1. Find the interest rates earned on each of the following. Round each answer to two decimal places.
A. You borrow $650 and promise to pay back $676 at the end of 1 year.
B. You lend $650 and the borrower promises to pay you $676 at the end of 1 year.
C. You borrow $83,000 and promise to pay back $311,986 at the end of 8 years.
D. You borrow $16,000 and promise to make payments of $5,001.00 at the end of each year for 5 years.
2. What is the expected return for this stock?
Economy Probability Return
Boom 0.20 32.09%
Normal 0.30 30.82%
Recession 0.50 -6.5%