Flat Organisational Structure

Similar financial terms

Inflation risk on bonds
If investors purchase a bond on which they can realize a coupon rate of 5% but the rate of inflation is 6%, the purchasing power of the cash flow actually has declined. Inflation risk arises because of the variation in the value of cash flows from a security due to inflation, as measured in terms of purchasing power.

Inflation
An increase in prices, also reflected as a decrease in purchasing power, the rate of which is measured by the Consumer Price Index (CPI).

Stagflation
A recently coined term that combines the economic effects of "inflation", i.e. escalating prices, and "stagnation", i.e. stagnant, or no economic growth in terms of GDP. Prices as measured by the consumer price index (CPI) may be increasing while the economy is not expanding. When an economy is not growing (stagnant), but prices are increasing, this is not a healthy situation for a country. This occurred in the 1970s when oil prices increased and the economy was slowing down.

Hyperinflation
This refers to very rapid, out-of-control inflation. There is no exact definition of what consitutes hyperinflation. In 1922 this occurred in Germany when the country printed banknotes so liberally that consumers had to take bags full of currency to make purchases. Inflation has been over 100% for many countries at various times in their history. Since inflation for stable economies is in the low single-digits, it is generally understood that inflation above 10% would constitute hyperinflation. ...

Deflator
A statistical factor used to convert current dollar purchasing power into inflation-adjusted purchasing power. Enables the comparison of prices while accounting for inflation in two different time periods.

Reflation
Policies to pump up demand and thus boost the level of economic activity. Monetarists fear that such policies may simply result in higher inflation.

GDP deflator
The index value used to eliminate the effect of inflation. Real national income is found by dividing money national income by the GDP deflator and multiplying by 100.

Volatility term structure
The volatility term structure is the variation of implied volatility with time to maturity.

Term structure of interest rates
The relationship between interest rates and their maturities.

Structured settlement
An agreement in settlement of a lawsuit involving specific payments made over a period of time. Property and casualty insurance companies often buy life insurance products to pay the costs of such settlements.

Structured portfolio strategy
A strategy in which a portfolio is designed to achieve the performance of some predetermined liabilities that must be paid out in the future.

Structured debt
Debt that has been customized for the buyer, often by incorporating unusual options.

Structured arbitrage transaction
A self-funding, self-hedged series of transactions that usually utilize mortgage securities as the primary assets.

Static theory of capital structure
Theory that the firm's capital structure is determined by a trade-off of the value of tax shields against the costs of bankruptcy.

Pro forma capital structure analysis
A method of analyzing the impact of alternative capital structure choices on a firm's credit statistics and reported financial results, especially to determine whether the firm will be able to use projected tax shield benefits fully.

Pie model of capital structure
A model of the debt/equity ratio of the firms, graphically depicted in slices of a pie that represent the value of the firm in the capital markets.

Personal tax view (of capital structure)
The argument that the difference in personal tax rates between income from debt and income from equity eliminates the disadvantage from the double taxation (corporate and personal) of income from equity.

Perfect market view (of capital structure)
Analysis of a firm's capital structure decision, which shows the irrelevance of capital structure in a perfect capital market.

Pecking-order view (of capital structure)
The argument that external financing transaction costs, especially those associated with the problem of adverse selection, create a dynamic environment in which firms have a preference, or pecking-order of preferred sources of financing, when all else is equal. Internally generated funds are the most preferred, new debt is next, debt-equity hybrids are next, and new equity is the least preferred source.

Liquidity theory of the term structure
A biased expectations theory that asserts that the implied forward rates will not be a pure estimate of the market's expectations of future interest rates because they embody a liquidity premium.

Capital structure
The makeup of the liabilities and stockholders' equity side of the balance sheet, especially the ratio of debt to equity and the mixture of short and long maturities.