test 3 Flashcards
Capital market
a system thet allocates fincial resorces in the from of debt and equdity according to their most efficent uses
Debt
consistes of loans for which the borrower promices to repay principal and interest
bonds
a form of debt taken on by a compinay that specifies timing of principle and interest
equity
a part onership of a compiney
liquidity
is a feature of both debt and equity markets, how fast investments can be turned into cash
international capital market
a networkof individules compines, banks and govt that invest and borrow accross international boarders
Offshore financial center
country or territory that has few regs and taxes
International bond market
all bonds sold by issuing companies, governments, or other organizations outside their own countries.
Eurobond
is a bond issued outside the country in whose currency it is denominated. Eurobonds are popular because the governments of countries in which they are sold do not regulate them. That substantially reduces the cost of issuing a bond.
Foreign bonds
are bonds sold outside the borrower’s country and denominated in the currency of the country in which they are sold.
Samurai bond
the name for foreign bonds issued in Japan.
Yankee bonds
are foreign bonds in the US.
Bulldog bonds
are foreign bonds in the United Kingdom.
international equity market
consists of all stock bought and sold outside the issuer’s home country.
Eurocurrency-
all the world’s currencies that are banked outside their countries of origin (Eurodollars, Europounds, Euroyen).
Interbank interest rates
are rates that the world’s largest banks charge one another for loans.
Foreign exchange market
is a market in which currencies are bought and sold and their prices are determined.
Exchange rate
is the rate at which one currency is exchanged for another.
Currency hedging
is a practice of insuring against potential losses that result from adverse changes in exchange rates.
Currency arbitrage
is the instantaneous purchase and sale of a currency in different markets for profit.
Currency speculation
is the purchase or sale of a currency with the expectation that its value will change and generate profit.
quoted currency
numerator in currency raito
base currency
denominater in currency raito
Direct quote
1/indirect quote
Cross rate
is an exchange rate calculated using two other exchange rates.
Spot rates- exchange rate
that require delivery of traded currency within two days.
Forward rate.
is an exchange rate at which two parties agree to exchange currencies on a specified future date
Forward contract
is a contract that requires the exchange of an agreed-upon amount of a currency on an agreed-upon date at a specific exchange rate.
Countertrade
is the practice of selling goods or services that are paid for, in whole or in part, with other goods and services.
Monetary policy
refers to activities that directly affect a nation’s interest rates or money supply. Selling government securities reduces a nation’s money supply because investors pay money to the government’s treasury to acquire the securities. When the government buys its own securities on the open market, cash is infused into the economy and the money supply increases.
Fiscal policy
involves using taxes and government spending to influence the money supply indirectly. Governments increase taxes to reduce the amount of money in the hands of consumers.
Devaluation
is the intentionally lowering the value of a nation’s currency. Devaluation lowers the price of country’s exports on world markets and increases the price of its imports because the value of the country’s currency is now lower on world markets.
Revaluation
is the intentional raising the value of a nation’s currency.
The law of one price
states that an identical product must have an identical price in all countries when the price is expressed in a common currency.
Inflation
is the result of the supply and demand for a currency. A country that is experiencing inflation higher than that of another country should see the value of its currency fall.
Purchasing power parity
is the relative ability of two countries’ currencies to buy the same “basket” of goods in those two countries.
Fisher effect
is the principle that the nominal interest rate is the sum of the real interest rate and the expected rate of inflation over a specific period.
International Fisher effect
is the principle that a difference in nominal interest rates supported by two countries’ currencies will cause an equal but opposite change in their spot exchange rates.
The efficient market
view is a view that prices of financial instruments reflect all publicly available information at any given time.
The inefficient market view
holds that prices of financial instruments do not reflect all publicly available information.
International monetary system
is the collection of agreements and institutions that govern exchange rates.
Gold standard
is an international monetary system in which nations linked the value of their paper currencies to specific values of gold.
Fixed exchange-rate system-
one in which the exchange rate for converting one currency into another is fixed by international agreement.
Bretton Woods Agreement (1944)
incorporated fixed exchange rates, built-in flexibility, and created IMF and World Bank.
Special drawing right (SDR)
is an IMF asset whose value is based on a weighted “basket” of four currencies, including U.S. dollar, European Union euro, Japanese yen and British pound.
Smithsonian Agreement (1971) accomplishments were:
- To lower the value of the dollar in terms of gold to $38/oz
- To increase the values of other countries’ currencies against the dollar
- To increase to 2.25 % from 1% the band within which currencies were allowed to float.
Jamaica Agreement (1976)
is an accord among members of the IMF to formalize the existing system of floating exchange rates as the new international monetary system.
Managed float system of exchange rates
is a system in which currencies float against one another, with governments intervening to stabilize their currencies at particular target exchange rates.
Free float system
is a system in which currencies float freely against one another without governments intervening in currency markets.
Pegged exchange-rate
arrangements “peg” a country’s currency to a more stable and widely used currency in international trade.
Currency board
is a monetary regime that is based on an explicit commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate.
Planning
is the process of identifying and selecting an organization’s objectives and deciding how the organization will achieve those objectives.
Strategy
is the set of planned actions taken by managers to help a company meet its objectives.
Mission statement
is a written statement of why a company exists and what it plans to accomplish.
Core competency
is a special ability of a company that competitors find extremely difficult or impossible to equal.
Value-chain analysis
is the process of dividing a company’s activities into primary and support activities and identifying those that create value for customers.
Multinational strategy
is a strategy of adapting products and their marketing strategies in each national market to suit local preferences.
Global strategy
is a strategy of offering the same products using the same marketing strategy in all national markets.
Corporate level strategies:
growth, retrenchment, stability and combination.
Growth strategy
is designed to increase the scale or scope of a corporation’s operation.
Retrenchment strategy
is a strategy designed to reduce the scale or scope of a corporation’s businesses.
Stability strategy
is designed to guard against change.
Combination strategy
is a mix of growth, retrenchment and stability strategies.
Business-level strategies:
low-cost leadership, differentiation and focus.
Low-cost leadership
is a strategy in which a company exploits economies of scale to have the lowest cost structure of any competitor in its industry.
Differentiation
is a strategy in which a company designs its products to be perceived as unique by buyers throughout its industry.
Focus strategy
is one in which a company focuses on serving the needs of a narrowly defined market segment by being the low-cost leader, by differentiating its product, or both.
Organizational structure
is the way in which a company divides its activities among separate units and coordinates activities among those units.
Centralized decision making
concentrates decision making at a high organizational level in one location, such as headquarters.
Decentralized decision making
disperses decisions to lower organizational levels, such as to international subsidiaries.
International division structure
separates domestic from international business activities by creating a separate international division with its own manager.
International area structure
organizes a company’s entire global operations into countries or geographic regions.
Global product structure
divides worldwide operations according to a company’s product areas.
Global matrix structure
splits the chain of command between product and area divisions.
Self-managed team
is one in which the employees from a single department take on the responsibilities of their former supervisor.
Cross-functional team
is one composed of employees who work at similar levels in different functional departments.
Global teams
are groups of top managers from both headquarters and international subsidiaries who meet to develop solutions to company-wide problems.
screening process for potential markets and sites
- Identify basic appeal
- Assess the national business environment
- Measure market or site potential
- Select the market or site
Logistics
refers to management of the physical flow of products from the point of origin as raw materials to end users as finished goods.
Market research
is the collection and analysis of information used to assist managers in making informed decisions.
Secondary market research
is the process of obtaining information that already exists within the company or that can be obtained from outside sources.
Primary market research
is the process of collecting and analyzing original data and applying the results to current research needs.
Competitor analysis
- Number of competitors in each market
- Customer loyalty commanded by competitors
- Whether each competitor’s product appeals to a small market segment or mass appeal
- Whether each competitor focuses on high quality or low price
- Potential threat from substitute products
- Potential entry of new competitors into market
- Competitors’ control of key production inputs
Focus group
is an unstructured but in-depth interview of a small group of individuals by a moderator to learn the group’s attitudes about a company or its product.
Consumer panel
is a research in which people record in personal diaries information on their attitudes, behaviors or purchasing habits.
Survey
is a research in which an interviewer asks current or potential buyers to answer written or verbal questions to obtain facts, opinions or attitudes.
Environmental scanning
is an ongoing process of gathering, analyzing, and dispensing information for tactical or strategic purposes.
