1. The sustainable growth rate is defined as the maximum rate at which a firm can grow given which of the following conditions?

A. No new external financing of any kind

B. No new debt but additional external equity equal to the increase in retained earnings

C. New debt and external equity in equal proportions

D. New debt and external equity, provided the debt-equity ratio remains constant

E. No new external equity and a constant debt-equity ratio

2. According to the expectations hypothesis a rising yield curve indicates that investors expect

a. future short term rates to fall b. future short term rates to rise c. future long term rates to rise d. future long term rates to fall e. none of the above