TAILIEUCHUNG - Dictionary of Finantial and Business Terms part 14

Signaling approach Approach to the determination of the optimal capital structure asserting that insiders in a firm have information that the market does not have; therefore, the choice of capital structure by insiders can signal information to outsiders and change the value of the firm. This theory is also called the asymmetric information approach. | 131 Dictionary of Finantial and Business Terms Lico Reis - Consultoria L nguas licoreis@ Signaling approach Approach to the determination of the optimal capital structure asserting that insiders in a firm have information that the market does not have therefore the choice of capital structure by insiders can signal information to outsiders and change the value of the firm. This theory is also called the asymmetric information approach. Signaling view on dividend policy The argument that dividend changes are important signals to investors about changes in management s expectation about future earnings. Simple compound growth method A method of calculating the growth rate by relating the terminal value to the initial value and assuming a constant percentage annual rate of growth between these two values. Simple interest Interest calculated only on the initial investment. Related compound interest. Simple linear regression A regression analysis between only two variables one dependent and the other explanatory. Simple linear trend model An extrapolative statistical model that asserts that earnings have a base level and grow at a constant amount each period. Simple moving average The mean calculated at any time over a past period of fixed length. Simulation The use of a mathematical model to imitate a situation many times in order to estimate the likelihood of various possible outcomes. See Monte Carlo simulation. Single-index model Related market model Single-payment bond A bond that will make only one payment of principal and interest. Single-premium deferred annuity An insurance policy bought by the sponsor of a pension plan for a single premium. In return the insurance company agrees to make lifelong payments to the employee the policyholder when that employee retires. Sinker Sinking fund. Sinking fund requirement A condition included in some corporate bond indentures that requires the issuer to retire a specified portion of debt each year. Any .

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