Temporary investments are financed with temporary sources while permanent asset investments are financed with permanent sources.

Prices of financial assets are formed in the market by the interaction of demand and supply for these securities.

Decisions on the mix of debt financing and equity financing are made based on the type of the industry in which the company operates and general economic conditions as well.

The preferred stockholders are given the right to purchase new shares of stock proportionate with their existing share of ownership.

Companies can create value if they can achieve economic returns above the cost of capital on their existing and new investments.