QUESTION 1: INTRODUCTION TO FINANCIAL MANAGEMENT [30MARKS]
Assume that you recently graduated and have just reported towork as an investment advisor at the Bill Morrisons WealthManagement Sdn. Bhd. One of the firm’s clients is Dato’ Lee ChongWei, a Malaysian male professional badminton player who was rankedfirst worldwide for 349 weeks from 21 August 2008 to 14 June 2012.After retiring, he would like to set up a badminton academy inMalaysia to develop and nurture good athletes from the grassroots.In line with his passion for drawing, he also wishes to have hisown product design company. He also expects to invest substantialamounts of money through Bill Morrisons Wealth Management Sdn Bhd.Dato’ Lee Chong Wei is very bright, and he would like to understandin general terms what will happen to his money. Your boss hasdeveloped the following set of guideline you must answer to explainthe Malaysian Financial System to Dato’ Lee.
a) Describe three (3) organizational forms a company might haveas it evolves from a startup to a major corporation.
[9 Marks]
b) Elaborate the statement that high concentration of ownershipin corporation gives rise to the agency problem.
[9 Marks]
c) Justify whether social, stakeholder or shareholders should bethe primary objective of managers based on the belowconditions:
(1) Do firms have any responsibilitiesto society at large?
(2) Is stock price maximization goodor bad for society?
[12 Marks]
QUESTION 2: FINANCIAL MARKETS AND INSTITUTIONS [15MARKS]
Leading Malaysian scientist Prof Teo Soo-Hwang has been awardedan Honorary Order of the British Empire from Queen Elizabeth II forher outstanding work in cancer research. Prof Teo, who is the ChiefExecutive Officer of Cancer Research Malaysia, was recognised notonly for her efforts in improving the diagnosis and treatment for avariety of cancers but for developing research collaborationsbetween Malaysia and Britain, specialising in Asian genetics andcancers prevalent within Asian communities.
Prof Teo and her team need a machine to detect cancer cells in ablood sample long before a tumour can be found with standardimaging techniques. Unfortunately, they do not have sufficientfunds to produce the machine. Tan Sri Dato' Seri Syed Mokhtar Shahbin Syed Nor AlBukhary is a Malaysian businessman, entrepreneur andphilanthropist has plenty of savings, which he and his wife haveaccumulated over the years.
Based on the scenario above, illustrate a Flows of Funds throughthe Financial System that provides and facilities lending andborrowing money that basically could fulfil the needs of peoplelike Prof Teo and Tan Sri Dato’ Syed Mokhtar.
[15 Marks]
