Mgmt 425 Ch 9

system that allocates financial resources in the form of debt and equity according to their most efficient uses

loan in which the borrower promises to repay the borrowed amount (the principal) plus a predetermined rate of interest

debt instrument that specifies the timing of principal and interest payments

part ownership of a company in which the equity holder participates with other part owners in the company's financial gains and losses

shares of ownership in a company's assets that give shareholders a claim on the company's future cash flows

ease with which bondholders and shareholders may convert their investments into cash

network of individuals, companies, financial institutions, and governments that invest and borrow across national boundaries

unbundling and repackaging of hard-to-trade financial assets into more liquid, negotiable, and marketable financial instruments for securities

country or territory whose financial sector features very few regulations and few, if any, taxes

markets consisting of all bonds sold by issuing companies, governments, or other organizations outside their own countries

bond issued outside the country in whose currency it is denominated

bond sold outside the borrower's country and denominated in the currency of the country in which it is sold

market consisting of all stocks bought and sold outside the issuer's home country

market consisting of all the world's currencies that are banked outside their countries of origin

interest rates that the world's largest banks charge one another for loans

market in which currencies are bought and sold and their prices determined

rate at which one currency is exchanged for another

practice of insuring against potential losses that result from adverse changes in exchange rates

instantaneous purchase and site of a currency in different markets for profit

profit-motivated purchase and sale of interest-paying securities denominated in different currencies

purchase or sale of a currency with the expectation that its value will change and generate a profit

the numerator in a quoted exchange rate, or the currency with which another currency is to be purchased

the denominator in a quoted exchange rate, or the currency that is to be purchased with another currency

risk of adverse changes in exchange rates

exchange rate calculated using two other exchange rates

exchange rate requiring delivery of the traded currency within two business days

market for currency transactions at spot rates

exchange rate at which two parties agree to exchange currencies on a specified future date

market for currency transactions at forward rates

contract that requires the exchange of a an agreed-on amount of a currency on a agreed-on date at a specifies exchange rate

financial instrument whose value derives from other commodities or financial instruments

simultaneous purchase and sale of foreign exchange for two different dates

right, or option, to exchange a specified amount of a currency on a specified date at a specified rate

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 used as an intermediary to convert funds between two other currencies

market in which the world's largest banks exchange currencies at spot and forward rates

process of aggregating the currencies that one bank owed another and then carrying out the transaction

exchange specializing in currency futures and options transactions

decentralized exchange encompassing a global computer network of foreign exchange traders and other market participants

currency that trades freely in the foreign exchange market, with its price determined by the forces of supply and demand

practice of selling goods or services that are paid for, in whole or in part, with other goods or services

the value of any one country's currency in terms of another

What are the factors influencing a currency value

a currency that is readily accepted as a means of payment in international trade

what are the hard currencies