INTB 200 EXAM 1- 2 STUDY GUIDE
international business - Answers - business that has operations in at least one foreign
country (products are localized)
Global business - Answers - a business selling their in product in multiple countries
where they do not localize products (such as raw materials)
multinational corporation - Answers - when a firm invests resources in business
activities outside its home country
globalization of markets - Answers - Moving away from an economic system in which
national markets are distinct entities, isolated by trade barriers and barriers of distance,
time, and culture, and toward a system in which national markets are merging into one
global market.
globalization of production - Answers - Trend by individual firms to disperse parts of
their productive processes to different locations around the globe to take advantage of
differences in cost and quality of factors of production.
International Monetary Fund - Answers -
World Bank - Answers - makes loans to countries for economic development, trade
promotion, and debt consolidation
World Trade Organization - Answers - Polices world trading system and ensures
nations adhere to the rules established in treaties made
democracy - Answers - government run by the people
Totalitarianism - Answers - one person/political party controls every aspect of public and
private life
socialism - Answers - a political theory advocating state ownership of industry
common law - Answers - A legal system based on custom and preceding court rulings
civil law - Answers - A legal system based on a written code of laws
theocratic law - Answers - legal system based on religious teachings
, representative democracy - Answers - elected representatives vote on behalf of
constituents
market economy - Answers - the goods and services that a country produces, and the
quantity in which they are produced is determined by supply and demand
command economy - Answers - the goods and services that a country produces, the
quantity in which they are produced, and the price at which they are sold are all planned
by the government
mixed economy - Answers - an economic system combining private and public
enterprise (electricity as a government-run utility, for example)
International Monetary Fund - Answers - an agency to promote trade by increasing the
exchange stability of the major currencies
free trade - Answers - where a government does not attempt to influence through
quotas or duties what its citizens can buy from another country or what they can
produce and sell to another country
Translation Risk - Answers - -- Past
-- The risk of changes in the reported home currency on the balance/account sheets
due to changes in exchange rates
-- Won't really affect the transaction itself because the exchange already took place
Transaction Risk - Answers - -- Present
-- The risk associated with fluctuating exchange rates and the time delay between
entering into a contract and settling it
-- Takes place during the deal because currencies are constantly changing and may
change in a negative way for your currency
Economic Risk - Answers - -- Future
-- The risk associated with macroeconomic events such as political or economic
volatility, government regulation, or exchange rates in the other country that may affect
your investment in the future
Spot Rate - Answers - -- The current exchange rate
-- Changes every second
Forward Rate - Answers - -- The exchange rate at which investors agree to exchange
one currency at for another at a future date
-- Used to protect against risk
Spread - Answers - The difference between the asking price (the price the seller sets;
the lowest price the seller is willing to sell at) and the bid price (the price that the buyer
is willing to pay; the highest a buyer is willing to pay)
international business - Answers - business that has operations in at least one foreign
country (products are localized)
Global business - Answers - a business selling their in product in multiple countries
where they do not localize products (such as raw materials)
multinational corporation - Answers - when a firm invests resources in business
activities outside its home country
globalization of markets - Answers - Moving away from an economic system in which
national markets are distinct entities, isolated by trade barriers and barriers of distance,
time, and culture, and toward a system in which national markets are merging into one
global market.
globalization of production - Answers - Trend by individual firms to disperse parts of
their productive processes to different locations around the globe to take advantage of
differences in cost and quality of factors of production.
International Monetary Fund - Answers -
World Bank - Answers - makes loans to countries for economic development, trade
promotion, and debt consolidation
World Trade Organization - Answers - Polices world trading system and ensures
nations adhere to the rules established in treaties made
democracy - Answers - government run by the people
Totalitarianism - Answers - one person/political party controls every aspect of public and
private life
socialism - Answers - a political theory advocating state ownership of industry
common law - Answers - A legal system based on custom and preceding court rulings
civil law - Answers - A legal system based on a written code of laws
theocratic law - Answers - legal system based on religious teachings
, representative democracy - Answers - elected representatives vote on behalf of
constituents
market economy - Answers - the goods and services that a country produces, and the
quantity in which they are produced is determined by supply and demand
command economy - Answers - the goods and services that a country produces, the
quantity in which they are produced, and the price at which they are sold are all planned
by the government
mixed economy - Answers - an economic system combining private and public
enterprise (electricity as a government-run utility, for example)
International Monetary Fund - Answers - an agency to promote trade by increasing the
exchange stability of the major currencies
free trade - Answers - where a government does not attempt to influence through
quotas or duties what its citizens can buy from another country or what they can
produce and sell to another country
Translation Risk - Answers - -- Past
-- The risk of changes in the reported home currency on the balance/account sheets
due to changes in exchange rates
-- Won't really affect the transaction itself because the exchange already took place
Transaction Risk - Answers - -- Present
-- The risk associated with fluctuating exchange rates and the time delay between
entering into a contract and settling it
-- Takes place during the deal because currencies are constantly changing and may
change in a negative way for your currency
Economic Risk - Answers - -- Future
-- The risk associated with macroeconomic events such as political or economic
volatility, government regulation, or exchange rates in the other country that may affect
your investment in the future
Spot Rate - Answers - -- The current exchange rate
-- Changes every second
Forward Rate - Answers - -- The exchange rate at which investors agree to exchange
one currency at for another at a future date
-- Used to protect against risk
Spread - Answers - The difference between the asking price (the price the seller sets;
the lowest price the seller is willing to sell at) and the bid price (the price that the buyer
is willing to pay; the highest a buyer is willing to pay)
