Which of the Following Statements Is CORRECT

question 31

Multiple Choice

Which of the following statements is CORRECT?

• A) The sustainable growth rate is the maximum achievable growth rate without the firm having to raise external funds.In other words,it is the growth rate at which the firm's AFN equals zero.
• B) If a firm's assets are growing at a positive rate,but its retained earnings are not increasing,then it would be impossible for the firm's AFN to be negative.
• C) If a firm increases its dividend payout ratio in anticipation of higher earnings,but sales and earnings actually decrease,then the firm's actual AFN must,mathematically,exceed the previously calculated AFN.
• D) Higher sales usually require higher asset levels,and this leads to what we call AFN.However,the AFN will be zero if the firm chooses to retain all of its profits,i.e. ,to have a zero dividend payout ratio.
• E) Dividend policy does not affect the requirement for external funds based on the AFN equation.

Differentiate between various types of bonds based on their risk level.

Understand the concept of yield to maturity (YTM) and its significance.

Interpret the implications of accrued interest in bond transactions.

Identify the characteristics and functions of the bond market.

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Definitions:

Affirmative Action

Policies or measures aimed at increasing the representation of minorities and women in areas of employment, education, and business from which they have been historically excluded.

Discriminatory

Behaving unfairly towards a person or group of people based on prejudice against their race, sex, age, or other personal characteristics.

Controversy

A prolonged public dispute or debate, often involving differing opinions and strong feelings.

Educational Worlds

Environments or realms focused on learning, teaching, and academic development.