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ch 20
ch20 int business
49
Business
Undergraduate 2
12/01/2012

Additional Business Flashcards

 


 

Cards

Term
international financial management 536
Definition
the acquisition and use of funds for cross border trade, investment, R&D, manufacturing, marketing, outsourcing, and other commercial activities.
Term
manage working capital and cash flow 537
Definition
administer funds passing in and out of the firm's value adding activities.
Term
manage the diversity of international accounting and tax practices 537
Definition
learn how to operate in a global environment with diverse accounting practices and international tax regimes.
Term
capital structure 537
Definition
the mix of long term equity financing and debt financing that firms use to support their international activites. It affects the profitablity and stability of the firm and its international operations.
Term
equity financing 537
Definition
the issuance of shares of stock to raise capital from investors and the use of retained earnings to reinvest in the firm.
Term
debt financing 537
Definition
comes from either of two sources: loans from banks and other financial intermediaries or the sale of corporate bonds to individuals or institutions.
Term
global money market 538
Definition
the collective financial markets where firms and governments raise short term financing.
Term
global capital market 538
Definition
the colelctive financial markets where firms and governments raise intermediate and long term financing.
Term
capital 538
Definition
funding for most projects come from instruments whose maturity period is over one year, we refer to all such funding .
Term
financial centers 538
Definition
new yrok, london and tokyo.
Term
why did global markets grow so rapidly in the past decade? 538-539
Definition
government's deregulation of financial markets eased movement of capital across national border, innovation in info and communication technologies accelerated the ease and speed of global transactions, globalization of business compelled firms to seek new cost effective ways to finance global operations and conduct management activites. Widespread securitization of financial instruments which resulted in convesion of illiquid financial instruments, such as bank loans, into tradable securities, like bonds.
Term
global money market 538
Definition
the collective financial markets where firms and governments raise short term financing.
Term
global capital market 538
Definition
the collective financial markets where firms and governments raise intermediate and long term financing.
Term
equity financing 539
Definition
the firm obtains capital by selling stock, which gives shareholders a percentage of ownership in firm and, often, a stream of dividend payments. Pros: the firm obtains capital without debt.
Term
glboal equity market 540
Definition
stock exchanges worldwide whereinvestors and firms meet to buy and sell shares of exchanges in Britian, Germany, Japan and US.
Term
eurodollars542
Definition
U.S. dollars held in banks outside the US, including foreign branches of US banks
Term
Eurocurrency 542
Definition
any currency deposited in a bank outside its country of origin.
Term
bond 542
Definition
a debt instrument that enables the issuer to reaise capital by promising to repay the principal along with interest on a specified date
Term
global bond market 542
Definition
the international marketplace in which bonds are bought and sold, primarily through bond brokers.
Term
foreign bond 542
Definition
a bond sold outside the issuer's country and denominated in the currency of the country where issued.
Term
eurobond 542
Definition
a bond sold outside the issuer's home country but denominated in its own currency.
Term
intracorporate financing 543
Definition
funds from sources inside the firm (both hq and subsidiaries) such as equity, loans, and trade credits. Trade credit arises in the firm when a supplier unit grants a buyer unit the option to pay at a later date.
Term
trade credit 543
Definition
a subsidiary can defer payment for goods and services received from the paretn firm. The 30 day credit is the US norm, while 90 day credit is typical in Europe, with longer terms elsewhere.
Term
dividend remittances 543
Definition
common for transferring funds from foreign subsidiaries to the parent but varying depending on tax levels and currency risks.
Term
transaction exposure 546
Definition
currency risks firms face when outstanding accounts receivable or payable are denominated in foreign currencies.
Term
translation exposure 546
Definition
the currency risk that results when a firm translates financial statements denominated in a foreign currency into the functional currency of the parent firm, as part of consolidating international financial results.
Term
consolidation 546
Definition
process of commbining and integrating the financial results of foreign subsidiaries into the financial statements of the parent firm.
Term
economic exposure546
Definition
the currency risk that results from exchange rate fluctuations affecting price of products, the cost of inputs and the value of foreign investments.
Term
spot rate548
Definition
the exchange rate applied when the current exchange rate is used for immediate receipt of a currency.
Term
forward rate549
Definition
the exhcange rate applicable to the collection or delivery at some future date.
Term
direct quote 549
Definition
also known as normal quote the # of units of domestic currency needed to acquire one unit of ofreign currency.
Term
indirect quote 549
Definition
# of uniits of foreign currency obtained for one unit of domestic currency.
Term
hedgers 549
Definition
typically MNEs and other international trade or investment firms, seek to minimize their risk of exchange rate fluctuations, often by entering into forward contracts or similar financial instruments.
Term
speculators 549
Definition
currency traders who seek profits by investing in currencies with the expectation their value wil rise in the future and then sell them later at the higher value. A speculator might purchas e a certificate of deposit denominated in Mexican pesos or a money market account tied to the chinese yuan, believing the value of these currencies will rise.
Term
arbitragers 550
Definition
currency traders who buy and sell the same currency in two or more foreign exchange markets to profit from differencees in the currency's exchange rate. But unlike the speculator who bets on the future price of a currency this person attempts to profit from a current disequilibrium in currency markets based on known prices.
Term
momentum trading 550
Definition
accomplished via computers programmed to conduct massive buying or selling when prices reach certain levels.
Term
technical analysis 550
Definition
looks at recent movements in exchange rates
Term
fundamental analysis 550
Definition
studies involving macroeconomic data
Term
hedging 551
Definition
using financial instruments and other measures to reduce or eliminate exposure to currency risk by locking in guaranteed foreign exchange positions.
Term
passive hedging 551
Definition
each exposure is hedged as it occurs and the hedge stays in place until maturity.
Term
active hedging 551
Definition
firm frequently reviews total exposure and hedges only a subset of its total exposures, usually those that pose the greatest risk.
Term
forward contract 551
Definition
an agreement to exchange two currencies at a specified exchange rate on a set future date. No money changes hands until the delivery date of the contract.
Term
futures contract 551
Definition
ana greement to buy or sell a currency in exchange for another at a specified price on a specified date. Unlike forward contracts, futures contracts are standardized to enable trading in organizatied exchanges.
Term
currency option 551
Definition
differs from forward and futures contracts in that it gives the purchaser the right, but not the obligation, to buy a certain amount of foreign currency at a set exchange rate within a specified amount of time.
Term
currency rate method 555
Definition
translates foreign currency balance sheets and income statements at the current exchange rate-the spot exchange rate in effect on the day (in the case of balance sheets) or for the period the statements are prepared.
Term
temporal method 555
Definition
the choice of exchange rate depends on the underlying method of valuation. If assets and liabilities are normally valued at historical cost, then they are translated at the historical rates-that is, the rates in effect when the assets were acquired.
Term
diret taxes 555
Definition
imposed on income from profits, capital gains, intracorporate transactions, royalties, interest and dividends.
Term
sales tax 555
Definition
flat percentage tax on the value of goods or services sold, bpaid by the ultimate user.
Term
value added tax555
Definition
payable at each stage of procesing in the value chain of a product or service.
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