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CBA 300 Exam 3
Terms & Definitions (no concepts)
| Term | Definition |
|---|---|
| arbitrage | the process of buying and selling instantaneously to make profit with no risk |
| ask price | lowest-priced sell order currently in the market |
| balance of payments (BOP) | record of a country's transactions with the rest of the world |
| Bank for International Settlements (BIS) | institution for central bankers; operates to build cooperation in order to foster monetary and financial stability |
| bid price | highest-priced buy order currently in the market |
| Bretton Woods System | the international monetary system in place from 1945 to 1971, with par value based on gold and the U.S. dollar |
| efficient market approach | assumption that current market prices fully reflect all available relevant information |
| fiscal policies | policies that address the collecting and spending of money by the government |
| Fischer effect | the relationship between real and nominal interest rates: the real interest rate will be the nominal interest rate minus the expected rate of inflation |
| fixed exchange rate | exchange rate regime in which the currency's value is tied to the value of another currency or gold |
| floating exchange rate | exchange rates determined by supply and demand that allow currency values to float against one another |
| forward currency market | trading market for currency contracts deliverable 30, 60, 90, or 180 days in the future |
| forward rate | the exchange rate between two currencies for delivery in the future, usually 30, 60, 90, or 180 days |
| fundamental approach | exchange rate prediction based on econometric models that attempt to capture the variables and their correct relationships |
| gold standard | a monetary system that defines the value of its currency in terms of a fixed amount of gold |
| international Fischer effect | concept that the interest rate differentials for any two currencies will reflect the expected change in their exchange rates |
| intervention currency | a currency used by a country to intervene in the foreign currency exchange markets |
| Jamaica Agreement | the 1976 IMF agreement establishing flexible exchange rates among IMF members |
| law of one price | concept that in an efficient market, like products will have like prices |
| monetary policies | government policies that control the amount of money in circulation and its growth rate |
| par value | stated value |
| purchasing power parity (PPP) | the amount of adjustment that must be made in the exchange rates for two currencies in order for them to have equivalent purchasing power |
| random walk hypothesis | assumption that the unpredictability of factors suggests that the best predictor of tomorrow's prices is today's prices |
| reciprocal currency | in FX, using the dollar as the base currency, a currency that is quoted as dollars per unit of currency instead of in units of currency per dollar |
| reserves | assets held by a nation's central bank, used to back up government liabilities |
| special drawing rights | an international reserve asset established by the IMF; the unit of account for the IMF and other international organizations |
| spot rate | the exchange rate between two currencies for delivery within two business days |
| technical analysis | an approach that analyzes data for tends and then projects these trends forward |
| Triffin paradox | a problem in which a national currency that is also a reserve currency will eventually run a deficit, leading to a lack of confidence in the reserve currency and a financial crisis |
| vehicle currency | a currency used as a vehicle for international trade or investments |
| bottom-up planning | planning process that begins at the lowest level in the organization and continues upward |
| budget | an itemized projection of revenues and expenses for a future time period |
| competitive advantage | the ability of a company to achieve and maintain a unique and valuable competitive position both within a nation and globally, generating higher rates of profit than its competitors |
| competitive strategies | action plans to enable organizations to reach their objectives |
| contingency plans | plans for the best or worst case scenarios or for critical events that could have a severe impact on the firm |
| explicit knowledge | knowledge that is easy to communicate to others via words, pictures, formulas, or other means |
| international strategy | a plan that guides the way firms make choices about developing and deploying scarce resources to achieve their international objectives |
| iterative planning | repetition of the bottom-up or top-down planning process until all differences have been reconciled |
| knowledge management | the practices that organizations and their managers use for identifying, creating, acquiring, developing, dispersing, and exploiting competitively valuable knowledge |
| mission statement | a broad statement that defines the organization's purpose and scope |
| policies | broad guidelines issued by upper management to assist lower level managers in handling recurring issued or problems |
| procedures | guides that specify ways of carrying out a particular task or activity |
| sales forecast | a prediction of future sales performance |
| scenarios | multiple, plausible stories about the future |
| strategic planning | the process by which an organization determines where it is going in the future, how it will get there, and how it will assess whether and to what extent it has achieved its goals |
| tacit knowledge | knowledge that an individual has but that is difficult to express clearly in words, pictures, or formulas and is therefore difficult to transmit to others |
| top-down planning | planning process that begins at the highest level in the organization and continues downward |
| value chain | a set of interlinked activities that add value to the final product or service |
| value chain analysis | an assessment conducted on the chain of interlinked activities of an organization or set of interconnected organizations, intended to determine where and to what extent value is added to the final product or service |
| values statement | a clear, concise description of the fundamental values, beliefs, and priorities expected of the organization's members, reflecting how they are to behave with each other and with the company's customers, suppliers, & other members of the global community |
| vision statement | a description of the company's desired future position if it can acquire the necessary competencies and successfully implement its strategy |
| big data | the huge sets of sets of data, structured & unstructured, that businesses collect; can be analyzed with advanced data analysis methods such as predictive analytics or user behavior analytics to provide valuable insights into consumer needs and trends |
| cluster analysis | statistical technique that divides objects into groups based on similarity |
| contracted manufacturing | an arrangement in which one firm contracts with another to produce products to its specifications |
| country screening | a screening that uses countries as the basis for market selection |
| environmental scanning | a procedure in which the firm scans the world for changes in the environmental forces that might affect it |
| franchising | a form of licensing in which one firm contracts with another to operate a business under an established name according to specific rules |
| joint venture | a cooperative effort among two or more organizations that share a common interest in a business undertaking |
| licensing | a contractual agreement in which one firm grants access to its patents, trade secrets, or technology to another for a fee |
| management contract | an arrangement by which one firm provides management to another firm |
| market factors | economic data that correlate highly with market demand for a product |
| market indicators | economic data used to measure relative market strength of countries or geographic areas |
| market screening | a modified version of environmental scanning in which the firm identifies desirable markets by eliminating the less desirable ones |
| segment screening | a screening that uses market segments, a within-country analysis of groups of consumers, as the basis for market selection |
| social desirability bias | the respondent's desire to please that leads to answers designed to please the interviewer rather than reflect the respondent's true feelings |
| strategic alliance | collaboration with competitors, customers, and/or suppliers that may take nonequity or equity form |
| trade fair | a large exhibition at which companies promote the sale of their products |
| trade mission | a market visit by businesspeople and/or government officials (state or federal) in search of business opportunities |
| trend analysis | statistical technique used to estimate future values by successive observations of a variable at regular time intervals that suggest patterns |
| turnkey project | an export of technology, management expertise, & capital equipment where a contractor agrees to design & erect a plant, supply the process technology, provide the production inputs, train the operating personnel, & turn the facility over to the purchaser |
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