BEC MCQ 6.3 Flashcards Preview

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Flashcards in BEC MCQ 6.3 Deck (17):
1

Globalization

Is described as a distribution of industrial and service activities across a increasing number of nations.
It is measured by world trade as a percentage of GDP

2

Economic systems

Centrally planned Economies, market economies, Conglomerates.

3

IMF

Do not regulate currency values

4

Global Economic balance of power

A distribution of power and influence that ensures that no one nation or group of nations will dominate or interfere with the activities of others

5

Three basic Risk preferences

Risk indifferent- Increase int he level of risk does not result in an increase in the managements required rate of return
Risk-averse- Increase in the level of risk results in an increase in management's required rate of return
Risk seeing behavior- Increase in level of risk results in the decrease in managements required rate of return

6

Diversifiable risk(Unique)

Non market, Unsystamatic or firm specific risk
Non diversable risk- Market or systematic risk

7

NAFTA offers trading partners operating its boundaries reductions in tariffs on products in exchange for compliance with limits on imported labor and materials

are known as sourcing requirement

8

Foreign trade zone

contemplates a physical location in which tariffs are waived on imported products until they leave a zone.

9

Value added tax

is an incremental tax, not a reduction in tarriffs

10

The concentration of power in one country

is referred to as unipolar.

11

Unilateral

The action taken by single nation acting on its own is referred to as unilateral . The distribution of power is a separate issue

12

Multilateral

refers to power that is not only distributed but shared cooperatively among nation

13

Bric Nations

Brazil, Russia, India and China whose overall economic activity represents an increasing components of world GDP and gradual shift in economic balance of power

14

Global Sourcing complication

Global sourcing is the use of world wide supply chain. The reduced production in US factories as a result of natural disaster in Japan is an example of the complications that come from global sourcing

15

Transaction risk

Transaction risk is the risk that the settlement of a specific transaction in a foreign currency will result in transactional loss

16

Economic Risk

Is the risk that the fluctuations in the exchange rate could have a negative impact on a company that either consistently sells to foreign customers or consistently buys from foreign vendors

17

Shift in the balance of economic power

releate to the shared and changing ability of countries to impact the world wide economy