True or False.1 If a company improves its profitability, asset management, liquidity, and market value between two consecutive years, then its total debt to total capital must have gone down.

2 Suppose a 10-year bond is callable in 6 years while its coupon rate has continued to remain lower than the prevailing interest rate since its third year. The most likely maturity of this bond is 10 years.

3 The present value of $100 received every quarter and then placed into a bank account earning 1% per year compounded quarterly for a year while the prevailing interest rates are 5% annually is less than the present value of $400 received at year-end.

4 The most secure bonds have lower yields than those with a higher risk rating because investors demand a higher return for a higher risk at a lower price.

5 True or False: According to the corporate valuation model, the market value of a company equals the market value of its operations.