1. In general, the higher the debt ratio the ____ the unused debt capacity of the firm.

• A. Lower
• B. Higher
• C. There is no relationship between the debt ratio and the unused debt capacity of the firm.

2. which of the following types of lending is(are) generally considered to be relatively high risk?

• A. loans for research and development
• B. lending to meet seasonal demand
• C. loans for land and buildings if the company has a good track record
• D. all of the above
• E. a and b only