Mgmt 425 Ch 9

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  1. system that allocates financial resources in the form of debt and equity according to their most efficient uses
    capital market
  2. loan in which the borrower promises to repay the borrowed amount (the principal) plus a predetermined rate of interest
  3. debt instrument that specifies the timing of principal and interest payments
  4. part ownership of a company in which the equity holder participates with other part owners in the company's financial gains and losses
  5. shares of ownership in a company's assets that give shareholders a claim on the company's future cash flows
  6. ease with which bondholders and shareholders may convert their investments into cash
  7. network of individuals, companies, financial institutions, and governments that invest and borrow across national boundaries
    international capital market
  8. unbundling and repackaging of hard-to-trade financial assets into more liquid, negotiable, and marketable financial instruments for securities
  9. country or territory whose financial sector features very few regulations and few, if any, taxes
    offshore financial center
  10. markets consisting of all bonds sold by issuing companies, governments, or other organizations outside their own countries
    international bond market
  11. bond issued outside the country in whose currency it is denominated
  12. bond sold outside the borrower's country and denominated in the currency of the country in which it is sold
    foreign bond
  13. market consisting of all stocks bought and sold outside the issuer's home country
    international equity market
  14. market consisting of all the world's currencies that are banked outside their countries of origin
    eurocurrency market
  15. interest rates that the world's largest banks charge one another for loans
    interbank interest rates
  16. market in which currencies are bought and sold and their prices determined
    foreign exchange market
  17. rate at which one currency is exchanged for another
    exchange rate
  18. practice of insuring against potential losses that result from adverse changes in exchange rates
    currency hedging
  19. instantaneous purchase and site of a currency in different markets for profit
    currency arbitrage
  20. profit-motivated purchase and sale of interest-paying securities denominated in different currencies
    interest arbitrage
  21. purchase or sale of a currency with the expectation that its value will change and generate a profit
    currency speculation
  22. the numerator in a quoted exchange rate, or the currency with which another currency is to be purchased
    quoted currency
  23. the denominator in a quoted exchange rate, or the currency that is to be purchased with another currency
    base currency
  24. risk of adverse changes in exchange rates
    exchange-rate risk (foreign exchange risk)
  25. exchange rate calculated using two other exchange rates
    cross rate
  26. exchange rate requiring delivery of the traded currency within two business days
    spot rate
  27. market for currency transactions at spot rates
    spot market
  28. exchange rate at which two parties agree to exchange currencies on a specified future date
    forward rate
  29. market for currency transactions at forward rates
    forward market
  30. contract that requires the exchange of a an agreed-on amount of a currency on a agreed-on date at a specifies exchange rate
    forward contract
  31. financial instrument whose value derives from other commodities or financial instruments
  32. simultaneous purchase and sale of foreign exchange for two different dates
    currency swap
  33. right, or option, to exchange a specified amount of a currency on a specified date at a specified rate
    currency option
  34. contract requiring the exchange of a specified amount of currency on a specified date at a specified exchange rate, with all conditions fixed and not adjustable
    currency futures contract
  35. currency used as an intermediary to convert funds between two other currencies
    vehicle currency
  36. market in which the world's largest banks exchange currencies at spot and forward rates
    interbank market
  37. process of aggregating the currencies that one bank owed another and then carrying out the transaction
  38. exchange specializing in currency futures and options transactions
    securities exchange
  39. decentralized exchange encompassing a global computer network of foreign exchange traders and other market participants
    over-the-counter (OTC) market
  40. currency that trades freely in the foreign exchange market, with its price determined by the forces of supply and demand
    convertible (hard) currency
  41. practice of selling goods or services that are paid for, in whole or in part, with other goods or services
  42. the value of any one country's currency in terms of another
    foreign exchange
  43. What are the factors influencing a currency value
    • foreign direct investments
    • inflations
    • governments monetary and fiscal policies
    • major political, economic, and environmental factors that happens in a country
  44. a currency that is readily accepted as a means of payment in international trade
    hard currency
  45. what are the hard currencies
    • Dollar
    • Euro
    • British Pound
    • Chinese Yen
    • Swiss Franc
Card Set
Mgmt 425 Ch 9
Mgmt 425 Ch 9
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