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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AVERAGE LIFE, in securities, is the weighted average retirement date of a bond issue or preferred stock; the average amount of time each dollar of principal amount will be outstanding.

DISCRETIONARY means it is not mandatory, it is up to the individual or company.

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