Exam 14: Global Financial Management

The price paid by the buyer to the seller for an option contract is called a(n)_____.

______ is an organization that provides secure communications for contracts, invoices, and other trade documents that normally accompany cash payments.

The price paid by the buyer to the seller for an option contract refers to the _____.

Consolidated accounting statements consist of income statements and balance sheets of multinational corporations including all subsidiaries abroad and are due to the IMF's special drawing right.

______ is an examination of optimistic, expected, and pessimistic scenarios to give a more complete picture of the risks and returns of investments abroad.

If losses occur causing a market participant's balance to fall below the maintenance margin at the end of the trading day, a margin premium occurs that requires the bank to replenish the investor's trading account.

The uncertainty in predicting how a variety of different factors will affect an investment in a country, including political risk, economic risk, inflation risk, tax risk, etc., refers to ______.

______ refers to futures contracts in which gains or losses are earned in cash at the end of each trading day.

______ is an organization in New York City that provides large, wholesale dollar payments services for businesses, banks, and governments.

The impact of random change in the value of one currency with respect to other currencies is called the _____.

________ is the practice of using currency derivatives to reduce potential transaction, translation, and economic risks of currency movements that could lead to losses for a firm or investor.

The ______ is the weighted average of different interest rates paid on long-term borrowings.

Bonds that are issued by foreign firms in another country in the home currency of that country are called _____.

Explain the domestic versus global cost of capital.

On October 19, 1987, stock prices in Hong Kong began collapsing and spread throughout the day into Europe and then North America as their stock markets opened for trading. Within one week, Hong Kong fell 46 percent, Australia 42 percent, the U.S. 23 percent, and Canada 23 percent. This is an example of an event called _____.

Standardized agreements to buy or sell a specified amount of currency at a date in the future at a pre-determined price are called _________.

Does exchange rate risk affect firms' cash flows and its stock value? Explain.

Buying securities in a portfolio with price patterns over time that are different from one another, which reduces the volatility of the portfolio, refers to _____.

______ is a coefficient obtained by regressing a stock's return on a currency's return over time.

______ refers to when stock markets in many countries move down in concert with one another and thereby reduce international diversification benefits.