Consider six$-$month commercial paper $($CP$)$ issued by a manufacturing firm. The CP is currently selling at a price of $$90.$ An investor estimates that the CP will repay $$60$ in six months if it defaults. Which will occur with a probability of $15\%.$ What does the investor expect this CP$\text{'}$s $($mean$)$annualized return to be$?$ Round to the nearest $1\%$

$-11\%$

$-6\%$

$11\%$

$22\%$

None of the above

Suppose the SSP $500$ index of US stocks is priced at $4,000.$ The index has a $12-$month forward dividend yield of $2\mathrm{.}0\%$ and earnings yield of $3\mathrm{.}0\%.$ lf you expect dividends to grow at $4\%$ per year indefinitely, what is the annualized long$-$run expected return of the SP $500$ index? Round to the nearest $1\%.$

$02\%$

$03\%$

$4\%$

$06\%$

None of the above