LEVERAGE HYPOTHESIS Definition

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LEVERAGE HYPOTHESIS is the theory that managers have incentive to avoid technical default of loan covenants because it could result in increases in the firm's cost of capital.

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OBJECTIVITY PRINCIPLE states that accounting will be recorded on the basis of objective evidence. Objective evidence means that different people looking at the evidence will arrive at the same values for the transaction. Simply put, this means that accounting entries will be based on fact and not on personal opinion or feelings.

FIRM QUOTATION is the requirement that a Market Maker execute an order from another broker/dealer at its displayed price for the normal unit of trading, or for its displayed size, whichever is greater.

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