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Definition of J-curve
Theory that says a country's trade deficit will initially worsen after its currency depreciates because
The ratio of net income to net sales.
Money after-tax rate of return minus the inflation rate.
The analysis of principal-agent relationships, wherein one person, an agent, acts on behalf of
hours, machine hours or volume of production
An alternative model to the capital asset pricing model developed by
Dollar deposits held in Singapore or other Asian centers.
The difference between exports and imports of goods.
Net flow of goods (exports minus imports) between countries.
See balance of merchandise trade.
Related: Program trades.
A large trading order, defined on the New York Stock Exchange as an order that consists of
A currency that is not freely convertible to other currencies due to exchange controls.
The managing underwriter for a new issue. The book runner maintains the book of securities sold.
Security prices sometimes move wildly above their true values.
The amount by which government spending exceeds government revenues.
The excess of government spending over tax receipts.
Cash flow after interest and taxes
Net income plus depreciation.
Controlled foreign corporation (CFC)
A foreign corporation whose voting stock is more than 50% owned
Cost–volume–profit analysis (CVP)
A method for understanding the relationship between revenue, cost and sales volume.
analysis a procedure that examines
The exchange of goods for other goods rather than for cash; barter.
Covariance of a national economy's rate of return and the rate of return the world economy
Country financial risk
The ability of the national economy to generate enough foreign exchange to meet
Country risk General
Level of political and economic uncertainty in a country affecting the value of loans or
A type of active international management that measures the contribution to performance
A decline in the ability or willingness of banks to lend.
Taking advantage of divergences in exchange rates in different money markets by
The value of a portfolio of specific amounts of individual currencies, used as the basis for
A financial future contract for the delivery of a specified foreign currency.
An option to buy or sell a foreign currency.
Related: Exchange rate risk
Currency risk sharing
An agreement by the parties to a transaction to share the currency risk associated with
Asset allocation in which the investor chooses among investments denominated in
An agreement to swap a series of specified payment obligations denominated in one currency
An excess of liabilities over assets, of losses over profits, or of expenditure over income.
Anegative balance in the retained earnings account that is caused by cumulative
See budget deficit.
Devaluation A decrease in the spot price of the currency
Eurobonds that pay coupon interest in one currency but pay the principal in a different
economic production run (EPR)
an estimate of the number
A short-term fixed rate time deposit denominated in a currency other than the local
The money market for borrowing and lending currencies that are held in the form of
European Currency Unit (ECU)
An index of foreign exchange consisting of about 10 European currencies,
expectations theory of exchange rates
Theory that expected spot exchange rate equals the forward rate.
fixed overhead volume variance
see volume variance
1) A bond in default trades flat; that is, the price quoted covers both principal and unpaid,
A member who generally trades only for his own account, for an account controlled by him or
Foreign banking market
That portion of domestic bank loans supplied to foreigners for use abroad.
A bond issued on the domestic capital market of anther company.
Foreign bond market
That portion of the domestic bond market that represents issues floated by foreign
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
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 direct investment (FDI)
The acquisition abroad of physical assets such as plant and equipment, with
Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.
currency from another country.
The currency of a foreign 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 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.
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
A transaction in which the settlement will occur on a specified date in the future at a price
The absence of any government restrictions, such as tariffs or quotas, on imports or exports.
Excess of the purchase price over the fair market value of the net assets acquired under purchase
The excess of the price paid to buy another company over the book value of
Intangible assets of a firm established by the excess of the price paid for the going concern over the value of its assets.
A freely convertible currency that is not expected to depreciate in value in the foreseeable future.
trades in which an investor believes he or she possesses pertinent
trades that are the result of either a reallocation of wealth or an implementation of an
Liquidity theory of the term structure
A biased expectations Theory that asserts that the implied forward
This is a will which specifically expresses the testator's desire not to be kept alive on life support machines, should the occasion arise.
Local expectations theory
A form of the pure expectations Theory which suggests that the returns on bonds
A period of time in which all costs are variable; greater than one year.
A period of time in which all costs are variable; greater than one year.
The amount of money that a willing buyer pays to acquire something from a willing seller,
Market segmentation theory or preferred habitat theory
A biased expectations Theory that asserts that the
Modern portfolio theory
Principles underlying the analysis and evaluation of rational portfolio choices
Such a clause on a Euro loan permits the borrower to switch from one currency to
Give the borrower the possibility of drawing a loan in different currencies.
A system, such as the arrangement between the CME and SIMEX, which allows trading
A term used to describe a situation in which a business combination
Net Cash after Operations
Cash flow available for debt service—the payment of interest and principal on loans. Generally calculated as cash provided by operating activities before interest
Normal backwardation theory
Holds that the futures price will be bid down to a level below the expected
North American Free Trade Agreement (NAFTA)
an agreement among Canada, Mexico, and the United States establishing the North American Free trade Zone, with a resulting reduction in trade barriers
Elimination of a long or short position by making an opposite transaction. Related: liquidation.
On the run
The most recently issued (and, therefore, typically the most liquid) government bond in a
A manufactured or received quantity exceeding the planned amount.
pecking order theory
Firms prefer to issue debt rather than equity if internal finance is insufficient.
prices after the decision to trade.
prices occurring before or at the decision to trade.
Preferred habitat theory
A biased expectations Theory that believes the term structure reflects the
after premiums have been paid for a number of years, further annual premiums may be paid by the current dividends and the surrender of some of the paid-up additions which have built up in the policy. In effect, the policy can begin to pay for itself. Whether a policy becomes eligible for premium offset, the date on which it becomes eligible and whether it remains eligible once premium offset begins, will all depend on how the dividend scale changes over the years. Since dividends are not guaranteed, premium offset cannot be guaranteed either.
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