Chapter 7

Question 1

Anything people will accept for goods and services

Answer 1

Money

Question 2

The process of converting the currency of one country into the currency of another country

Answer 2

Foreign exchange

Question 3

Amount of currency of one country that can be traded for one unit of the currency of another country

Answer 3

Exchange rate

Question 4

Cost of using someone else’s money

Answer 4

Interest rate

Question 5

Currency not easily exchanged for other currencies

Answer 5

Soft currency

Question 6

Currency easily converted into other countries currency

Answer 6

Hard currency

Question 7

Currency values are based on supply and demand

Answer 7

Floating exchange rate

Question 8

Network of banks that buy and sell different currencies

Encourages international trade

Answer 8

Foreign exchange market

Question 9

Contract a person/ company buys that allows the buyer the option to purchase a foreign currency in the future

Answer 9

Currency option

Question 10

Governments restrictions to regulate the amount and value of a nations currency

Answer 10

Exchange controls

Question 11

Bank whos major function is to provide economic assistance to less developed countries

Answer 11

World bank

Question 12

Promotes economic cooperation maintains world trade and exchange rates

Answer 12

International Monetary Fund (IMF)

Question 13

Financial documents issued by a bank for an importer that the bank guarantees payment

Answer 13

Letter of credit

Question 14

Time required for payment including other conditions of a sale on account

Answer 14

Credit terms

Question 15

Buying or selling an account

Answer 15

Trade credit

Question 16

Amount due from a customer to a company that sells on credit

Answer 16

Account receivable

Question 17

Amount owed to a supplier

Answer 17

Account payable

Question 18

Expensive, long-term financial activity

Answer 18

Capital project

Question 19

Certificate representing money borrowed by a company over a long period of time

Answer 19

Bond

Question 20

A document that states a promise to pay a sets amount by a certain date

Answer 20

Promissory note

Question 21

Written order by exporter to an importer to make a payment

Answer 21

Bill of exchange

Question 22

Moving payments through banking computer systems

Answer 22

Electronic funds transfer (EFT)

Question 23

Prepared by exporter provides description of the merchandise and terms of the sale

Answer 23

Commercial invoice

Question 24

Explains the amount of insurance coverage for damage that may occur to goods in shipment

Answer 24

Insurance certificate