BEC 3 Flashcards
A direct exchange rate expresses the domestic price of one unit of foreign currency. In this case, 1 euro, the foreign currency, costs $1.20, the domestic currency. An indirect exchange rate expresses the foreign price of one unit of the domestic currency. Given the direct exchange rate, the indirect exchange rate can be calculated (or vice versa).
A direct exchange rate expresses the domestic price of one unit of foreign currency. In this case, 1 euro, the foreign currency, costs $1.20, the domestic currency. An indirect exchange rate expresses the foreign price of one unit of the domestic currency. Given the direct exchange rate, the indirect exchange rate can be calculated (or vice versa).
When a foreign currency becomes weaker compared to the U.S. dollar (or the dollar becomes stronger compared to the foreign currency), the U.S. dollar will exchange for more units of the foreign currency. As a result, dollars will buy more of the foreign competitor’s goods, giving the foreign company an advantage in the U.S. market.
When a foreign currency becomes weaker compared to the U.S. dollar (or the dollar becomes stronger compared to the foreign currency), the U.S. dollar will exchange for more units of the foreign currency. As a result, dollars will buy more of the foreign competitor’s goods, giving the foreign company an advantage in the U.S. market.
A put is an option that gives its owner the right to sell a specific security at fixed conditions of price and time. A put option is a contract that gives the owner the right, but not the obligation, to sell a specified amount of an underlying asset (e.g., security) at a specified price within a specified time.
A put is an option that gives its owner the right to sell a specific security at fixed conditions of price and time. A put option is a contract that gives the owner the right, but not the obligation, to sell a specified amount of an underlying asset (e.g., security) at a specified price within a specified time.
The IMF maintains order in the international monetary system by providing funds to countries in financial crisis, including currency crisis, banking crisis, or debt crisis.
The IMF maintains order in the international monetary system by providing funds to countries in financial crisis, including currency crisis, banking crisis, or debt crisis.
Both a country’s imports and exports enter into the determination of that country’s gross domestic product. Specifically, it is net exports (exports minus imports) that enter into the determination of gross domestic product.
Both a country’s imports and exports enter into the determination of that country’s gross domestic product. Specifically, it is net exports (exports minus imports) that enter into the determination of gross domestic product.
If the dollar strengthens against a foreign currency, an investment denominated in that currency would result in fewer dollars; if the dollar weakens against a foreign currency, borrowing in that currency would cost more dollars, as more dollars would be required to service and repay the debt.
If the dollar strengthens against a foreign currency, an investment denominated in that currency would result in fewer dollars; if the dollar weakens against a foreign currency, borrowing in that currency would cost more dollars, as more dollars would be required to service and repay the debt.
The five forces framework developed by Michael Porter is used for determining the nature, operating attractiveness, and probable long-run profitability of a competitive industry.
The five forces framework developed by Michael Porter is used for determining the nature, operating attractiveness, and probable long-run profitability of a competitive industry.
PEST is a means of analyzing the external macro-environment (political, economic, social, and technological) in which an entity operates or may operate.
PEST is a means of analyzing the external macro-environment (political, economic, social, and technological) in which an entity operates or may operate.
Five forces analysis is concerned with determining the nature, operating attractiveness, and probable long-run profitability of a competitive industry
Five forces analysis is concerned with determining the nature, operating attractiveness, and probable long-run profitability of a competitive industry
A niche or focus strategy attempts to serve a narrow segment of an industry, which may be targeted through seeking either cost advantage or differentiation.
A niche or focus strategy attempts to serve a narrow segment of an industry, which may be targeted through seeking either cost advantage or differentiation.
Porter identified three generic strategies: cost leadership, differentiation, and market focus.
Porter identified three generic strategies: cost leadership, differentiation, and market focus.
In setting its objectives, the characteristics commonly intended by SMART are: Specific, measurable, attainable, relevant, and time-bound.
In setting its objectives, the characteristics commonly intended by SMART are: Specific, measurable, attainable, relevant, and time-bound.
For a given borrower at a particular point in time, interest rates on short-term borrowings, in general, are lower than interest rates on long-term borrowings.
For a given borrower at a particular point in time, interest rates on short-term borrowings, in general, are lower than interest rates on long-term borrowings.
For present value, the higher the interest or discount rate, the lower the present value of a future amount. Since the higher the interest or discount rate, the more that is counted as interest, the less there is in present value.
For present value, the higher the interest or discount rate, the lower the present value of a future amount. Since the higher the interest or discount rate, the more that is counted as interest, the less there is in present value.
For future value, the higher the interest rate, the greater the future value of a present amount. Since future value is computed as principal plus compounded interest, the higher the interest rate, the greater the amount of interest earned each period and, therefore, the greater the accumulated future amount.
For future value, the higher the interest rate, the greater the future value of a present amount. Since future value is computed as principal plus compounded interest, the higher the interest rate, the greater the amount of interest earned each period and, therefore, the greater the accumulated future amount.
