True/False Question:

1. An income statement reports the firm's revenues and expenses for a specific period of time such as one year.

2. An example of a perpetuity is a bond with an interest rate that remains constant over the life of the bond (i.e., until the bond matures).

3. A return of 12% compounded annually is the same as a return of 1% per month.

4. If a bond sells for its par value, the coupon interest rate and yield to maturity are equal.

5. An inverted yield curve implies that the market expects interest rates to rise in the future.

6. Preferred stock is less risky than common stock, but more risky than debt.

7. A general partnership, unlike a limited partnership, is an entity that legally functions separate and apart from its owners.

8. Profit maximization is not the goal of the firm because accounting profits do not accurately measure the timing and uncertainty of a company's cash flows.

9. The corporation is a legal entity separate from it owners; thus it is possible for the corporation to continue even upon the death of one or more shareholders.

10. If two companies have the same revenues and operating expenses, their net incomes will still be different if one company finances its assets with more debt and the other company with more equity.