1. State whether the the following is true or false. (a) If an investment is safe, the corresponding interest rate is slightly higher point in time. (b) Annuity-certain is a series payments that granteed. (c) Payback period is the amount of cash to be recovered during the investment.[6] 2. Define the following terms. (a) Rate of return (b) Probability index (4 3. Suppose that for the coming year inflation is forecast at an effective annual rate of r = 0.15 and interest is forecast at effective annual rate i = 0.10. What will be the corresponding real, or inflation-adjusted rate of interest for the coming year