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15 Cards in this Set
- Front
- Back
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Homemade leverage
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The use of personal borrowing to change the overall amount of financial leverage to which the individual is exposed.
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M&M Proposition I
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The position that the value of the firm is independent of the firm's capital structure.
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M&M Proposition II
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The proposition that a firm's cost of equity capital is a positive linear function of the firm's capital structure.
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Business risk
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The equity risk that comes from the nature of the firm's operating activities.
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Gracilis
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Proximal caudal femoral artery
Obturator nerve |
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Interest tax shield
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The tax saving attained by a firm from interest expense.
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Unlevered cost of capital
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The cost of capital for a firm that has no debt.
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Direct bankruptcy costs
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The costs that are directly associated with bankruptcy, such as legal and administrative expenses.
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Indirect bankruptcy
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The costs of avoiding a bankruptcy filing incurred by a financially distressed firm.
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Financial distress costs
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The direct and indirect costs associate with going bankrupt or experiencing financial distress.
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Static theory of capital structure
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The theory that a firm borrow up to the point where the tax benefit from an extra dollar in debt is exactly equal to the cost that comes from the increased probability of financial distress.
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Bankruptcy
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A legal proceeding for liquidating or reorganizing a business.
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Liquidation
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Termination of the firm as a going concern.
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Reorganization
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Financial restructuring of a failing firm to attempt to continue operations as a going concern.
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Absolute priority rule (APR)
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The rule establishing priority of claims in liquidation.
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