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13 Cards in this Set

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  • Back


a situation involving exposure to danger

economic risk

is the chance that macroeconomic conditions like exchange rates, government regulation, or political stability will affect an investment, usually one in a foreign country.

exchange rate risk

The risk of an investment's value changing due to changes in currencyexchange rates. 2. The risk that an investor will have to close out a long or short position in a foreign currency at a loss due to an adverse movement in exchange rates.

credit / sale risk

a risk associated with the sale and accompanying transactions between two foreign markets

high dependency risk

occurs when a country depends too greatly on imports from one single country or when a country depends too greatly on exporting a very large number of exports to one single country

political risk

The risk that an investment's returns could suffer as a result of political changes or instability in a country. Instability affecting investment returns could stem from a change in government, legislative bodies, other foreign policy makers, or military control.

legal risk

Basel II classified Legal risk as a subset of Operational Risk in 2003. There is no standard definition, but there are at least two primary/secondary definition sets in circulation. Mcormick, R. 2004Legal risk is the risk of loss to an institution which is primarily caused by: (a) a defective transaction; or.

purchasing power

An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.


is the broadest quantitative measure of a nation's total economic activity. More specifically, GDP represents the monetary value of all goods and services produced within a nation's geographic borders over a specified period of time.

foreign dept

An outstanding loan that one country owes to another country or institutions within that country. Foreign debtalso includes due payments to international organizations such as the International Monetary Fund (IMF).


an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities, e.g., providing a broadcasting service or acting as an agent for a company's products.

strategic alliance

is an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. This form of cooperation lies between mergers and acquisitions and organic growth.

joint venture

a commercial enterprise undertaken jointly by two or more parties that otherwise retain their distinct identities.