Author Question: Mallory Market Inc. relies on external debt financing and internally generated retained earnings to ... (Read 29 times)

Anajune7 · **on:** Jul 11, 2018

Mallory Market Inc. relies on external debt financing and internally generated retained earnings to finance new projects. This is an unsustainable model because:

A) the firm cannot rely on outside financing to fund new projects.
B) too much debt will lead to too much equity held by outside creditors.
C) with no new stockholders the firm must eventually fail.
D) This is NOT an unsustainable model.

Question 2

The returns on Asset A are strongly, positively correlated with Asset B's returns; thus, holding the two assets together will

A)

significantly reduce portfolio risk.
B)

significantly increase portfolio risk.
C)

have little or no effect on portfolio risk.
D)

significantly increase portfolio return.