a) Explain the concept of risk and return and their components. (5 marks)

(b) Mr. Umar has been awarded a bonus for his outstanding work. His employer offers

him a choice of a lump-sum of RM5,000 today, or an annuity of RM1,250 a year for

the next five years. Which option should Mr. Umar choose if his opportunity cost is 9

percent? (5 marks)

(c) Mr. Othman borrowed RM45,000 for five years at an interest rate of 12%,

compounded monthly. Payments are made by monthly instalments. Based on the

information given, how much is his monthly loan payment? (5 marks)