Dictionary of Business Terms: financial pyramid
financial pyramid
- risk structure many investors aim for in spreading their investments among low-, medium-, and high-risk vehicles. In a financial pyramid, the largest part of the investor's assets is in safe, liquid investments that provide a decent return. At the top of the financial pyramid, where only a small amount of money is committed, are high-risk ventures that have a slight chance of success, but that will provide substantial rewards if they succeed.
- acquisition of holding company assets through financial leverage. Financial pyramid is not to be confused with fraudulent selling schemes, sometimes called pyramiding or pyramid distribution.
Dictionary of Finance and Investment Terms: financial pyramid
financial pyramid
- risk structure many investors aim for in spreading their investments between low-, medium-, and high-risk vehicles. In a financial pyramid, the largest part of the investor's assets is in safe, liquid investments that provide a decent return. Next, some money is invested in stocks and bonds that provide good income and the possibility for long-term growth of capital. Third, a smaller portion of one's capital is committed to speculative investments which may offer higher returns if they work out well. At the top of the financial pyramid, where only a small amount of money is committed, are high-risk ventures that have a slight chance of success, but which will provide substantial rewards if they succeed.
- acquisition of holding company assets through financial leverage. See also pyramiding.
