the flashcards - International finance

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

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