An under‑capitalized firm has excessive debt relative to equity.​

The power to create money is given by the Constitution to the Federal Reserve.

The internal rate of return equates the net present value and the cost of an investment.​

Compounding refers to the earning of interest on interest.​

As the firm increases its use of equity instead of debt financing, the cost of equity rises.

A pension plan that invests in the stock of IBM or Verizon does not perform the function of a financial intermediary.​

As the firm increases its use of equity instead of debt financing, the cost of equity rises.

All debentures are bonds but not all bonds are debentures.​

The weighted cost of capital includes the cost of debt and the cost of equity.

All debentures are bonds but not all bonds are debentures.​