Test 4 Flashcards
Economic integration whereby countries seek to remove all barriers to trade among themselves but where each country determines its own barriers against non members
Free Trade Area
Economic integration whereby countries remove barriers to trade and the movement of labor and capital among members, set a common trade policy against non members, and coordinate their economic policies
Economic Union
Economic and political integration whereby countries coordinate aspects of their economic and political systems
Political union
Increase in the level of trade between nations that results from regional economic integration
Trade Creation
Diversion of trade away from nations not belonging to a trading bloc and toward member nations
Trade Diversion
European Union plan that established its own central bank and currency
European Monetary Union
Loan in which the borrower promises to repay the borrowed plus a predetermined rate of interest
Debt
Debt instrument that specifies the timing of principal and interest payments
Bond
Part ownership of a company in which the equity holder participates with other part owners in the company’s financial gains and losses
Equity
Shares of ownership in a company’s assets they give shareholders a claim on the company’s future cash flow’s
Stock
Ease with which bondholders and shareholders may convert their investments into cash
Liquidity
Network of individuals, company’s, financial institutions and governments that invest and borrow across national boundaries
International capital market
Country or territory whose financial sector features very few regulations and few, if any, taxes
Offshore financial center
Bond issued outside the country in whose currency it is denominated
Euro bond
Bond sold outside the borrowers country and nominated in the currency of the country in which it is sold
Foreign bond
