INSTRUCTIONS: TIME: 30 minutes

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THERE ARE 45 QUESTIONS. ANSWER ALL QUESTIONS BY HIGHLIGHTING

YOUR CHOICES ON THE QUESTION PAPER. DO NOT USE SEPARATE PAPER.
1. Which of the following statements would be generally TRUE?

A. Investing is the only factor that contributes to wealth building.

B. Income alone does determine a person's wealth.
C. Only people who are natural savers can become wealthy.
D. How much money a person makes does not dictate his or her spending and
saving behaviour.

2. A tool for managing money to achieve short and long-term goals.

A. personal property inventory

B. net worth statement
C. budget
D. check book

3. If you purchase a car, which type of credit are you most likely to use?

A. Term loan
B. Open credit
C. Hire purchase
D. Revolving credit

4. The interest rate granted by the bank to their valuable credit customers would be the: -.

A. Discount basis interest rate

B. Base rate
C. Prime rate
D. B and C.

5. The primary reason for insurance is to: -

A. Avoid out of pocket expense

B. Risk pooling
C. Transfer risk
D. All of the above.

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 6. Money spent here cannot be spent somewhere else refers to the concept of
___________.

A. Delayed gratification
B. Opportunity cost
C. Alternate choices
D. Marginal choice.

7. The easy quick return promised by get rich quick schemes is too good to be true as: -

A. When risk goes down generally the return goes up.

B. When risk goes up generally the return goes up.
C. When risk goes up generally the return goes down.
D. There is inverse correlation between risk and return.

8. You are involved in a two-car accident in which you are at fault. The other driver is
injured and your insurance covers the medical expenses of the victim. This type of
insurance coverage is called:

A. Comprehensive
B. Liability
C. Collision
D. Uninsured motorist protection

9. How much does Allen has to pay for his car insurance in the second year if there is no
claim during the first year? The gross premium is RM1,400. This is Allen first car.

A. RM630.
A. RM770.
B. RM980.
C. RM1,050.

10. When buying house-owner policy it should be based on ____________.

A. The house market value

B. The loan amount
C. Full restoration cost
D. The purchase price.

11. When planning to buy a house you must at least have ______ percent of the purchase
price.

A. 10
B. 15
C. 20
D. 25

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 12. _________ is based on tips, rumour and hunches, unplanned and without knowledge
of the exact nature of risk.

A. Investment
B. Speculation
C. Gambling
D. Arbitrage

13. A personal balance sheet:

A. shows how much is available each month to pay for necessities

B. shows how much money a person has available for savings
C. is used to determine if a person's budget is realistic
D. is a picture of a person's financial well-being at a point in time

14. Items that are relatively rare that people collect in hopes that they will increase in
value.

A. assets
B. luxury goods
C. intangibles
D. antiques

15. When a person applies for a loan, the lender will review the person's past record in
order to find out if he:

A. Is willing to repay the new loan.

B. Has the capacity to pay.
C. Is careful with his money.
D. A and B are correct.

16. In Malaysia, the best way to determine a borrower past repayment history is to look at
his/her ___________.

A. FICO score
B. CCRIS record.
C. CTOS
D. All of the above.

17. The idea that you should put money into a savings account as soon as you receive any
income and before you pay any expenses or spend any money.

A. Personal financial planning

B. Saving for a rainy day
C. Pay yourself first
D. Plan ahead

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 18. Financial ratios that tell how well an individual can pay off his short-term debts and
meet unexpected needs for cash.

A. liquidity ratios
B. efficiency ratios
C. leverage ratios
D. profitability ratios

19. Professionally managed investments that allow investors to pool their money in order
to invest in a larger variety of financial assets such as stocks from many different
companies.

A. Certificate of Deposit
B. Bonds
C. Stocks
D. Unit Trusts

20. Some investment choices have the potential for high earnings. However, the
investment may be difficult to convert to cash when you require the fund. This
problem refers to:

A. Inflation risk
B. Income risk
C. Conversion risk
D. Liquidity risk

21. What is a credit limit?

A. A determined set amount money on a credit card.

B. An overdraft protection number on your checking account.
C. A type of personal investment strategy.
D. A limited amount of personal net worth.

22. What is one characteristic of open-end credit?

A. A down payment must be made before receiving the loan

B. Individuals are allowed to borrow an unlimited amount of money as long as
they pay it back
C. Credit is extended in advance so the borrower does not have to apply for credit
each time credit is desired
D. Payments are equal and are required on a regular basis

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23. A loan made to your chequing account whenever it does not have sufficient balance to
cover the amount on the cheque: -

A. Overdraft
B. Term loan
C. Bill purchased
D. Flexible loan

24. A time period in which no finance charges will be added to your credit card account.

A. lead time
B. moratorium
C. free period
D. grace period

25. Spending for goods and services beyond the essentials like food, shelter and clothing
refers to ____________.

A. disposable income
B. discretionary expense
C. unanticipated expense
D. emotional spending.

26. Which of the following is a strategy to help with tracking expenses?

A. Estimate fixed expenses.

B. Only use cash payments.
C. Spend as little as possible.
D. Pay using credit card.

27. Which of the following accounts will give you the LEAST access to your money?

A. savings account
B. fixed deposit
C. checking account
D. all of the above

28. Earning interest on interest is called

A. Extra Interest
B. Simple Interest
C. Inflation Interest
D. Compound Interest

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29. Which of the following statements is true about inflation?

A. It increases when the money supply decreases.

B. It has little effect on consumers' ability to save.
C. It is usually caused by a supply surplus.
D. It decreases the value of money.

1. In calculating the value of the amount of money at the end of the period if you deposit
RM1,000 every year for 4 years at 4 percent, the suitable formula to be used is: -

A. Present Value (PV) Single Payment

B. Future Value (FV) Single Payment
C. Future Value of Annuity
D. Present Value of Annuity

2. In order to get RM20,000 from a fixed deposit account in 5 years with 7% interest rate,
which formula is appropriate?

A. Future Value (FV) Single Payment

B. Present Value of Annuity
C. Future Value of Annuity
D. Present Value (PV) Single Payment

30. Which of the following statements is TRUE about liquidity?

A. The more liquid an investment, the less return

B. The more liquid an investment, the more return
C. The less liquid the investment, the less return
D. Both A and B

31. Which may NOT impact the interest rate on your loan?

A. Tenure.
B. Type of loan.
C. Education.
D. Credit history.

32. Why does the interest on the housing loan decreases over time?

A. The bank trusts you more, so they lower the interest.

B. With each payment, principal decreases, so interest lowers.
C. Banks are legally required to lower interest rates over time.
D. With each payment, principal increases; so interest lowers.

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33. A key difference between saving and investing is

A. Saving is for everyone, investing is for the wealthy

B. Your money is insured when investing, it is not in savings
C. Investing has a guaranteed return, savings does not
D. Saving is for emergencies & goals, investing is for long-term wealth

34. A young investor willing to take moderate risk for above-average growth would be most
likely buy:

A. Foreign currency
B. Crypto currency
C. Real estate
D. Unit trust

35. Why is it important to start investing as soon as possible?

A. You take less risk when you are young, so money will be safe
B. You have more time for your money to compound and make money
C. Investing is an easy way to make quick money
D. Fees on investments are cheaper when you are younger

36. What is a stock?

A. A loan an investor makes to a company or government that pays interest over time.
B. A share of ownership in a company
C. A collection of investments sold as a package.
D. An option to purchase something in the future at today’s price.

37. If you intend to purchase a house, what is the main consideration?

A. Price
B. The builder background
C. The bank interest rate
D. Location

38. The following cost would be the initial outlay in buying a house EXCEPT:

A. Down-payment
B. Stamping fee
C. Valuation fee
D. Renovation.

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39. The person named in a life insurance policy to receive the death benefit is called the

A. policy holder
B. beneficiary
C. recipient
D. insurance agent

40. Which is the primary role of the PIDM?

A. Regulate saving and loans

B. Advise the Secretary of Treasury
C. Insure citizens’ deposits made at commercial banks
D. Provide financial support for home mortgage borrowers

41. The assumption in the calculation of future value of money is _______ of interest paid
on an investment’s principal.
A. present rate
B. withdrawal
C. reinvestment
D. inflation rate

42. The percentage of the sale that the shop pays to the credit card issuer is known as
____________.
.
A. Merchant’s discount fee
B. Sales commission fee
C. Issuer’s service fee
D. Point of sale fee

43. Relationship of substantial reward in comparison

to the amount of risk taken is referred as
___________.

A. Return on Investment
B. Investment Reward
C. Profitability Ratio
D. Risk Return Ratio.

MPU3253 (June 2023) mid-term