ffc Flashcards
Define risk in a financial context
Probability of economic losses due to unforeseen events or market fluctuations
What is transactional risk?
Risk of conducting operations abroad
What does business risk refer to?
The risk related to the industry
Define exchange rate risk
Where the value of the firm’s operation or investment will be affected by changes in exchange rate
Who is an arbitrageur?
Person involved in the process of buying and selling to make transactions less risky
What is a secure loan?
A loan that is backed by collateral
What characterizes an insecure loan?
A loan without collateral
What are the 5 C’s of credit?
- Character
- Capacity
- Collateral
- Conditions
- Capital
What is an example of unsecured debt?
Trade Credit
Define commercial paper
Represents secure promissory notes issued to the public by large corporations
What is a tax shield?
Savings based on deductible expenses to reduce taxable income
What is considered short term in finance?
Less than one year
List examples of short-term financing methods
- Trade credit
- Commercial paper
- Tax shield
- Certificate of deposit
- Factoring
- Pledging
What is considered long term in finance?
More than one year
List examples of long-term financing methods
- Bonds
- Mortgage
- Shareholders equity
- Leasing
- Bank loan
- Safety stocks
What is the principal objective of promoting growth in finance?
To promote growth
Define safety stock
The amount of capital saved by owners for emergencies, internal, long term
Sources of unsecured terms include:
- Trade credit
- Commercial paper
What is a source of secure debt?
Certificate of deposit
What technique compares costs and profits?
Cost benefit analysis
What does a cash discount of 5/15 net 50 mean?
5% discount if paid within 15 days, with a maximum payment term of 50 days
What are Eurodollars?
U.S. dollars held by foreign banks or institutions outside of the USA
Define permanent investment
Investment that the company hopes to maintain longer than one year
What is financial risk?
Additional risk placed on common stockholders due to financing with debt
What is net working capital?
Current assets minus current liabilities
What is an stock change?
An organization that operates in the securities market for transactions
Define crowdfunding
FINTEC managing financing services through the internet, including debt platforms, equity investment, rewards, and donations
What are the most important securities?
- Shares
- Bonds
Define shares
Units of ownership in a company that provide a percentage of the company and its profits
What are bonds?
A loan made by an investor to a company, government, or municipality in exchange for interest payments
What does ONG stand for?
Organización no gubernamental (nonprofit institution)
What is the BID?
Banco Interamericano de desarrollo (Inter-American Development Bank)
What is a financing model?
Ensures an adequate and regular source of funding for healthy organization within nonprofit ethics
What is a heartfelt connector?
Popular causes related to the environment, international issues, and medical research
Define beneficiary builder
Model that includes hospitals and universities
What is a member motivator?
Donors motivated by issues integral to their daily lives
What is a public provider?
Associations providing services using a Public Service Provider model
What is a beneficiary broker?
A nonprofit administering rental assistance voucher programs
Why is donor relations important?
Building and maintaining strong relationships with donors is crucial for sustainable funding
What is financial sustainability for NGOs?
Achieving lasting influence through diversifying funding sources and accumulating reserves
What is the National Infrastructure Fund’s objective?
To provide financial help for public and private sector infrastructure
What must NGOs adhere to?
Applicable financial regulations and legal requirements
What is multilateral development banking?
Organizations like IDB, IFC, WB that help various projects
What does the International IBRD do?
Provides financial products to help countries reduce poverty
What is AIF’s goal?
To address climate impacts in client countries
What does IFC stand for?
International Finance Corporation
What does MIGA do?
Brings together guarantee products and experts from the World Bank Group
What is venture capital?
Funds that invest in companies with high growth potential
What is INDESOL?
National Institute for Social Development funding NGOs for community development projects
What role do private companies play in NGO funding?
Corporate donations through CSR programs
Name some foundations that fund NGOs in Mexico
- Ford Foundation
- Kellogg Foundation
- Rockefeller Foundation
- Open Society Foundations
What are state trusts and programs?
Specific supports for social projects led by NGOs in Mexico
What are business angels?
Private investors financing new companies in exchange for equity
What is development banking?
Providing medium and long-term financing to serve the public interest
Name some commercial banks
- BBVA
- Banamex
- Santander
What connects corporations seeking financing with investors?
Investment banking
Define common stock
A security that represents ownership in a corporation
What are the types of leverage?
- Operational
- Financial
List classifications of financing
- Long and short
- External and internal
