Question 1 Suppose you are a loan officer at a bank and two different firms are applying for a loan. The bank you work for typically charges each borrower a risk-free rate of 4% plus their respective risk premium. You don't know beforehand what type of borrower you are facing. In reality, firm Alpha is a relatively low risk borrower. The appropriate premium over the risk-free rate for lending to these firms should be 2 percent. Meanwhile, firm Beta is actually a relatively high risk borrower. The appropriate risk premium over the risk-free rate for lending to these types of firms should be 5 percent. a) As a loan officer with no good information about the true characteristics for each firm, what is the lending interest rate that you are likely to charge, assuming that there is a 50-50 chance that any random borrower you face will be a Beta type firm? b) Which type of firm will be more likely to accept your offer of a loan: Alpha or Beta? Why