Question

30. Businesses obtain internal financing from funds generated from profits

T F

31. The credit rating for a bond is stated by the issuer at the time of sale.

T F

32. A stock’s dividend yield must stay constant if the stock price doubles.

T F

Answer 1

A) The Internal Financing is done through funds generated in terms of Retained profits. They have been reinvested in the firm for some more operational or financing activity TRUE

B) Bond rating is given by Credit rating agencies which is independent of the issuer. FALSE

C) False

If the yield has to be constant and dividend is fixed and stock price doubles . These three things cannot happen simultaniously

For Ex. DIv yield of a firm is 10 % where div which is fixed is 10$ and stock price is 100$. so yeild is 10/100 =10%

If stock price doubles to 200 and divident is fixed ie. 10$ then Yield would change to 10/200 = 5%

So FALSE

Hope it helps