the flashcards - International finance

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término English definición English
foreign direct investment
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occurs when a firm invests directly in new facilities to produce and/or market in a foreign country
Terms of Trade
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• Related to current accounts and balance of payments, the terms of trade is the ratio of export prices to import prices.
inflation
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A country with government debt is less likely to acquire foreign capital, leading to...
Recession
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As a result, its currency weakens in comparison to that of other countries, therefore lowering the exchange rate.
Speculation
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If a country's currency value is expected to rise, investors will demand more of that currency in order to make a profit in the near future.
A forward contract
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is an agreement to buy or sell an asset in the future at prices agreed upon today.
A forward premium
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is frequently measured as the difference between the current spot rate and the forward rate, so it is reasonable to assume that the future spot rate will be equal to the current futures rate.
Hazard
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Something that can potentially cause harm
risk in business
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the likelihood of a loss or reduced profit
Long call • Short call • Long put • Short put
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The basic trades of traded stock options
Derivatives
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are financial contracts, whose values are derived from the value of something else (known as the underlying)
Common derivative contract types
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– futures/forwards, – options, – swaps.
A trigger – a new event
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Reduction of int. rate
Central bank increases the int. rates %
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The pursuit of the change
AMBER GOLD loses the liquidity
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The colapse

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