1. (a) Given the following information, calculate the companys internal growth rate. Return on Equity = 30%; Dividend Payout Ratio = 10%.

1. (b) Please explain the significance of the calculated internal growth rate in terms of assessing the investment merits of this company.

2. Brain-teaser / Thought Problem: Options are viewed as tools for helping to either reduce or hedge against price risk. However, the pervasive use of options is associated with increased rather than lower price volatility. Please explain this seeming paradox.