Answer T for true or F for false. 2 marks for each correct answer. 1. Limited liability is not a benefit of a partnership 2. If a firm uses cash to purchase inventory, its quick ratio will increase. 3. The equity multiplier, the profit margin and the total asset turnover are the three parts of the Du Pont identity. 4. Interest earned on the reinvestment of previous interest payments is called simple interest. 5. The future value of a single sum will increase more rapidly when the frequency of compounding increases. 6. An annuity stream of cash flow payments is a set of level cash flows occurring each time period for a fixed length of time. 7. Preferred stock dividends fit the definition of a perpetuity. 8. A sinking fund is used to pay off portions of debt each year. 9. The higher the coupon rate, the higher the interest rate risk. 10. All else the same, if interest rates fall, the percentage price change for long-term bonds will be greater than for short-term bonds. I 11 Vintechnications Instinct