1. Compound Frequency Payday loans are very short-term loans that charge very high interest rates. You can borrow $2,200 today and repay $2,552 in two weeks. What is the compound annual rate implied by this 16 percent rate charged for only two weeks?
4,641.41%
17.25%
19.20%
16.20%
2. Suppose you estimate a boom will occur only 45 percent of the time and that the expected return on the portfolio in such an environment is 40 percent. You also estimate that a recession will occur 55 percent of the time and that the expected return in such an environment is 5 percent. Whats the expected return of the portfolio?
A. 40 percent
B. 5 percent
C. 20.75 percent
D. 22.5 percent