|Foreign direct investment (FDI)|
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Definition of Foreign direct investment (FDI)
Foreign direct investment (FDI)
The acquisition abroad of physical assets such as plant and equipment, with
A foreign corporation whose voting stock is more than 50% owned
A method of cash budgeting based on detailed estimates of cash receipts and cash
Lease in which the lessor purchases new equipment from the manufacturer and leases it to the
Commercial paper sold directly by the issuer to investors.
Selling a new issue not by offering it for sale publicly, but by placing it with one of several
For foreign exchange, the number of U.S. dollars needed to buy one unit of a foreign currency.
Buyers and sellers seek each other directly and transact directly.
The purchase by investors of securities directly from the issuer.
Automatic reinvestment of shareholder dividends in more shares of a
The return one can expect to earn on an investment. See: capital asset
Federal Deposit Insurance Corporation.
A federal institution that insures bank deposits.
That portion of domestic bank loans supplied to foreigners for use abroad.
A bond issued on the domestic capital market of anther company.
That portion of the domestic bond market that represents issues floated by foreign
Foreign currency option
An option that conveys the right to buy or sell a specified amount of foreign
Foreign currency translation
The process of restating foreign currency accounts of subsidiaries into the
Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.
Currency from another country.
Foreign exchange controls
Various forms of controls imposed by a government on the purchase/sale of
Foreign exchange dealer
A firm or individual that buys foreign exchange from one party and then sells it to
Foreign exchange risk
The risk that a long or short position in a foreign currency might have to be closed out
Foreign exchange swap
An agreement to exchange stipulated amounts of one currency for another currency
Part of a nation's internal market, representing the mechanisms for issuing and trading
Foreign market beta
A measure of foreign market risk that is derived from the capital asset pricing model.
Foreign Sales Corporation (FSC)
A special type of corporation created by the Tax Reform Act of 1984 that
Foreign tax credit
Home country credit against domestic income tax for foreign taxes paid on foreign
Future investment opportunities
The options to identify additional, more valuable investment opportunities
Guaranteed investment contract (GIC)
A pure investment product in which a life company agrees, for a
For foreign exchange, the number of units of a foreign currency needed to buy one U.S.$.
Related: financial analysts
Financial intermediaries who perform a variety of services, including aiding in the sale of
Decisions concerning the asset side of a firm's balance sheet, such as the decision to
Investment grade bonds
A bond that is assigned a rating in the top four categories by commercial credit
The revenue from a portfolio of invested assets.
Also called a portfolio manager and money manager, the individual who manages a
Investment product line (IPML)
The line of required returns for investment projects as a function of beta
Investment tax credit
Proportion of new capital investment that can be used to reduce a company's tax bill
A closed-end fund regulated by the investment Company Act of 1940. These funds have a
As a discipline, the study of financial securities, such as stocks and bonds, from the investor's
investments that a regulated entity is permitted to make under the rules and regulations
Mutually exclusive investment decisions
investment decisions in which the acceptance of a project
Gross, or total, investment minus depreciation.
Net present value of future investments
The present value of the total sum of NPVs expected to result from
Passive investment strategy
See: passive management.
Passive investment management
Buying a well-diversified portfolio to represent a broad-based market
The rate at which an investor assumes interest payments made on a debt security can be
The risk that proceeds received in the future will have to be reinvested at a lower potential
REIT (real estate investment trust)
Real estate investment trust, which is similar to a closed-end mutual
REMIC (real estate mortgage investment conduit)
A pass-through tax entity that can hold mortgages
Return on investment (ROI)
Generally, book income as a proportion of net book value.
Short-term investment services
Services that assist firms in making short-term investments.
The mirror image of the asset substitution problem, wherein stockholders refuse
Unit investment trust
Money invested in a portfolio whose composition is fixed for the life of the fund.
A portfolio of zero net value established by buying and shorting component
RETURN ON INVESTMENT (ROI)
In its most basic form, the rate of return equals net income divided by the amount of money invested. It can be applied to a particular product or piece of equipment, or to a business as a whole.
Costs that are readily traceable to particular products or services.
Costs that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead.
A division or unit of an organization that is responsible for achieving an adequate return on
Return on investment (ROI)
The net profit after tax as a percentage of the shareholders’ investment in the business.
A method of preparing the operating section of the Statement of Cash Flows that uses the company’s actual cash inflows and cash outflows.
Direct write-off method
A method of adjusting accounts receivable to the amount that is expected to be collected by eliminating the account balances of specific nonpaying customers.
A method of preparing the operating section of the Statement of Cash Flows that does not use the company’s actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities.
capital investment analysis
Refers to various techniques and procedures
return on investment (ROI)
A very general concept that refers to some
The commitment of funds (capital) in anticipation of an increased
a cost that is distinctly traceable to a particular cost object
see variable costing
the time spent by individuals who work specifically
a readily identifiable part of a product; the cost of such a part
a service department cost allocation approach
Foreign Corrupt Practices Act (FCPA)
a law passed by U.S. Congress in 1977 that makes it illegal for a U.S. company to engage in various “questionable” foreign payments and
a cost that cannot be traced explicitly to a particular
a responsibility center in which the manager
a judgment about which assets will be
the process of gathering information
an assumption made about the rates of return that will be earned by intermediate cash flows from a capital project; NPV and PI assume reinvestment at the discount rate; IRR assumes reinvestment at the IRR
return on investment
a ratio that relates income generated
A cost that can be clearly associated with specific activities or products.
A costing methodology that only assigns direct labor and material costs
Labor that is specifically incurred to create a product.
Direct materials cost
The cost of all materials used in a cost object, such as finished goods.
Direct materials mix variance
The variance between the budgeted and actual mixes of
A member of a company’s Board of directors.
A cost that is not directly associated with a single activity or event. Such
The cost of any labor that supports the production process, but which is
Bonds rated Baa or above by Moody’s or BBB or above by Standard & Poor’s.
The currency of a foreign country.
Foreign Exchange Market
A worldwide market in which one country's currency is bought or sold in exchange for another country's currency.
Foreign Exchange Reserves
A fund containing the central bank's holdings of foreign currency or claims thereon.
Taxes paid by consumers when they buy goods and services. A sales tax is an example.
Middleman between a corporation issuing new securities and the public. The middleman buys the securities issue outright and then resells it to customers. Also called an underwriter.
Expenditures on capital goods including new housing. Financial ''investments" and sales of existing assets are not included.
Investment Tax Credit
A reduction in taxes offered to firms to induce them to increase investment spending.
investment spending minus depreciation.
The direct transfer of payroll funds from the company bank account
A format for the operating section of the cash-flow statement that reports actual cash receipts and cash disbursements from operating activities.
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