(a)VDSL NetworkSdn Bhd had sold a bond that issuedwith 15 warrants attached. The bond has 15 years maturity period with 9 percent annual coupon rateat RM1,000 of par value. The current yield on similar straight bonds is 12 percent. Calculate the value of each warrant.

(4 marks)

(b)Packet One Networksis an internet service provider company. Currently, the company announces to sell a one yearcall option. The share price is RM57and the strike price is RM53. The risk-free rate is 12percent per annum and the volatility is 10percent. Calculate the value of call option.

(9marks)

(c)Mr.Shahrul Affendy had been appointed to lead the finance team of Extreme Broadband Corporation. The team is required to advise the board on the investment project that should to be undertaken.Theannualhistorical share prices for Maxis and Telekom Malaysia Berhad (TLMM) are as follows:

Date Maxis (RM) TLMM (RM)

31/12/2015 5.32 3.82

31/12/2016 5.35 2.66

31/12/2017 6.01 6.30

31/12/2018 5.98 5.95

31/12/2019 6.80 6.78

As the leader for finance team, he is required to suggest on the preferable company to be invested based on the coefficient of variation for Maxis and Telekom Malaysia Berhad.

(12 marks