Week 4 Glossary PDF

Economics 2162B: Week 4 Part I. Introduction to International Business and Finance Balance of payments (BOP) A statistical record that systematically summarizes, for a specific time period, all economic transactions of an economy with the rest of the world. Capital (Economics) Durable goods that a...

Economics 2162B: Week 4 Part I. Introduction to International Business and Finance Balance of payments (BOP) A statistical record that systematically summarizes, for a specific time period, all economic transactions of an economy with the rest of the world. Capital (Economics) Durable goods that are in turn used as productive inputs for further production of goods and services. Capital (Finance) Monetary assets required for a business to provide goods and services Capital account (KA) A record of economic transactions with non-residents in non- produced, nonfinancial assets (such as patents, copyrights, and licenses) and in capital transfers. Clearing The process of reconciling and confirming payment orders before settlement. Current account (CA) A record of economic transactions with non-residents in goods, services, income, and current transfers. Debt (Equity) financing The process of raising capital by selling debt (equity) instruments. Debt instrument Any contract that obligates the debtor to provide payment of principal or interest or both at some point(s) in the future. Derivative instrument A contract that derives its value from the performance of an underlying entity. Equity instrument Any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Economic transactions Transactions that comprise transfers of ownership, the rendering of services, and transfers of money and other investments. Eurocurrency market The money market for any currency deposited outside of its home market. Exchange The process of transmitting and issuing instructions for payments between participants. Finance The study of the allocation of economic resources both spatially and across time in an uncertain environment. Financial account (FA) A record of economic transactions with non-residents in external financial assets and liabilities. Financial globalization The integration of the world through cross-border capital flows. Financial institution A business entity that provides service as an intermediary to facilitate a financial transaction. Financial instrument Any contract that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity. Financial intermediary An intermediary that transforms the nature of financial transactions by lending the money to the ultimate borrowers but raising the money themselves from other lenders. Financial market Any market in which financial instruments are traded, including markets for money, bonds, equities, derivatives, and foreign exchange. Financial system A system consists of financial institutions, financial markets, and payment systems. Financial transaction An agreement between two or more parties to exchange money, goods, or services. Financing The process of obtaining money or capital to fund business activities, make purchases, or invest. Foreign exchange instrument A contract that converses one currency into another. Foreign exchange market An over-the-counter market for converting the currency of one country into that of another country. Global capital market A financial market of various countries in which long-term debt or equity-backed securities are brought and sold. Long-term debt A financial obligation with a maturity exceeding one year. Market intermediary An intermediary that facilitates the financial transactions directly from lenders to borrowers. Payment system A set of payment methods, procedures, rules and technology used to exchange money. Settlement The release of payment obligations between two or more parties.