Cpcu 530 Ch 10

Front 1

Business risk

Back 1

is the risk of loss or gain due to economic variables, such as product demand and market competition.

Front 2

Product licensing

Back 2

grants a firm the right to manufacture another’s product or to use its distribution facilities or technology or to use its name.

Front 3

Franchising

Back 3

grants a firm the right to supply another’s product or to use its name.

Front 4

Foreign direct investment

Back 4

occurs when a firm buys assets located in another country.

Front 5

Subsidiary

Back 5

is a stockissuing company owned or controlled by another company.

Front 6

Resource seeker

Back 6

looks for resources such as oil and lowcost labor.

Front 7

Market seeker

Back 7

looks for markets that cannot be served by exporting.

Front 8

Market follower

Back 8

follows its clients overseas.

Front 9

Democratic rule

Back 9

is rule by the people though elected representatives.

Front 10

Nonparty democracy

Back 10

is governed by elected officials who have no political party affiliation.

Front 11

Parliamentary democracy

Back 11

is governed by a prime minister and an elected parliament.

Front 12

Presidential democracy

Back 12

is governed by a president who is elected directly by its citizens.

Front 13

Multiparty democracy

Back 13

is governed by representatives who are elected from many political parties.

Front 14

Junta

Back 14

is a military government governed by a group of military officers who seize power and maintain control through martial law.

Front 15

Martial law

Back 15

is military control.

Front 16

Monarchy

Back 16

is government with a hereditary head of state.

Front 17

Absolute monarchy

Back 17

is a monarchy in which the leader rules alone with help from the advisers he selects.

Front 18

Constitutional monarchy

Back 18

is a monarchy in which a parliament governs the country and the monarch has ceremonial powers.

Front 19

Single

Back 19

party governmentonly allows one specified political party.

Front 20

Theocratic government

Back 20

is based on religious doctrine and is led by religious leaders.

Front 21

Transitional government

Back 21

is a temporary form of government used when a country is rebuilding its government, typically after a war.

Front 22

Roman

Back 22

French lawuses a written legal code with a magistrate who acts as the final arbiter of private law disputes; the court relies heavily on appointed experts who investigate the evidence.

Front 23

German law

Back 23

uses a legal code designed for interpretation by technical legal bureaucrats.

Front 24

Nordic law

Back 24

uses a longestablished body of customary law.

Front 25

Common law

Back 25

uses factintensive inductive reasoning based on precedent.

Front 26

Socialist

Back 26

communist lawdoes not recognize tort or contract laws because the state owns most means of production.

Front 27

Far Eastern law

Back 27

relies on local customary law and Confucianism, with an emphasis on compromise rather than on individual rights.

Front 28

Islamic law

Back 28

uses the Koran as the foundation for its legal system; society must adapt to the law, rather than create laws that reflect society.

Front 29

Hindu law

Back 29

relies on the philosophical precepts of Hinduism.

Front 30

International law

Back 30

is the body of law governing relationships among nations.

Front 31

Public international law

Back 31

addresses the interrelation of nation states; is governed by treaties and other international agreements.

Front 32

Private international law

Back 32

addresses disputes between individuals or entities in different countries.

Front 33

Comity

Back 33

is the voluntary, binding recognition of the laws and judicial decisions of another jurisdiction.

Front 34

Pegged currency

Back 34

is based on an exchange rate fixed to another country’s currency.

Front 35

Expropriation

Back 35

occurs when a government takes property without its owner’s consent and, usually, without compensation.

Front 36

Territorial tax system

Back 36

taxes all firms only on the economic activity that occurs within the country’s geographic borders, regardless of the location of the firm’s incorporation or operations.

Front 37

Worldwide tax system

Back 37

taxes domestically incorporated firms on their total earnings from both domestic and international activities.

Front 38

Border tax adjustment (BTA)

Back 38

creates a ‘taxneutral’ setting for international trade by providing tax rebates on exported goods and imposing taxes on imported goods.

Front 39

BTA

Back 39

abbreviates border tax adjustment.

Front 40

Earnings stripping

Back 40

lets a firm reduce its overall tax liability by moving earnings from a high tax jurisdiction to a lowtax jurisdiction, usually by letting debt accumulate within the hightax jurisdiction.

Front 41

Inversion (expatriation or reincorporation)

Back 41

occurs when a firm established in a lowtax country buys the shares and/or assets of a domestic corporation, which lets the domestic company become a foreignbased company.

Front 42

Expatriation

Back 42

is another term for inversion. Reincorporationis another term for inversion.

Front 43

Transfer price

Back 43

is the price one branch of a company charges for goods and services it provides to another branch of the same company.

Front 44

Tax haven

Back 44

is a country that offers financial incentives to encourage foreign firms to do business.

Front 45

Bearer share

Back 45

is not registered; its ownership remains private.

Front 46

Registered share

Back 46

keeps records of the share’s owner and its buying and selling price.

Front 47

Repatriation of earnings

Back 47

is the process by which a US firm moves earnings from its foreign affiliates back to its US parent.

Front 48

Dumping

Back 48

occurs when a firm sells a large quantity of goods at less than fair value, including selling goods abroad for less than the market price at home.

Front 49

Common Market

Back 49

is a single, unified market in which goods, services, people, and capital move freely across borders.