1. A newly established small business borrows $55000 per year (money is received at the ng of the year) from a bank for three years. To allow the firm stabilize, no payment ade at this period and the interest rate is 0%. Thereafter, the firm will make equal is m annual payments for 20 years at 6% interest rate. Calculate the internal rate of return for this loan.
2. Behavioral finance suggests that
a. investors are not informed
b. individuals make rational investment decisions
c. investors may be subject to bias which leads to excessive buying or selling of stocks
d. emotion plays only a minor role in security selection