Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

International Finance > Definitions > Flashcards

Definitions Flashcards

1
Q

International Finance

A

is concerned with the determination of income, consumption over time, and linking 2 or more international markets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Balance of Payment

A

statistical statements of all economic transactions between Australian residents and the world over a particular period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

FX Market

A

market in which one currency is bought and sold for another currency.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Interbank operations

A

buying and selling of currencies between banks.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Eurocurrency market

A

market for short term assets and liabilities that are denominated in currencies other than that of the country in which they are held.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Eurocurrencies

A

short term assets and liabilities denominated in currencies other than that of the country where they are issued.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Eurobanks

A

banks dealing in short term assets and liabilities denominated in currencies other than that of the country where they are located.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

International banking

A

banks operations with non-residents in both domestic and foreign currency, and residents in foreign currency.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Euro Commercial Paper

A

short-term unsecured promissory note issued in currency other tan that of the country in which it is issued

  • maturity: 60-180 days
  • bearer instrument
  • interest paid on maturity
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Euro Notes

A

short term unsecured promissory notes issued in a currency other than that of the country in which it is issued

  • maturity: 2-4 years
  • bearer instrument
  • interest paid semi-annually
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Bond

A

fixed interest securities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Foreign bond

A

fixed interest securities that are issued in a foreign market denominated in the currency of the country of issue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Euro bond

A

fixed interest securities that are issued in a foreign market denominated in the currency other than that of the country of issue.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Equity market

A

market in which shares are traded and issued

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

International equity market

A

primary and secondary markets for international equities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Equity

A

value of the shares issued by a company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Euro equity market

A

market in which euroequity is issued and traded

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Euroequity

A

an equity sold to investors in more than one national market other than the country where the company is domiciled

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

American Depository Receipts (ADR)

A

negotiable certificate issued by a US bank representing a specified number of shares in a foreign stock traded on the US exchange

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Exchange rate

A

price of one currency in terms of another

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Spot rate

A

exchange rate for immediate delivery

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Forward rate

A

agreement you make for delivery at some specific future rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Indirect ER

A
  • S(f/d)
  • buy > sell
  • increase S = appreciation of domestic
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Direct ER

A
  • S(d/f)
  • sell > buy
  • increase S = depreciation of domestic
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Buy/sell rates
the rates at which the bank buys/sells
26
Buy/sell margin
(spread) difference between buy and sell rates
27
Cross rate
ER between two currencies computed by reference to a third currency
28
Effective exchange rate
measure of the value of one currency in terms of more than one other currency
29
Relative exchange rate
ratio of ER in a particular period to the value of the same ER in a base period Vt = St/S0
30
Nominal exchange rate
exchange rate to reflect geographical distribution of trade
31
Real exchange rate
nominal ER adjusted for relative international prices
32
Comparative statics
looking at change in variables underlying models and how it affects equilibrium
33
Flexible/floating ER
determined in a market without intervention or regulation by the government or monetary authority
34
Fixed/pegged ER
government or monetary authority sets the price of domestic currency in terms of foreign currency and stands ready to support the fixed price
35
Arbitrage
buying and selling some goods or assets in different markets to profit from price differences or returns
36
Purchasing power parity
equality of general price levels in 2 countries once the countries' different currencies have been taken into account using the ER
37
Law of one price
the same commodity sales for the same price in 2 different countries once prices has been converted to a common currency
38
Relative purchasing power parity
rate of change in the exchange rate depends on relative inflation rate
39
Quantity theory
change in price corresponds to a change in monetary supply
40
Forward contract
contract between 2 people who agree to exchange a certain amount of one currency for a certain amount of another currency on a particular future date
41
Covered interest parity
the returns on similar assets in 2 different countries are equal after the associated foreign exchange risk has been covered in the forward market
42
Inward arbitrage
``` borrowing foreign (short foreign) invest domestic (long domestic) (1 + i) > F/S (1 + i*) ```
43
Forward margin
proportional difference between forced and current spot rate
44
Uncovered interest parity
condition on which the returns on similar assets in 2 different countries are the same after you take into account the expected exchange in the exchange rate with no forward cover
45
Forward market efficiency
forward exchange rate is an unbiased and efficient estimator of the future spot exchange rate
46
Forward premium puzzle
forward premium doesn't respond one-for-one with proportional changes in the actual exchange rate
47
Efficient market hypothesis
asset price fully reflects al relevant information as soon as it becomes readily available
48
Speculation
buying or selling of a commodity in anticipation from making a profit or avoiding a loss from future price change
49
Stabilizing speculation
buying a currency when it's weak selling when it's strong and reducing ER volatility
50
Destabilizing speculation
buying when a currency is strong, selling when it is weak and accentuating exchange rate fluctuations
51
Forecast
statement about the value or range of values that a variable will take on at a specific future date where the future value is unknown when the forecast is made
52
Risk
measure of the probability and magnitude of deviation from some expected outcome
53
FX risk
risk arising from fluctuations in the ER
54
Forward market
market in which forward contracts are traded
55
Forward contract
contract for the exchange of a specific amount of one currency for a specific amount of another currency at a specific date at a particular rate - traded OTC - can be traded with any counter party - tailor-made - settled at delivery
56
Forward spread
proportional difference between forward rate and current spot rate
57
Futures market
market at which futures contracts are traded
58
Futures contract
contract to buy or sell specific amount of foreign currency for a specific amount of domestic currency at a specific date at a specific rate. - traded on an organised exchange - traded with the exchange - limited and specified by size, delivery date, settlement date - marked to market
59
Currency swap
transaction in which 2 counter-parties exchange cash flows denominated in 2 different currencies at a pre-specified ER
60
Interest-rate swaps
swap of interest payments streams - one at a fixed rate, one at a variable rate - computed on the same notational principle denominated in the same currency
61
Cross-currency interest rate swaps
swap involving the exchange of fixed and variable interest payments denominated in 2 currencies
62
Swap risk
the risk that one party reneges on the agreement
63
Option contract
contract between 2 parties where one party has the right but not the obligation to buy (or sell) a specific amount of one currency for another currency at a particular exchange rate on (or on or before) a particular future date
64
Call option
gives the holder the right to buy the underlying asset/currency
65
Put option
gives the holder the right to sell the underlying asset/currency
66
Exposure
measure of the sensitivity to what is at risk to the source of risk
67
Long exposure
exposure to foreign exchange risk resulting from the effect of changes in ER on the domestic currency value of foreign assets
68
Short exposure
exposure to foreign exchange risk resulting from the effect of changes in ER on the domestic currency value of foreign liabilities
69
Transactions exposure
foreign currency value of a payable/receivable asset/liability independent of the ER change in ER changes the domestic currency value of a foreign currency value of a payable/receivable asset/liability at the due date
70
Economic exposure
any form of exposure of the value of the firm to the ER
71
Translation exposure
exposure of consolidated accounts of a multinational firm to changes in the ER
72
Hedging
covering of FX risk to eliminate or reduce the variability of the domestic currency value of the foreign currency position securing against loss by compensating transactions on the other side
73
Money-market hedging
creation of a synthetic forward contract by borrowing and lending domestic and foreign currencies
74
Contingent exposure
exposure that arises only if a certain outcome materialises, such as winning a contract
75
Financial hedging
hedging using derivative products (forwards, futures, options)
76
Operational hedging
changing operations/techniques to decrease risk
77
Exposure netting
calculating net value of payable and receivables

International Finance (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions