The text used is Chapter 16 & 17 of: Berk, J., & DeMarzo, P. (2011). Corporate finance: The Core: 2010 custom edition. (2nd ed.). Boston: Pearson Education. Thank you. 1. The “irrelevance principle” states that in frictionless markets, capital structure (the mix of debt and equity to finance a firm’s assets) doesn’t matter. Explain this principle. 2. According to finance theory, in an imperfect market, what are the major advantages and disadvantages of utilizing debt in a firm’s capital structure?