1. In general, an increase in a liability is a source of funds.

True

False

2. The sustainable growth rate is the maximum growth rate achievable over an extended period of time.

True

False

3. An increase in financial leverage generally results in a higher return on equity (ROE).

True

False

4. The beta for the market as a whole equals 1.0.

True

False

5. The higher the opportunity cost of capital the higher the NPV.

True

False

6. A company's beta (from the CAPM) is affected by its capital structure.

True

False

7. An optimal current ratio should be greater than 1.0.

True

False