1. Which of the following best describes the annual percentage? rate?
A. the effective annual? rate, after compounding is taken into account
B. the quoted interest rate? which, considered with the compounding? period, gives the effective interest rate
C. the discount? rate, when effective annual rate is divided by the number of times it is compounded in a year
D. the discount? rate, when compounded more than once a year or less than once a year
2. Suppose Paycheck, Inc., has a beta of 1.32. If the market return is expected to be 13.80 percent and the risk-free rate is 7.30 percent, what is Paycheck’s risk premium?