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89 Cards in this Set
- Front
- Back
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Capital Market
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Allocates financial resources in the form of debt and equity according to their most efficient uses
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Debt
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loan in which borrower promises to repay the borrowed amount plus rate of interest
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Bond
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debt instrument that specifies the timing of principal and interest and payments
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Equity
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Part ownership of a company in which the equity holder participates with other part owners in the company's financial gains and losses
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Stock
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Shares of ownership in a company's assets that give shareholders a claim on the company's future cash flow
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Liquidity
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ease with which bondholders and shareholders may convert their investment into cash
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International Capital Market
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Network of individuals, companies and financial institutions and governments that invest and borrow across national borders
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Securitization
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Unbundling and repacking of hard to trade financial assets into more liquid negotiable and marketing financial instrumentes (securities)
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Offshore Financial Center
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country or territory whose financial sector features very few regulations and few if any taxes
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International Bond Market
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All bonds sold by issuing companies, governments or other org outside their own countries
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Eurobond
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bond issued outside the country in whose currency it is dominated
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Foreign Bond
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bond sold outside the borrowers country and denominated in the currency of the country in which it is sold
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International Market equity
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All stocks bought and sold outside the issuers home country
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Eurocurrency Market
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All worlds currencies that are banked outside their countries of origin
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Interbank interest rates
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worlds largest banks charging one another for loans
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Foreign Exchange Market
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Currencies are bought and sold and their prices are determined
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Exchange rate
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rate at which one currency is exchanged for another
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Currency Hedging
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Insuring against potential losses that result from adverse changes in exchange rates
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Currency Arbitrage
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instantaneous purchase and sale of currency in different markets for profit
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Interest arbitrage
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profit motivated purchase and sale of interest paying securities denominated in different currencies
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Currency Speculation
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purchase or sale of currency with the expectation that its value will change and generate profit
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Quoted currency
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numerator in a quoted exchange rate or the currency with which another currency is to be purchased
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Base Currency
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denominator in a quoted exchange rate or the currency that is to be purchased with another currency
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Exchange rate risk
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risk of adverse changes in exchange rates
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Cross rate
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exchange rate calculated using two other exchange rates
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Spot rate
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exchange rate requiring delivery of the traded currency within two business days
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Spot market
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market for currency transactions at spot rates
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Forward Rate
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two parties agree to exchange currencies on a specified future date
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Forward Market
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Currency transactions at forward rates
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Forward Contact
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require exchange of an agreed upon amount of a currency on an agreed upon date at a specific exchange rate
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Spot Rate
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Exchange rate requiring delivery of the traded currency within two business days
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Spot Market
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Market for currency transactions at spot rates
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Forward rate
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Two parties agree to exchange currencies on a specified future date
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Forward Market
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Currency transaction at forward rates
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Forward Contract
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requires exchange of an agreed upon amount of currency on an agreed upon date at a specific exchange rate
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Derivative
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Financial instrument whose value derives from other commodities or financial instruments
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Currency Swap
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Purchase and Sale of foreign exchange for two different dates
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Currency option
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right or option to exchange a specific amount of a currency on a specific date at a specific rate
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Currency Futures Contract
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requiring exchange of a specific amount of currency on a specific date at a specific exchange rate with all conditions fixed and not adjustable
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Vehicle Currency
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used as an intermediary to convert funds between two other currencies
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Interbank Market
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World's largest banks exchange currencies at spot and forward rates
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Clearing
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aggregating currencies that one bank owes another then carrying out the transaction
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Securities Exchange
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specializing in currency futures and options transactions
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Over the Counter Market (otc)
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decentralized exchange encompassing a global computer network of foreign exchange traders and other market participants
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Convertible (hard) currency
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trades freely in the foreign exchange market, with its price determined by the forces of supply and demand
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Countertrade
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selling goods or services that are paid from in whole or in part with other goods and services
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Devaluation
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intentionally lowering the value of a nations currency
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Revaluation
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intentionally raising the value of a nations currency
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Law of one price
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principle that an identical item must have an identical price in all countries when the price is expressed in a common currency
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Fisher effect
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nominal interest rate is the sum of the real interest rate and the expected rate of inflation over a specific period
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International Fisher Effect
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difference in nominal interest rates support by two countries currencies will cause an equal but opposite change in their spot exchange rates
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Efficient market view
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prices of financial instruments reflect publicly available info at any given time
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Inefficient market view
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view that prices of financial instruments do not reflect all publicly available information
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Fundamental analysis
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uses statistical models based on fundamental economic indicators to forecast exchange rates
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technical analysis
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uses charts of past trends in currency prices and other factors to forecast exchange rates
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International monetary system
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agreements and institutions that govern exchange rates
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Gold standard
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international monetary system in which nations linked the value of their paper currencies to specific values of gold
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Fixed exchange rate system
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convert one currency into another fixed by international agreement
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Bretton woods agreement
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1944 create a new international monetary system based on the value of the US dollar
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Fundamental disequilibrium
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trade deficit causes a permanent negative shift in country's balance of payments
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Special Drawing Right SDR
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IMF asset whose value is based on a weighted basket of four currencies
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Smithsonian Agreement
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1971 IMF members restructure and strengthen international monetary system created at Bretton Woods
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Jamaica Agreement
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1976 IMF members formalize existing system of floating exchange rates as the new international monetary system
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Free Float System
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Currencies float freely against one another without governments intervening in currency markets
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Currency Board
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monetary regimes that is based on an explicit commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate
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Planning
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identifying and selecting an org objectives and deciding how the org with achieve those obj
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Strategy
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planned actions taken by managers to help a company meet its obj
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Mission statement
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written statement of why a company exists and what it plans to accomplish
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Stakeholders
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all parties, ranging from suppliers and employees to stockholders and consumers who are affected by a company's activities
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Core Competency
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special ability of a company that competitors find extremely difficult or impossible to equal
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Value chain analysis
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dividing a company's activities into primary and support activities and identifying those that create a value for customers
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Multinational (Multidomestic) Strategy
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adapting products and their marketing strategies in each national market to suit local preferences
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Global strategy
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offering the same products using the same marketing strategy in all national markets
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Growth Strategy
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strategy designed to increase the scale or scope of a corporations operations
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retrenchment strategy
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reduce the scale or scope of a corporations business
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Stability strategy
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guard against change and used by corporations to avoid either growth or retrenchment
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Combination strategy
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mix growth, retrenchment and stability strategies across a corporations business units
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Low cost leadership
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Company exploits economies of scale to have lowest cost structure of any competitor in its industry
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Differentiations strategy
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company designs its products to be perceived as unique by buyers throughout its industry
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Focus strategy
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Strategy in which a company focuses on a serving the needs of a narrowly defined market segment by being the low cost leader by differentiating its product or both
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Organizational structure
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company divides its activities among separate units and coordinates activities among those units
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Chain of command
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lines of authority that run up from top management to individual employees and specify internal reporting relationship
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International division structure
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separates domestic from international business activities by creating a separate international division with its own manager
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international area structure
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organizes a company's entire global operations into countries or geographic regions
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global product structure
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divides worldwide operations according to a company's product area
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global matrix structure
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splits chain of command between product and area divisions
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self managed team
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employees from a single department take on the responsibilities of their former supervisors
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cross functional team
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employees who work at similar levels in different functional departments
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global team
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team of top managers from both headquarters and international subsidiaries who meet to develop solutions to company wide problems
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