Question
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.
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.
- What is the stock value for Yoyo stock?
A. RM10.95.
B. RM12.95.
C. RM19.05.
D. RM15.25.
- What is the stock value for Zizi stock?
A. RM45.53.
B. RM43.93.
C. RM34.35.
D. RM39.43.
- 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.
- What would be the price of Zizi 6 years from now?
A. RM10.95.
B. RM12.95.
C. RM19.05.
D. RM15.25.
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