Encyclopedic Dictionary of International Finance and Banking
Jae K. Shim
Format: PDF / Kindle (mobi) / ePub
The Encyclopedic Dictionary of International Finance and Banking is a practical reference of proven techniques, strategies, and approaches. It covers virtually all important topics dealing with multinational business finance, money, investments, financial planning, financial economics, and banking. In addition, it explores the application of computers, quantitative techniques and models, and economics to international finance and banking. You get:
Shim presents the most current information, offers important directives, and explains the technical procedures involved in this dynamic field. This reference gives you the tools you need to diagnose and evaluate the financial situations you face on a daily basis and answers every question you may have. It provides real-life examples and suggestions for handling everyday problems.
WHAT THIS BOOK WILL DO FOR YOU
More than a dictionary, more than an encyclopedia, this working guide will help you quickly pinpoint:
You'll find ratios, formulas, examples, applications, exhibits, charts, and rules of thumb to help you analyze and evaluate any multinational financial decision. You will find this Encyclopedic Dictionary practical, comprehensive, quick, and useful. In short, this is a veritable cookbook of guidelines, illustrations, and how-tos. Encyclopedic Dictionary of International Finance and Banking is the resource you will reach for again and again.
several different spot prices for the mark up to the time of maturity. At all spot rates below (out-of-the-money) the strike price of $0.485, MYK would choose not to exercise its option. This decision is obvious, since at a spot rate of $0.485, for example, MYK would prefer to buy a German mark for $0.480 on the spot market rather than exercise his option to buy a mark at $0.485. If the spot rate remains below $0.480 until August when the option expires, he would not exercise the option. His
(e.g., foreign subsidiaries) for economic or other reasons. 2. Pulling out of the capital invested in a foreign country. DIVERSIFIABLE RISK Also called controllable risk, company-specific risk, or unsystematic risk, diversifiable risk is that part of the total risk of a security associated with such random events as lawsuits, strikes, winning or losing a major contract, and other events that are unique to a particular company. This type of risk can be diversified away and hence is not priced in a
underlying commodity. EQUILIBRIUM EXCHANGE RATE Exchange rate at which demand for a currency exactly matches the supply of the currency for sale. EQUITY METHOD The equity method is an accounting method used in preparing a parent company’s nonconsolidated ﬁnancial reports that treats income at the foreign subsidiary’s level as being received by the parent company when it is earned by the foreign entity. This method requires that the EURO 91 value of the investment in the parent company’s
currency of a country that is widely accepted in the world and may be exchanged for that of another nation without restriction. Hard currency nations typically have sizeable surpluses in their balance of payments and foreign exchange reserves. The U.S. dollar and British pound are good examples. See also SOFT CURRENCY. HARD LANDING See SOFT LANDING VS HARD LANDING. HEDGE Hedge is the process of protecting oneself against unfavorable changes in prices. One may enter into an offsetting purchase or
businesses engaged in hedging activities. They engage in forward contracts to protect the home-currency value of foreign-currencydenominated assets and liabilities on their balance sheets that are not to be realized over the life of the contracts. 146 HYBRID FOREIGN CURRENCY OPTIONS 147 HEDGE RATIO A ratio comparing the amount you are hedging with the size of the position being hedged against. For example, a 25% hedge ratio means you have 1 ⁄ 4 of a portfolio with a neutral return. HEDGING