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:

Semiannually

Occurring or conducted twice a year; typically refers to payments, reports, or evaluations made every six months.

Quoted

Refers to the latest price at which a stock, commodity, or currency was traded, often seen on exchanges.

Market Price

The present cost at which a service or asset is available for purchase or sale in a specific market.

Face Value

The nominal or original value of a security or financial instrument as stated by the issuer, crucial for calculating interest payments for bonds.