(Solved): Which of the following statements are false? 1. If inflation expectations increase we would expect ...

Which of the following statements are false? 1. If inflation expectations increase we would expect the real interest rate to rise. 2. Investors benefit from more frequent compounding. 3. We can observe nominal interest rates, but not the real rate of interest. 4. For a discount loan interest is deducted upfront from the loan proceeds. Which of the following statements are false? 1. If a project is accepted using the discounted payback method, firm value will always increase. 2. The payback method may result in decisions that decrease firm value. 3. The payback method and average accounting rate of return both make use of arbitrary bench marks or cutoffs. 4. The internal rate of return is defined as the maximum rate of return a firm expects to earn on a project.