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Definition of Agency theory
The analysis of principal-agent relationships, wherein one person, an agent, acts on behalf of
A grouping of sales producers according to region. Compare with Branch.
A form of organization commonly used by foreign banks to enter the U.S. market. An agency
A means of compensating the broker of a program trade solely on the basis of commission
The argument that specifies that the various agency costs create a complex environment in
The incremental costs of having an agent make decisions for a principal.
Mortgage pass-through securities whose principal and interest payments are
Conflicts of interest among stockholders, bondholders, and managers.
Conflicts of interest between the firm’s owners and managers.
An alternative model to the capital asset pricing model developed by
Security prices sometimes move wildly above their true values.
theory that expected spot exchange rate equals the forward rate.
Securities issued by corporations and agencies created by the U.S. government,
An alternative to a bond trust deed. Unlike the trustee, the fiscal agent acts as an
A biased expectations theory that asserts that the implied forward
A form of the pure expectations theory which suggests that the returns on bonds
Market segmentation theory or preferred habitat theory
A biased expectations theory that asserts that the
Modern portfolio theory
Principles underlying the analysis and evaluation of rational portfolio choices
Normal backwardation theory
Holds that the futures price will be bid down to a level below the expected
pecking order theory
Firms prefer to issue debt rather than equity if internal finance is insufficient.
Preferred habitat theory
A biased expectations theory that believes the term structure reflects the
Pure expectations theory
A theory that asserts that the forward rates exclusively represent the expected
Quantity Theory of Money
theory that velocity is constant, and so a change in money supply will change nominal income by the same percentage. Formalized by the equation Mv = PQ.
random walk theory
Security prices change randomly, with no predictable trends or patterns.
Real Business Cycle Theory
Belief that business cycles arise from real shocks to the economy, such as technology advances and natural resource discoveries, and have little to do with monetary policy.
Static theory of capital structure
theory that the firm's capital structure is determined by a trade-off of the
theory of constraints (TOC)
a method of analyzing the bottlenecks
Debt levels are chosen to balance interest tax shields against the costs of financial distress.
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