are markets where all valid information is available to all participants at the same time, and where prices respond immediately to available information

show the amount of wealth that is expected to be created if the project is undertaken

give the preferred stockholders the right to purchase new shares of stock proportionate with their existing share of ownership

involve debt or equity financing. Bond issuances provide debt financing whereas issuing shares of stock provide equity financing

are the discount rates that make the NPV of the project equal to zero