A loan of nominal amount of RM100,000 will be repaid at 110% after 15 years. The loan provides interest of 9% per annum payable annually. On the issue date, the loan is purchased for RM80,000 by an investor who is liable to income tax at the rate of 40% and to capital gains tax at the rate of 30%. Calculate the investor's net effective annual yield for this transaction. (5 Marks) b) An investment is made such that the probability is 90% with RM1,000 will be received at the end of one year and 10% that nothing will be received. The effective rate of interest is 25%. Calculate i) the mean of the present value of this investment, its EPV. ii) the standard deviation of the present value of this investment. iii) the risk premium in the interest rate. (2 Marks) (6 Marks) (2 Marks)