Which of the Following Statements About a Not-For-Profit Firm's Sources

Multiple Choice

Which of the following statements about a not-for-profit firm's sources of capital is most correct?

A) Fund capital is obtained by retaining earnings⎯if all earnings are paid out as dividends, no fund capital is created.
B) Preferred stock is never used by not-for-profit firms.
C) Not-for-profit firms are not allowed to raise capital by borrowing.
D) Not-for-profit firms usually have high dividend payouts.
E) Since not-for-profit firms are tax exempt, there is no tax advantage to debt capital.