The following scenario related to questions 1 15.

Alan, a chartered financial analyst (CFA), is willing to invest two stocks, Yoyo stock and Zizi stock. He has collected the data on both stocks from Bursa Malaysia. The data as follows:

		Stock Yoyo	Stock Zizi
State of Economy	Probability	Return (%)	Return (%)
Recession	0.35	19	31
Normal	040	28	24
Boom	0.25	23	17

The beta for Yoyo stock and Zizi stock are 1.5 and 1.15 respectively. Alan plan to invest 45% in Yoyo stock and the remainder in Zizi stock. Yoyo stock is preferred stock while Zizi stock is a common stock. The treasury bills rate is at 1.75% and the market risk premium is 8%.

Yoyo stock dividend is RM1.20 per share and Zizi stock recently paid dividend is RM1.20 and the growth rate of dividend is 8%. Market price for Yoyo is RM14 and Zizi is RM24.

1. What is the stock value for Yoyo stock?

A. RM10.95.

B. RM12.95.

C. RM19.05.

D. RM15.25.

2. What is the stock value for Zizi stock?

A. RM45.53.

B. RM43.93.

C. RM34.35.

D. RM39.43.

3. What would be the price of Zizi at the end of one year?

A. RM14.90.

B. RM1.235.

C. RM1.3075.

D. None of the above.

4. What would be the price of Zizi 6 years from now?

A. RM10.95.

B. RM12.95.

C. RM19.05.

D. RM15.25.