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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

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. (2 Marks)

ii) the standard deviation of the present value of this investment. (6 Marks)

iii) the risk premium in the interest rate. (2 Marks)

please show complete work and not excel.

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