Which of the Following Statements About a Not-For-Profit Firm's Sources

question 6

Multiple Choice

Which of the following statements about a not-for-profit firm's sources of capital is most correct?

• A) Fund capital is obtained by retaining earnings⎯if all earnings are paid out as dividends, no fund capital is created.
• B) Preferred stock is never used by not-for-profit firms.
• C) Not-for-profit firms are not allowed to raise capital by borrowing.
• D) Not-for-profit firms usually have high dividend payouts.
• E) Since not-for-profit firms are tax exempt, there is no tax advantage to debt capital.

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Definitions:

Trade Restrictions

Regulations and policies that governments impose to control the free exchange or movement of goods between countries.

Embargo

Total ban on importing specific products or a total halt to trading with a particular country.

Importing Sugar

The process of buying or bringing in sugar from foreign countries to meet domestic demand or consumption.

Developing Nations

Countries with a lower level of material well-being and economic development compared to industrialized nations.