capital market
system that allocated financial resources in the form of debt and equity according to their most efficient uses
debt
loan in which the borrower promises to repay the borrowed amount (the principal) plus a predetermined rate of interest
bond
debt instrument that specifies the timing principal and interest payments
equity
part ownership of a company in which the equity holder participates with other part owners in the company's future cash flows
stock
shares of ownership in a company's assets that give shareholders a claim on the company's future cash flows
liquidity
ease with which bondholders and shareholders may convert their investment into cash
international capital market
network of individuals, companies, financial institutions, and governments that invest and borrow across national boundaries
securitization
unbundling and repackaging of hard-to-trade financial assets into more liquid, negotiable, and marketable financial instruments
offshore financial center
country or territory whose financial sector features very few regulations and few if any taxes
eurobond
bond issued outside the country in whose currency it is denominated
foreign bond
bond sold outside the borrower's country and denominated in the currency of the country in which it is sold
international equity market
market consisting of all stock bought and sold outside the issuers home country
eurocurrency market
market consisting of all the world's currencies that are banked outside the countries of origin
interbank interest rates
interest rates that the world's largest banks change one another for loans
foreign exchanged market
market in which currencies are bought and sold and their prices determined
exchanged rate
rate at which one currency is exchanged for another
currency hedging
practice of insuring against potential losses that result from adverse changes in exchange rates