Fund A and Fund B), based on the information given below. (20 Marks)

Select any TWO commercial banks in Malaysia. Based on the current interest rates offered by the banks, calculate the future value of annuity of RM100,000 made at the beginning of every year for 20 years. Analyse and compare the effect of the interest rates offered by the banks on the total savings.