True or false questions.
1. If interest rates rise after a bond is issued, the yield to maturity will exceed the current yield.
2. Equipment trust certificates issued by a firm are safer than its debentures.
3. Income bonds are the safest bonds issued by a firm.
4. A period payment to retire a debit is illustrative of a sinking fund.
5. An investor may anticipate that a bond will be called if interested rates have risen.
6. Preferred stock dividends are not a tax deductible expense for the firm.
7. One measure of the safety of a preferred stock's dividend is the ratio of dividends to earnings before interest and taxes.
8. A constant payout ration implies dividends vary with earnings.
9. A. Stock dividend has no impact on a firm's liabilities or the price of its stock.
10. A stock dividend decreases retained earnings.