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International equity are considered shares of companies, which are headquartered outside the United
States, for instance Research in Motion (Canada), BMW (Germany), UBS (Switzerland).
Some investors argue that adding international equities to a portfolio can reduce its risk due to regional
diversification.
An equity market is a market in which shares are issued and traded, either through exchanges or over-the-
counter markets. Also known as the stock market.
The foreign bond market includes the bonds that are sold in a country using that country's currency but
issued by a non-domestic borrower. For example, the Yankee bond market is the U.S. dollar version of
the market.
A financial institution (FI) is a company engaged in the business of dealing with financial and monetary
transactions such as deposits, loans, investments, and currency exchange. Financial institutions
encompass a broad range of business operations within the financial services sector including banks, trust
companies, insurance companies, brokerage firms, and investment dealers. Virtually everyone living in a
developed economy has an ongoing or at least periodic need for the services of financial institutions.
An international financial institution is a financial institution that has been established by more than one
country, and hence are subjects of international law.
Financial risk is a term that can apply to businesses, government entities, the financial market as a whole,
and the individual. This risk is the danger or possibility that shareholders, investors, or other financial
stakeholders will lose money.
There are several specific risk factors that can be categorized as a financial risk. Any risk is a hazard that
produces damaging or unwanted results. Some more common and distinct financial risks include credit
risk, liquidity risk, and operational risk.
103. IRR:
The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of
potential investments. The internal rate of return is a discount rate that makes the net present value (NPV)
of all cash flows from a particular project equal to zero.
The term internal refers to the fact that the calculation excludes external factors, such as the risk-free rate,
inflation, the cost of capital, or various financial risks. It is also called the discounted cash flow rate of
return.
105. LIBOR:
The basic rate of interest used in lending between banks on the London interbank market and also used as
a reference for setting the interest rate on other loans.
The London Interbank Offered Rate (LIBOR) is a benchmark interest rate at which major global banks
lend to one another in the international interbank market for short-term loans.
Long-term financing is usually needed for acquiring new equipment, R&D, cash flow enhancement, and
company expansion. Some of the major methods for long-term financing are Equity financing, corporate
bond, Capital notes etc.
M2 is a calculation of the money supply that includes all elements of M1 as well as "near money." M1
includes cash and checking deposits, while near money refers to savings deposits, money market
securities, mutual funds, and other time deposits. These assets are less liquid than M1 and not as suitable
as exchange mediums, but they can be quickly converted into cash or checking deposits.
M3 is a measure of the money supply that includes M2 as well as large time deposits, institutional money
market funds, short-term repurchase agreements and larger liquid assets. The M3 measurement includes
assets that are less liquid than other components of the money supply and are referred to as "near, near
money," which are more closely related to the finances of larger financial institutions and corporations
than to those of small businesses and individuals.
the marginal propensity to save (MPS) refers to the proportion of an aggregate raise in income that a
consumer saves rather than spends on the consumption of goods and services. Put differently, the
marginal propensity to save is the proportion of each added dollar of income that is saved rather than
spent. MPS is a component of Keynesian macroeconomic theory and is calculated as the change in
savings divided by the change in income, or as the complement of the marginal propensity to consume
(MPC).