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1 . Lina, a friend has given information that the share of Zip Zap Bhd is going to rise from RM 6 2 to RM

1.Lina, a friend has given information that the share of Zip Zap Bhd is going to rise from RM62 to RM65 per share over the next year. You know that the annual return on the KLCI has been 10 percent and the 90-day MGS-bill rate has been yielding 6 percent per year over the past 10 years. If beta for Zip Zap is 0.9, decide whether you should purchase the shares or not.
2.Diandra is interested in purchasing a European call and put option on AXL Berhad, with a strike price of RM55 and five year until expiration. AXLs share is currently trading RM59 per share, and the volatility is 35 percent per annum. Malaysia Treasury Bills that mature in five year yield a continuously compounded interest rate of 9 percent per annum. Calculate the price of the call option and put option by using the Black-Scholes model if d1=1.0560 and d2=0.2734.

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