Chapter 7 Flashcards
Anything people will accept for goods and services
Money
The process of converting the currency of one country into the currency of another country
Foreign exchange
Amount of currency of one country that can be traded for one unit of the currency of another country
Exchange rate
Cost of using someone else’s money
Interest rate
Currency not easily exchanged for other currencies
Soft currency
Currency easily converted into other countries currency
Hard currency
Currency values are based on supply and demand
Floating exchange rate
Network of banks that buy and sell different currencies
Encourages international trade
Foreign exchange market
Contract a person/ company buys that allows the buyer the option to purchase a foreign currency in the future
Currency option
Governments restrictions to regulate the amount and value of a nations currency
Exchange controls
Bank whos major function is to provide economic assistance to less developed countries
World bank
Promotes economic cooperation maintains world trade and exchange rates
International Monetary Fund (IMF)
Financial documents issued by a bank for an importer that the bank guarantees payment
Letter of credit
Time required for payment including other conditions of a sale on account
Credit terms
Buying or selling an account
Trade credit
Amount due from a customer to a company that sells on credit
Account receivable
Amount owed to a supplier
Account payable
Expensive, long-term financial activity
Capital project
Certificate representing money borrowed by a company over a long period of time
Bond
A document that states a promise to pay a sets amount by a certain date
Promissory note
Written order by exporter to an importer to make a payment
Bill of exchange
Moving payments through banking computer systems
Electronic funds transfer (EFT)
Prepared by exporter provides description of the merchandise and terms of the sale
Commercial invoice
Explains the amount of insurance coverage for damage that may occur to goods in shipment
Insurance certificate
