Module 11 Vocabulary

Question 1

Amount owed to someone

Answer 1

Debt

Question 2

Value of the shares of a company

Answer 2

Equity

Question 3

A useful or valuable thing; something you own such as building, inventory, or cash

Answer 3

Assets

Question 4

Any form of money in circulation in a different country

Answer 4

Foreign currency

Question 5

The price of one currency expressed in terms of units of another currency

Answer 5

Exchange rates

Question 6

A type of high-risk investing

Answer 6

Venture capital

Question 7

Enlisting the help of a large number of people, often via the internet

Answer 7

Crowdsourcing

Question 8

A collection of generally accepted accounting principles used in the United States

Answer 8

GAAP

Question 9

An independent group that oversees the development and revision of the IFRS

Answer 9

International Accounting Standards Board

Question 10

A collection of accounting principles used through much of the world outside the United States.

Answer 10

International Financial Reporting Standards

Question 11

An independent group that oversees the development and revision of the GAAP

Answer 11

Financial Accounting Standards Board

Question 12

Possible political changes or instability in a country that could hurt a company’s financial return on a foreign investment.

Answer 12

Political risk

Question 13

The market in which people use one currency to buy another currency

Answer 13

Foreign Exchanges Market

Question 14

Using financial instruments to reduce adverse price movements

Answer 14

Hedging

Question 15

Special types of financial instruments, the prices of which are ultimately derived from the price or performance of some underlying assets.

Answer 15

Derivatives

Question 16

A measure of the variation in returns on an investment

Answer 16

Return volatility

Question 17

A contract in which the firm agrees to pay a set rate at the beginning of a contract.

Answer 17

Forward contract

Question 18

Contracts that require the exchange of a specific amount of currency at a specific future date and at a specific exchange rate

Answer 18

Currency futures contracts

Question 19

A contract where 2 firms agree to swap currencies in the future at a previously agreed exchange rate.

Answer 19

Currency swap contracts

Question 20

The option or the right to exchange a specific amount of currency on a specific future date and at a specific agreed-on rate

Answer 20

Currency option contracts

Question 21

The practice of shifting assets to a subsidiary in a country with a better tax bracket

Answer 21

Transfer pricing

Question 22

A loan made between a parent company and its subsidiary through a financial intermediary such as a bank

Answer 22

Fronting loan

Question 23

A country that has very low corporate taxes

Answer 23

Tax Haven