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Uca Global business 3 pt 2
pt 2
21
Business
Undergraduate 1
12/01/2015

Additional Business Flashcards

 


 

Cards

Term
Foreign Exchange Market
Definition
is a market for converting the currency of one country into that of another country
Term
Exchange Rate
Definition
is simply the rated at which one currency is converted into another
Term
Foreign Exchange Risk
Definition
or the adverse consequences of unpredictable changes in exchange rates
Term
Currency Speculation
Definition
typically involves the short-term movemnet of funds from one currency to antoher in the hopes of profiting from shifts in exchange rates.
Term
Carry Trade
Definition
A kind of speculation thta has become more common in recent years
Term
Spot exchange rate
Definition
the rate at which a foreign exchange dealer converts one currency into another curency on a particular day.
Term
Foward Exchange
Definition
occurs when two parties agree to exchange currency and execute the deal at some specicfic date in the future
Term
Forward Exchange Rates
Definition
exchange rates governing such future transactions
Term
Currency Swap
Definition
is the simultaneous purchase and sale of a given amount of foreign exchange for thwo differet value dates.
Term
Arbitage
Definition
buying a currency low and selling it high
Term
Law of one price
Definition
states that in competitive markets free of transportation costs and barriers to trade (such as tariffs) identical products sold in different countries must sell for the same price when their price is expressed in terms of the same currency
Term
Efficicent Market
Definition
has no impediments to the free flow of goods and servieces such as trade barriers
Term
Fisher Effect
Definition

states that a countrys "nominal" intrest rate (i) is the sum of th erequired "real" rate of intrest (r) and the expected rate of inflation over the period for which the funds are to be lent (I). More formally

i=r+I

Term
International Fisher Effect
Definition
states that for any two countries the spot exchange rate should change in an equal amount but in the oppsite direction to th edifference in nominal intrest rates bwtwwen the two countries.
Term
Banwagon Effect
Definition
traders moving as a herd in the same direcetion at the same time
Term
Inefficient Market
Definition
is one in whihc prices do not reflect all available information
Term
Freely Convertible
Definition
when country's government allows both residents and nonresidents to purchase unlimited amounts of a foreign curreny with it.
Term
externally convertible
Definition
when only nonresidents may conbert it into a foreign currency without any limitations
Term

Nonconvertible

 

Definition
when neither residents nor nonresidents are allowed to convert into a foreign currency
Term
Capital Flight
Definition
occurs when residents and nonresidents rush to convert their holdings of domestic currency into foreign currency
Term
Countertrade
Definition
refers to a rangew of barter like agreements by which goods and services can be traded for other goods and services
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