MAN 3600 Final Exam Study Guide
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1. trying to create value by transferring core competen- International strategy
cies to foreign markets where indigenous competitors
lack those competencies
2. the portion of the supply chain from raw materials to Upstream supply chain
the production facility
3. a market for converting the currency of one country Foreign Exchange Market
into that of another country
4. the rate at which one currency is converted into an- Exchange Rate
other
5. the risk that changes in exchange rates will hurt the Foreign Exchange Risk
profitability of a business deal
6. involves short-term movement of funds from one cur- Currency Speculation
rency to another in hopes of profiting from shifts in
exchange rates
7. A kind of speculation that involves borrowing in one Carry Trade
currency where interest rates are low, and then using
the proceeds to invest in another currency where in-
terest rates are high
8. the exchange rate at which a foreign exchange dealer Spot Exchange Rate
will convert one currency into another that particular
day
9. when two parties agree to exchange currency and Forward Exchange
execute a deal at some specific date in the future
10. the exchange rate governing a forward exchange Forward Exchange Rate
transaction
, MAN 3600 Final Exam Study Guide
Study online at https://quizlet.com/_hz7siy
11. simultaneous purchase and sale of a given amount of Currency Swap
foreign exchange for two different value dates
12. the purchase of securities in one market for immedi- Arbitrage
ate resale in another to profit from a price discrepancy
13. in competitive markets free of transportation costs Law of one price
and barriers to trade, identical products sold in differ-
ent countries must sell for the same price when their
price is expressed in the same currency
14. a market where prices reflect all available information Efficient market
15. Nominal interest rates (i) in each country equal the Fisher effect
required real rate of interest ® and the expected rate
of inflation over the period of time for which the funds
are to be lent (l) that is, i = r + I
16. for any two countries, the spot exchange rate should International fisher effect
change in an equal amount but in the opposite di-
rection to the difference in nominal interest rates be-
tween countries
17. movement of traders like a herd, all in the same direc- Bandwagon effect
tion and at the same time, in response to each other's
perceived actions
18. one in which prices do not reflect all available infor- Inefficient market
mation
19. a country's currency is freely convertible when the Freely convertible curren-
government of that country allows both residents and cy
, MAN 3600 Final Exam Study Guide
Study online at https://quizlet.com/_hz7siy
nonresidents to purchase unlimited amounts of for-
eign currency with the domestic currency
20. limitations on the ability of residents to convert do- Externally convertible cur-
mestic currency, though nonresidents can convert rency
their holdings of domestic currency into foreign cur-
rency
21. a currency is not convertible when both residents and Nonconvertible currency
non-residents are prohibited from converting their
holdings of that currency into another currency
22. converting domestic currency into foreign currency Capital flight
23. the trade of goods and services for other goods and Countertrade
services
24. the extent to which income from individual transac- Transaction exposure
tions is affected by fluctuations in foreign exchange
values
25. the extent to which the reported consolidation results Translation exposure
and balance sheets of a corporation are affected by
fluctuations in foreign exchange values
26. the extent to which a firm's future international earn- Economic exposure
ing power is affected by changes in exchange rates
27. collecting foreign currency receivables early when a Lead strategy
foreign currency is expected to depreciate, and paying
foreign currency payables before they are due when a
currency is expected to appreciate
28. Lag strategy
Study online at https://quizlet.com/_hz7siy
1. trying to create value by transferring core competen- International strategy
cies to foreign markets where indigenous competitors
lack those competencies
2. the portion of the supply chain from raw materials to Upstream supply chain
the production facility
3. a market for converting the currency of one country Foreign Exchange Market
into that of another country
4. the rate at which one currency is converted into an- Exchange Rate
other
5. the risk that changes in exchange rates will hurt the Foreign Exchange Risk
profitability of a business deal
6. involves short-term movement of funds from one cur- Currency Speculation
rency to another in hopes of profiting from shifts in
exchange rates
7. A kind of speculation that involves borrowing in one Carry Trade
currency where interest rates are low, and then using
the proceeds to invest in another currency where in-
terest rates are high
8. the exchange rate at which a foreign exchange dealer Spot Exchange Rate
will convert one currency into another that particular
day
9. when two parties agree to exchange currency and Forward Exchange
execute a deal at some specific date in the future
10. the exchange rate governing a forward exchange Forward Exchange Rate
transaction
, MAN 3600 Final Exam Study Guide
Study online at https://quizlet.com/_hz7siy
11. simultaneous purchase and sale of a given amount of Currency Swap
foreign exchange for two different value dates
12. the purchase of securities in one market for immedi- Arbitrage
ate resale in another to profit from a price discrepancy
13. in competitive markets free of transportation costs Law of one price
and barriers to trade, identical products sold in differ-
ent countries must sell for the same price when their
price is expressed in the same currency
14. a market where prices reflect all available information Efficient market
15. Nominal interest rates (i) in each country equal the Fisher effect
required real rate of interest ® and the expected rate
of inflation over the period of time for which the funds
are to be lent (l) that is, i = r + I
16. for any two countries, the spot exchange rate should International fisher effect
change in an equal amount but in the opposite di-
rection to the difference in nominal interest rates be-
tween countries
17. movement of traders like a herd, all in the same direc- Bandwagon effect
tion and at the same time, in response to each other's
perceived actions
18. one in which prices do not reflect all available infor- Inefficient market
mation
19. a country's currency is freely convertible when the Freely convertible curren-
government of that country allows both residents and cy
, MAN 3600 Final Exam Study Guide
Study online at https://quizlet.com/_hz7siy
nonresidents to purchase unlimited amounts of for-
eign currency with the domestic currency
20. limitations on the ability of residents to convert do- Externally convertible cur-
mestic currency, though nonresidents can convert rency
their holdings of domestic currency into foreign cur-
rency
21. a currency is not convertible when both residents and Nonconvertible currency
non-residents are prohibited from converting their
holdings of that currency into another currency
22. converting domestic currency into foreign currency Capital flight
23. the trade of goods and services for other goods and Countertrade
services
24. the extent to which income from individual transac- Transaction exposure
tions is affected by fluctuations in foreign exchange
values
25. the extent to which the reported consolidation results Translation exposure
and balance sheets of a corporation are affected by
fluctuations in foreign exchange values
26. the extent to which a firm's future international earn- Economic exposure
ing power is affected by changes in exchange rates
27. collecting foreign currency receivables early when a Lead strategy
foreign currency is expected to depreciate, and paying
foreign currency payables before they are due when a
currency is expected to appreciate
28. Lag strategy
