Capital budgeting evaluates investment projects to determine their profitability.

The cost of capital is the required return to make an investment worthwhile.

Diversification spreads risk by investing in multiple asset types.

IRR is the discount rate that makes the net present value zero.

Raising capital by selling shares in the company.

Raising capital by borrowing funds to be repaid with interest.

Assets used for long-term business operations, like equipment or buildings.

Liquidity is the ease with which assets can be converted to cash.

ROE measures how effectively a company uses shareholders' equity to generate profits.