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Definition
| equal to your asstes minus your liabilities |
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Term
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Definition
| Price of foreign currency expressed in terms of a home or domestic currency |
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Term
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Definition
| when one currency buys more of another currency |
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Term
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Definition
| when one currency buys less of another currency |
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Term
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Definition
| measuring one countrys exchange rate with many other countrys rates |
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Definition
| when a countrys exchange rate fluctuates minimially or not at all against another base currency |
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Definition
| when a countrys exchange rate is left to fluctuate freely according to the market with no government intervention |
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Term
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Definition
| categories of like exchange rate behavior |
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Term
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Definition
| a group of countries that all follow the same structured central bank that decides all monetary policies for the group members |
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Definition
| a country will adopt the currency of a foreign country |
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Term
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Definition
| immediate exchange of currency; "on the spot" |
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Term
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Definition
| the daily changes in foreign exchange made up of a collection of individuals, corporations, and public institutions that buy and sell |
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Term
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Definition
| Contract established today, but the settlment date is in the future |
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Term
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Definition
| A spot sale of foreign currency with a forward repurchase of the same currency |
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Definition
| a contract between two parties that promise to deliver currencies to eachother at some future date at a prespecified exchange rate |
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Definition
| provides one party, the buyer, with the right to buy and or sell a currency in exchange for another at a prespecified exchange rate at a future date |
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Term
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Definition
| when a third currency is used to facilitate the transaction between other currencies |
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Term
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Definition
| trading strategy that explouts any profit opportunities arising from price differences |
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Definition
| contracts that determine a prespecified rate of exchange a year from now. |
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Term
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Definition
| when exchange rate risk on the euro side is covered by use of a forward contract |
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Term
| Uncovered Interest Parity |
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Definition
| risk is uncovered by decision not to hedge by using a forward contract and simply using a spot contract when the time comes |
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Term
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Definition
| Identical goods sold in different locations must sell for the same price when prices are expressed in a common currency |
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Definition
| relates exchange rates to the relative price of a basket of goods |
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Definition
| when price levels in two countries are equal when expressed in a common currency |
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Term
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Definition
| implies that the rate of depreciation of the nominal exchange rate equals the difference between the inflation rates of two countries |
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Term
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Definition
| difference between two countrys inflation rates |
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Term
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Definition
| tells us how many U.S. baskets are needed to purchase one European basket |
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Term
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Definition
| If the real exchange rate rises (more Home goods are needed in exchange for Foreign goods), we say Home has experienced a real depreciation |
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Term
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Definition
| If the real exchange rate falls (fewer Home goods are needed in exchange for Foreign goods), we say Home has experienced a real appreciation |
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