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  2. Real business-cycle theory - Wikipedia

    en.wikipedia.org/wiki/Real_business-cycle_theory

    The basic RBC model predicts that given a temporary shock, output, consumption, investment,t, and labor, all rise above their long-term trends and formative deviation. Furthermore, since more investment means more capital is available, a short-lived shock may impact the future.

  3. Earnings response coefficient - Wikipedia

    en.wikipedia.org/wiki/Earnings_response_coefficient

    Capital structure: ERC for a highly leveraged firm is lower than for a firm with little or no debt, Any good news passed on means that the debt holders get this benefit instead of the investors. (Thus it is important to disclose the nature & magnitude of financial instruments including off-balance sheet).

  4. Trade-off theory of capital structure - Wikipedia

    en.wikipedia.org/wiki/Trade-Off_Theory_of...

    The trade-off theory of capital structure is the idea that a company chooses how much debt finance and how much equity finance to use by balancing the costs and benefits. The classical version of the hypothesis goes back to Kraus and Litzenberger [ 1 ] who considered a balance between the dead-weight costs of bankruptcy and the tax saving ...

  5. Capital structure substitution theory - Wikipedia

    en.wikipedia.org/wiki/Capital_structure...

    The two main capital structure theories as taught in corporate finance textbooks are the Pecking order theory and the Trade-off theory.The two theories make some contradicting predictions and for example Fama and French conclude: [3] "In sum, we identify one scar on the tradeoff model (the negative relation between leverage and profitability), one deep wound on the pecking order (the large ...

  6. What is the Capital Asset Pricing Model (CAPM)? - AOL

    www.aol.com/finance/capital-asset-pricing-model...

    The capital asset pricing model (CAPM) is a financial model used to determine a security’s expected return considering its associated risk. Developed in the 1960s, CAPM has become an essential ...

  7. Comprehensive Capital Analysis and Review - Wikipedia

    en.wikipedia.org/wiki/Comprehensive_Capital...

    BHCs possess adequate capital. The capital structure is stable given various stress-test scenarios. Planned capital distributions, such as dividends and share repurchases, are viable and acceptable in relation to regulatory minimum capital requirements. The assessment is performed on both qualitative and quantitative bases.

  8. New Keynesian economics - Wikipedia

    en.wikipedia.org/wiki/New_Keynesian_economics

    The Calvo model has become the most common way to model nominal rigidity in new Keynesian models. There is a probability that the firm can reset its price in any one period h (the hazard rate), or equivalently the probability (1 − h) that the price will remain unchanged in that period (the survival rate).

  9. Market timing hypothesis - Wikipedia

    en.wikipedia.org/wiki/Market_timing_hypothesis

    It is differentiated by its emphasis on the level of the market, which is seen as the first order determinant of a corporation's capital structure: the (further) implication being that firms are generally indifferent as to whether they finance with debt or equity, choosing the form of financing, which, at that point in time, seems to be more ...