Banking Terms: Beta coefficient,LBO,Stagflation

Define Beta coefficient

The beta coefficient is a key parameter in the capital asset pricing model (CAPM).
Beta can be estimated for individual companies using regression analysis against a stock market index.

What is LBO

The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company. The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital.

Define Stagflation

Stagflation occurs when a country's inflation rate is high and unemployment rate is high. It is an economic condition in which inflation and economic stagnation are occurring simultaneously and have remained unchecked for a significant period of time


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