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

question 2

Multiple Choice

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

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

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Definitions:

Deliberative Effort

The mental exertion required to carefully consider options, make decisions, or solve problems, implying conscious and thoughtful endeavor.

Automatic

Occurring or functioning independently without conscious thought or intention, often referring to processes or reactions.

Self-Determination Theory

A theory of motivation that emphasizes the role of autonomy, competence, and relatedness in fostering well-being and personal growth.

Symbolic Immortality

A culturally shared belief that, by being part of something greater and more enduring than our individual selves, some part of us will live on after we die.