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20 Cards in this Set
- Front
- Back
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American Depository Receipt (ADR)
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A security issued in the United States representing shares of a foreign stock and allowing that stock to be traded in the United States.
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Cross-rate
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The implicit exchange rate between two currencies (usually non-U.S.) quoted in some third currency (usually the U.S. dollar)
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Eurobonds
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International bonds issued in multiple countries but denominated in a single currency (usually the issuer's currency).
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Foreign bonds
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International bonds issued in a single country, usually denominated in that country's currency.
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Gilts
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British and Irish government securities.
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London Interbank Offer Rate (LIBOR)
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The rate most international banks charge one another for overnight Eurodollar loans.
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Swaps
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Agreements to exchange two securities or currency.
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Foreign exchange market
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The market in which one country's currency is traded for another's.
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Exchange rate
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The price of one country's currency expressed in terms of another country's currency.
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Spot trade
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An agreement to trade currencies based on the exchange rate today for settlement within two business days.
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Spot exchange rate
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The exchange rate on a spot trade.
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Forward trade
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An agreement to exchange currency at some time in the future.
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Forward exchange rate
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The agreed-upon exchange rate to be used in a forward trade.
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Purchasing power parity (PPP)
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The idea that the exchange rate adjusts to keep purchasing power constant among currencies.
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Interest rate parity (IRP)
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The condition stating that the interest rate differential between two countries is equal to the percentage difference between the forward exchange rate and the spot exchange rate.
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Unbiased forward rates (UFR)
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The condition stating that the current forward rate is an unbiased predictor of the future spot exchange rate.
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Uncovered interest parity (UIP)
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The condition stating that the expected percentage change in the exchange rate is equal to the difference in interest rtes.
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International Fisher effect (IFE)
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The theory that real interest rates are equal across countries.
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Exchange rate risk
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The risk related to having international operations in a world where relative currency values vary.
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Political risk
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Risk related to changes in value that arise because of political actions.
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