costs Legal and administrative costs of liquidation or reorganization. Also includes implied costs associated with impaired ability to do business (indirect costs). Financial engineering Combining or carving up existing instruments to create new financial products. Financial future A contract entered into now that provides for the delivery of a specified asset in exchange for the selling price at some specified future date. Financial guarantee insurance Insurance created to cover losses from specified financialtransactions. Financial innovation Design of any new financial product, such as exotic currency options and swaps. Financial institution An enterprise such as a bank whose primary business and function is to collect money from the public and invest it in financial assets such as stocks and bonds. Financial institution buyer credit policy Insurance coverage for loans by banks to foreign buyers of exports. Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) Legislation that established the Office of Thrift Supervision, which was created in the wake of the savings and loan crisis of the late 1980s. Financial intermediaries institution that provide the market function of matching borrowers and lenders or traders. Financial lease Long-term, noncancellablerental agreement. Financial leverage Use of debt to increase the expected return on equity. Financial leverage is measured by the ratio of debt to debt plusequity. Financial leverage clientele A group of investors who have a preference for investing in firms that adhere to a particular financial leverage policy. Financial leverage ratios Common ratios are debt divided by equity a debt divided by the sum of debt plus equity. Related: capitalization ratios. Financial market An organized institutional structure or mechanism for creating and exchanging financial assets. Financial needs approach A method of establishing the amount of life insurance required by an individual by estimating the financial needs of dependents in the event of the individual's death. Financial objectives Goals related to returns that a firm will strive to accomplish during the period covered by its financial plan. Financial plan A blueprint relating to the financial future of a firm. Financial planner An investment professional who assists individuals with long- and short-termfinancial goals. Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against that plan. Financial policy Criteria describing a corporation's choices regarding its debt/equity mix, currencies of denomination, maturity structure, method of financinginvestment projects, and hedging decisions with a goal of maximizing the value of the firm to some set of stockholders. Financial position The account status of a firm's or individual's assets, liabilities, and equitypositions as reflected on its financial statement. Financial press Media devoted to reporting financial news. Financial price risk The chance there will be unexpected changes in a financial price, including currency (foreign exchange) risk, interest rate risk, and commodityprice risk. Financial public relations Public relations division of a company charged with cultivating positive investor relations and proper disclosure information. Financial pyramid A risk structure that spreadsinvestor's risks across low-,