Term
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Definition
| the foreign exchange rate quotation that represents the number of American dollars that can be bought with one unit of local currency. |
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Term
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Definition
| A long run plan that outlines in broad terms the firms basic strategy for the next 5-10 years. |
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Term
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Definition
| the process of planning expenditures on assets whose cash flows are expected to extend beyond one year. |
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Term
| Net Present Value (NPV) Method |
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Definition
| A method of ranking investment proposals using NPV, which is equal to the present value of future net cash flows, discounted at the cost of capitals. |
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Term
| Mutually Exclusive Projects |
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Definition
| A set of project where only one can be accepted. |
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Term
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Definition
| Projects whose cash flows are not affected by the acceptance or nonacceptance of other projects. |
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Term
| Internal Rate of Return (IRR) |
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Definition
| The discount rate that forces a projects NPV to equal zero. |
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Term
| Reinvestment Rate Assumption |
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Definition
| The assumption that cash flows from a project can be reinvested. |
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Term
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Definition
| the situation where a project has two or more IRR's |
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Term
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Definition
| The length of time required for an investment's net revenues to cover its cost. |
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Term
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Definition
| A comparision of actual versus expectd results for a given capital project. |
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Term
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Definition
| A cash flow that will occur if and only if the firm takes on a project. |
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Term
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Definition
| the situation where old and less efficient equipment is replaced by newer and more efficient equipment. |
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Term
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Definition
| A cash outlay that has already been incurred and that cannot be recovered regardless of whether the project is accepted or rejected. |
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Term
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Definition
| The return on the best alternative use of an asset, or the highest return that will not be earned if funds are invested in a particular project. |
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Term
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Definition
| The risk an asset would have if it were a firm's only asset and if investors owned only one stock. It is measured by the variablity of the assets expected return. |
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Term
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Definition
| A risk analysis technique in which "bad" and "good" sets of financial circumstances are compared with a most likely or base-case situation. |
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Term
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Definition
| An analysis in which all of the input variables are set at their most likely values. |
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Term
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Definition
| Ana analysis in which all of the input variables are set at their worst reasonably forecasted values. |
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Term
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Definition
| An analysis in which all of the input variable are set at their best reasonably forecasted values. |
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Term
| Risk-Adjusted Discount Rate |
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Definition
| The discount rate that applies to a particular risky cash flow stream; the riskier the project's cash flow stream, the higher the discount rate. |
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Term
| Multinational or Global Corporation |
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Definition
| A firm that operateds in an integrated fashion in a number of countries. |
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Term
| 7 reasons why companies go global |
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Definition
| 1. to seek production efficiency 2. to avoid political trade and regulatory hurdles 3. to broaden their markets 4. to seek raw materials and new technologies 5. to protect the secrecy of their processes and products 6. to diversify 7. to retain customers |
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Term
| International Monetary System |
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Definition
| The framework within which exchange rtes are determined. It is the blueprint for interantional trade and capital flows |
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Term
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Definition
| The number of units of a given currency that can be purchased for one unit of another currency |
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Term
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Definition
| Occurs when the exchange rate is determined by supply and demand for the currency. |
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Term
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Definition
| occurs when there is sisgnificant government intervention to control the exchange rte via manipulation of the currency's supply and demand |
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Term
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Definition
| the exchange rate between any two currencies. |
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Term
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Definition
| The foreign currency of one unit of the home currency. |
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Term
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Definition
| The home currency price of one unit of the foreign currency. |
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Term
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Definition
| The foreign exchange rate quotation that represents the units of local currency that can be bought with one US $ "European" is intended as a generic term that applies globally |
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Term
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Definition
| Specifies that investors should expect to earn the same return in all countries after adjusting for risk |
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Term
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Definition
| The effective exchange rate of a foreign currency for delivery on (approximately) the current day |
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Term
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Definition
| An agreed-upon price at which two currencies will be exchanged at some future date. |
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Term
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Definition
| Floating0-rate bank loans, available in most major trading currencies, that are tied to LIBOR |
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Term
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Definition
| A US dollar deposited in a bank outside the US |
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Term
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Definition
| The risk that relates to what the basic cash flows will be worth in the parent company's home currency |
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Term
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Definition
| Potential actions by a host government that would reduce the value of a companys investment |
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Term
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Definition
| Refers to a country's social, political and economic environment |
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Term
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Definition
| Unpaid preferred dividends |
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Term
| Adjustable Rate Preferred Stocks (ARPS) |
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Definition
| Preferred stocks whose dividends are tied to the rate of treasur securities |
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Term
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Definition
| An arrangement whereby a firm sells land, buildings, or equipment and simutaneously leases the property back for a specified period under specific terms |
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Term
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Definition
| the party that uses, rather than the one who owns, the leased property |
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Term
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Definition
| the owner of the leased property |
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Term
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Definition
| A lease under which the lessor maintains and finances the property; also called a service lease |
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Term
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Definition
| A lease that does not provide for maintenance services, is not cancelable |
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Term
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Definition
| The value of leased property at the end of the lease term |
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Term
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Definition
| A long term option to buy, a stated number of shares of common stock at a specified price |
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Term
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Definition
| The effective price paid for common stock obtained by converting a convertible security |
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Term
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Definition
| the number of shares of common stock that are obtained by converting a convertible bond or share of convertible preferred stock |
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