Please mark all of the following statements that you believe to be true and leave unmarked those that are false. You will receive partial credit for this question, i.e., two points for each statement you correctly mark or correctly leave unmarked. 1. Arbitrage profits are defined by the following characteristics: they are risk-free, they are fully realized immediately, and they require the use of own capital. 2. In order to properly reflect their time value, we are not permitted to net any cash flows that occur at different times. 3. The net present value (NPV) is the present value of all future cash flows of an investment. 4. The internal rate of return (IRR) is the effective average return that the invested capital yields per period over the life of the investment.5. Nominal interest rates are used to determine the cash flows of an interest-bearing investment, and effective interest rates are used to discount the cash flows of an investment.