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34 Cards in this Set
- Front
- Back
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International finance |
International finance is the branch of financial economics broadly concerned with monetary and macroeconomics interrelations between 2 or more countries |
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Definition of balance of payment |
Systematic record of all economic transactions Between Resident of one county and the rest of the world over a specified period of time. |
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Current account |
The part of the balance of payment that records current transactions in goods n services, net income as well as current transfers |
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Financial account |
Part of the balance of payment that records official n non-official net financial flows |
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Balancing item |
The difference between financial account n current account of the balance of payment that Represent as an error or omissions. |
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Forex exchange |
Market in which one currencies is traded for another |
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Eurocurrency market |
Short term loans, deposits by banks in currency other than that of the bank's country domicile |
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Commercial paper |
Short term unsecured promissory notes |
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Foreign bond |
Issued by borrowers in a foreign market in currency of market of issue |
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Euro bond |
Denominated in currency other than that of the country of issue |
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Exchange rate |
The price of one currency in terms of another |
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Effective exchange rate / multilateral exchange rate |
The exchange rate of a currenncy against the currencies of its trading partners calculated as a weighted average of the bilateral exchange rate |
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Real exchange rate |
The nominal exchange rate adjusted for domestic and foreign prices. It reflects the purchasing power of a currency. |
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Flexible exchange rate / floating exchange rate |
Exchange rate that are determined by market forces which are free from government regulation and intervention |
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Fixed exchange rate |
Where government sets the price of the domestic currency in terms of foreign currency and stand ready to support the currency at that lv |
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Arbitrage |
Buying and selling the same goods in diffent market to make profit |
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PPP |
a relationship between exchange rates and prices whereby Domestic price lv is the foreign price lv adjusted by the direct exchange rate. High inflation rate to those of its trading partners tends to have a depreciating currency. |
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Law of one price |
Same commodity selling for the same price in different countries expressing the same currency whereby there should be no cross country difference |
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Forward rate n spot rate |
Is a rate applicable to a financial transaction that will take place in the future Is a rate for the immediate settlement for a commodity, security or currency |
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Covered interest parity |
States that return on similar assets in different country r equal after taking into account of exchange rate changes which r covered in the forward market, no profit can be made. |
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Focus on this Forward margin |
Proportion of difference between the forward rate n spot rate |
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Uncovered Interest rate parity (UIP) |
Aa |
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Speculation |
Aa |
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Exchange rate forecasting |
A |
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single equation Fundamental based models sp |
A |
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Single equation time series model |
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Foreign risk |
A |
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Risk averse |
A |
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Forward market |
A |
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Further contract |
A |
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Currency swaps |
A |
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Interest swaps |
A |
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Currency options |
A |
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Exposure |
A |
