1. A firm has a positive net worth and is operating its fixed assets at full capacity, if its dividend payout ratio is 100%, and the company wants to hold all financial ratios constant, then for any positive growth rate in sales, it will require external financing.

a) True

b) False

2. Unsaved If a coupon bond sells at par, its current yield is equal its yield to maturity.

a) True

b) False

3. Unsaved Cash flow is a secondary consideration after net income in finance because it is needed to operate the business.

a) True

b) False

4. A firm has a positive net worth and is operating its fixed assets at full capacity, if its dividend payout ratio is 100%, and the company wants to hold all financial ratios constant, then for any positive growth rate in sales, it will require external financing.

a) True

b) False

5. Zero coupon bonds pay no interest and are offered at par value. These types of bonds allow investors to reap compensation through capital appreciation.

a) True

b) False