Can a Kinked Ethernet Cable Still Function Properly?

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Is it true that if you get a kink in an Ethernet cable (but without braking the wires), it will no longer work?

Why is that? Is it related to the signal frequency? Or is it because of the material the cable is made out of ?
 
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For coaxial wire to be a good bearer of signals, the centre conductor needs to be at the centre of the cable and the grounded tube or braid must be an even, circular tube around it at the proper distance. These factors are important in determining the impedance of the cable.
When the tube is kinked, the geometry is disturbed and the centre conductor comes closer to the ground. This alters the cable capacitance, and an impedance mismatch results at the point of the kink. Because of the abrupt change in impedance, a portion of the signal is reflected back to the sender, according to the badness of the mismatch.
The Wikipedia page on Impedance Matching contains a paragraph on Transmission Lines which answers your question in more detail.
 
In my experience, you usually end up breaking the conductors. Usually without breaking the cable jacket, and sometimes, even without breaking the insulator on the individual conductors. The multi-stranded stuff (what's usually used in patch cables) holds up to bending and flexing a whole lot better than the solid core stuff does.

Best way to be sure? Get a probe and tone kit which let's you test your ethernet cable (and RJ-45 pin-out). For instance:
http://www.flukenetworks.com/fnet/en-us/products/IntelliTone+Toner+and+Probe/Overview
 
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