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