Matching
Match the following to the items below:
Premises:
An arrangement in which a U.S. firm lends dollars to a foreign affiliate in the U.S. while that affiliate's parent company lends its own currency to the U.S. firm's affiliate in that country.
The possibility of experiencing a drop in revenue or increase in cost in an international transaction due to a change in foreign exchange rates.
Net income forwarded from the foreign affiliate to the parent company.
A written promise made by an IMPORTER'S bank to an EXPORTER to pay for merchandise.
An instrument which may be used to protect against foreign exchange risk.
Currency exchange rates tend to vary inversely with their respective purchasing powers in order to provide the same or similar purchasing power in each country.
A government takeover of a foreign subsidiary's assets.
Losses and gains on the balance sheet of an MNC as a result of changing exchange rates.
The interplay between interest rate differentials and exchange rates.
A firm which does business across its national border.
A parent company's loan to its foreign subsidiary through a large international bank.
A system of government accounts that catalogs the flow of economic transactions between the residents of one country and those of other countries.
The relationship between the values of two currencies.
Foreign exchange gains or losses resulting from international business transactions.
Responses:
Interest Rate Parity Theory
parallel loan
repatriation of earnings
balance of payments
transaction exposure
foreign exchange rate
foreign exchange risk
currency futures contract
fronting loan
letter of credit
multinational corporation
Purchasing Power Parity Theory
translation exposure
expropriation
Correct Answer:
Premises:
Responses:
An arrangement in which a U.S. firm lends dollars to a foreign affiliate in the U.S. while that affiliate's parent company lends its own currency to the U.S. firm's affiliate in that country.
The possibility of experiencing a drop in revenue or increase in cost in an international transaction due to a change in foreign exchange rates.
Net income forwarded from the foreign affiliate to the parent company.
A written promise made by an IMPORTER'S bank to an EXPORTER to pay for merchandise.
An instrument which may be used to protect against foreign exchange risk.
Currency exchange rates tend to vary inversely with their respective purchasing powers in order to provide the same or similar purchasing power in each country.
A government takeover of a foreign subsidiary's assets.
Losses and gains on the balance sheet of an MNC as a result of changing exchange rates.
The interplay between interest rate differentials and exchange rates.
A firm which does business across its national border.
A parent company's loan to its foreign subsidiary through a large international bank.
A system of government accounts that catalogs the flow of economic transactions between the residents of one country and those of other countries.
The relationship between the values of two currencies.
Foreign exchange gains or losses resulting from international business transactions.
Premises:
An arrangement in which a U.S. firm lends dollars to a foreign affiliate in the U.S. while that affiliate's parent company lends its own currency to the U.S. firm's affiliate in that country.
The possibility of experiencing a drop in revenue or increase in cost in an international transaction due to a change in foreign exchange rates.
Net income forwarded from the foreign affiliate to the parent company.
A written promise made by an IMPORTER'S bank to an EXPORTER to pay for merchandise.
An instrument which may be used to protect against foreign exchange risk.
Currency exchange rates tend to vary inversely with their respective purchasing powers in order to provide the same or similar purchasing power in each country.
A government takeover of a foreign subsidiary's assets.
Losses and gains on the balance sheet of an MNC as a result of changing exchange rates.
The interplay between interest rate differentials and exchange rates.
A firm which does business across its national border.
A parent company's loan to its foreign subsidiary through a large international bank.
A system of government accounts that catalogs the flow of economic transactions between the residents of one country and those of other countries.
The relationship between the values of two currencies.
Foreign exchange gains or losses resulting from international business transactions.
Responses:
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