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- multinational corporation
- absolute advantage
- comparative advantage
- internationalization
- foreign direct investment: the acquisition abroad of companies, property,
or physical assets such as plant and equipment
- reverse foreign investment
- global manager
- arbitrage
- market efficiency
- capital asset pricing model
- systematic or undiversifiable risk
- unsystematic or diversifiable risk
- terms of trade
- exchange rate
- devaluation
- pegged currency
- revaluation
- floating currency
- equilibrium exchange rate
- spot rate
- forward rate
- reference currency
- appreciation
- depreciation
- bid rate: the price in one currency at which a dealer will buy another
currency
- ask rate: the price in one currency at which a dealer will sell another
currency
- nominal interest rate
- real interest rate
- asset market model of exchange rate determination
- moral hazard
- liquidity
- store of value
- central bank
- fiat money: a system where the currency that is legal tender is not
back by commodities or other reserve currencies, but simply by the peoples'
faith in the government.
- monetizing the deficit
- currency board: a system where the central bank issues notes and coins
that are convertible on demand and at a fixed rate into a foreign reserve
currency.
- dollarization
- seigniorage: The amount of goods and services that the government
obtains by printing new money in a given period.
- real exchange rate
- nominal exchange rate
- foreign exchange market intervention: offical purchases and sales
of foreign exchange that national undertake through their central banks
to influence their currencies.
- sterilized intervention: intervention by central banks to affect the
exchange rate, accompanied by open-market operations domestically to
offset the impact of the currency market intervention on domestic money
supply.
- monetary base
- open-market operation
- international monetary system:
the set of policies, institutions, practices, regulations, and mechanisms
that determine the rate at which one currency is exchanged for another.
- free float
- managed float
- dirty float: A system of floating exchange rates in which a government
may intervene to change the direction of the value of the country's
currency; this differs from a managed float policy, in that it may not
be the explicit and avowed policy of the government to intervene to
affect currency rates.
- fixed-rate system
- target-zone arrangement: a monetary system under which countries pledge
to maintain theeir exchange rates within a specific margin around agreed-upon,
fixed central exchange rates.
- par value
- austerity
- gold standard
- price-specie-flow mechanism
- beggar-thy-neighbor devaluation: devaluation of its currency by one
country to increase its exports at others' expense and to reduce imports
-- often leads to a price war.
- International Monetary Fund
- International Bank for Reconstruction and Development (World Bank)
- lender of last resort
- Bank of International Settlements: central bank for the industrial
countries' central banks; helps central banks manage and invest their
foreign exchange reserves, and in cooperation with the IMF and the World
Bank, helps the central banks of developing countries. It also holds
deposits of central banks.
- Bretton Woods Agreement
- Smithsonian Agreement
- G-5 nations
- Plaza Agreement
- G-7 nations
- Louvre Accord
- European Monetary System (EMS)
- European Community (EC) or Common Market
- European Currency Unit (ECU)
- monetary union
- European Central Bank
- privatization: selling off state-owned enterprises.
- optimum currency area: largest area in which it makes sense to have
a single currency. Defined as that area for which the cost of having
an additional currency -- higher costs of doing business and greater
currency risk -- just balances the benefits of another currency -- reduced
vulnerability to economic shocks associated with the option to change
the area's exchange rate.
- conditionality
- Fisher Effect
- International Fisher Effect
- Purchasing Power Parity
- interest rate parity
- covered interest arbitrage
- unbiased forward rate
- peso problem
- interbank market
- spot market
- forward market
- foreign exchange brokers
- arbitrageurs
- traders
- SWIFT: An acronym that stands for "Society for Worldwide Interbank
Financial Telecommunications." This is a
dedicated computer network to support funds transfer messages internationally
between member banks world-wide. Among other things, it is used to transfer
funds between member banks.
- CHIPS
- Fedwire
- hedgers
- speculators
- American terms
- European terms
- direct quotation
- Indirect quotation
- bid-ask spread
- cross rates
- triangular currency arbitrage
- no-arbitrage condition
- settlement risk/ Herstatt risk: a type of credit risk that a bank
will deliver currency on one side of a foreign exchange deal only to
find that its counterparty has not sent any money in return.
- nostro account: working balances maintained with the correspondent
to facilitate delivery and receipt of currencies.
- position sheet: a document that shows a bank's position by currency,
as well as maturities of forward contracts.
- short position
- long position
- outright rate
- swap rate: The difference between spot and forward rates expressed
in points, e.g., $0.0001 per pound sterling (Source: Campbell Harvey
http://www.duke.edu/~charvey/Classes/wpg/bfgloss.htm).
- forward discount
- forward premium
- value date: the date on which monies must be paid to the parties involved,
often the second wokring day after the date on which the transaction
is concluded.
- interest rate swap
- notional principal: a reference amount against which the interest
on a swap is calculated.
- coupon swap
- basis swap
- LIBOR
- eurocurrency: a currency deposited in a bank outside the country of
its origin
- Eurobond
- currency swap
- all-in cost
- right of offset
- dual currency bond
- forward forward
- forward rate agreement
- accounting exposure
- balance-sheet exposure
- cross-hedge
- currency call option
- currency collar
- currency put option
- currency risk sharing
- current rate method
- current/noncurrent method
- cylinder
- economic exposure
- exposure netting
- Financial Accounting Standards Board
- foreign exchange risk
- forward market hedge
- functional currency
- funds adjustment
- hard currency hedging
- historical exchange rate
- hyperinflationary country
- monetary/nonmonetary method
- money market hedge
- neutral zone
- operating exposure
- opportunity cost
- price adjustment clauses
- range forward
- reporting currency
- risk shifting
- soft currency
- FASB 8
- FASB 52
- temporal method
- transaction exposure
- competitive exposure
- currency of denomination
- currency of determination
- differentiated products
- economic exposure
- flow-back effect
- market selection
- outsourcing: strategy of purchasing intermediate components from independent
suppliers. This gives the firm flexiblity in shifting purchases of intermediate
inputs towards suppliers who are least affected by a given exchange
rate change.
- price elasticity of demand
- pricing flexibility
- pricing strategy
- product cycles
- product innovation
- production shifting: a strategy that allows the firm to vary its production
mix over plants in different parts of the world; this can be used as
a means of hedging against exchange rate risk.
- product sourcing: this refers to the sources that a firm uses to obtain
its inputs
- product strategy: this deals with the firm's decisions such as new-product
introduction, product line decisions, and timing and nature of product
innovation.
- real exchange rate
- transaction exposure
- investment banker
- underwriting
- private placements
- covenants
- securitization
- financial intermediaries
- corporate governance: the means whereby companies are controlled (expand..)
- keiretsu
- universal banking
- regulatory arbitrage
- capital productivity
- entrepots
- shogun bonds
- samurai bonds
- yankee bonds
- yankee stocks
- global bond
- equity-related bonds
- equity warrants
- convertible bonds
- foreign bank market: the portion of domestic bank loans supplied to
foreigners for use abroad
- Rule 144A
- global shares
- development banks: banks, whose lending is directed to investments
that might not otherwise be funded by private capital
- Inter-American Development Bank (IADB)
- European Bank for Reconstruction and Development (EBRD)
- project finance
- eurocurrency
- eurobank
- eurodollar
- eurobonds
- euronotes
- LIBOR
- LIBID
- basis point
- drawdown
- purchase fund
- sinking fund
- note issuance facility (NIF): a substitute for syndicated credits,
which allows borrowers to issue their own short-term Euronotes, which
are placed or distributed by the financial institutions providing the
NIF.
- Short-term note issuance facility (SNIF)
- revolving underwriting facility (RUF)
- Euro-MTNs
- Euro-CP
- Asiacurrency
- dragon bond
- CAPM
- systematic/ nondiversifiable risk
- market risk premium
- project beta
- weighted average cost of capital
- target capital structure
- corporate international diversification
- global capital asset model
- home bias
- sovereign risk premium
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