Financial Terms related to Foreign This document is part of the valuable contents available at www.ftpall.com, a free online glossary with more than five thousand financial and business terms. This document can be copied and distributed freely Find thousands of financial terms at www.ftpall.com respecting its original format. It is forbidden its transcription, translation or change on its format without authorization of its author or editor. FOREIGN Controlled foreign corporation • Abbreviated CFC. A foreign corporation whose voting stock is more than 50% owned by U.S. stockholders, each of whom owns at least 10% of the voting power. Currencies and major foreign market hedge funds • Invest in securities and derivatives which go across borders. These funds try to capitalize on interest rate differentials between currencies, varying investment climates for different countries, relative volatilities in equity or credit markets, and variations of the other hedge fund themes. Foreign • A non U.S. company with securities trading on The NASDAQ Stock Market. Foreign affiliate • A foreign corporation in which the MNC owns at least 10 percent of the common shares. www.ftpall.com 2|Page Foreign banking market • That portion of domestic bank loans supplied to foreigners for use abroad. Foreign bond • A bond issued by a nondomestic borrower in the domestic capital market. • A bond issued in a host country's financial market, in the host country's currency, by a foreign borrower. An international bond that is sold primarily in the country of the currency of the issue. Find thousands of financial terms at www.ftpall.com • A bond issued on the domestic capital market of anther company. Foreign bond market • That portion of the domestic bond market that represents issues floated by foreign companies to governments. Foreign currency • Foreign money. Foreign currency effects • Returns on foreign investments will increase (in terms of dollars) to the extent a foreign currency appreciates relative to the dollar. The opposite would be true for declining foreign currencies. Foreign currency option • An option that conveys the right to buy or sell a specified amount of foreign currency at a specified price within a specified time period. Foreign currency translation • The process of restating foreign currency accounts of subsidiaries into the reporting currency of the parent company in order to prepare consolidated financial statements. www.ftpall.com 3|Page Foreign direct investment • FDI. The acquisition abroad of physical assets such as plant and equipment, with operating control residing in the parent corporation. • Abbreviated FDI. The transfer by a multinational firm of capital, managerial, and technical assets from its home country to a host country. Foreign equity market • That portion of the domestic equity market that represents issues floated by foreign Find thousands of financial terms at www.ftpall.com companies. Foreign exchange • Currency from another country. • Refers to currencies other than the United States dollar. It also refers to transactions, activities, and operations for trading, hedging, and investing in multiple currencies. Foreign exchange controls • Various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents. Foreign exchange dealer • A firm or individual that buys foreign exchange from one party and then sells it to another party. The dealer makes the difference between the buying and selling prices, or spread. Foreign exchange fx risk • The risk that a long or short position in a foreign currency might, due to an adverse movement in the relevant exchange rate, have to be closed out at a loss. The long or short position may arise out of a financial or commercial transaction. Foreign exchange manager www.ftpall.com 4|Page • The manager responsible for monitoring and managing the firm's exposure to loss from currency fluctuations. Foreign exchange rate • The value of two currencies with respect to each other. • The price at which one currency trades for another. Foreign exchange risk • This refers to the possibility of losing money due to changes in exchange rates. Net Find thousands of financial terms at www.ftpall.com Foreign Exchange Exposure will create a FX risk even if the bank is perfectly hedged with respect to duration, credit risk, etc. • The risk that a long or short position in a foreign currency might have to be closed out at a loss due to an adverse movement in the currency rates. Foreign exchange swap • An agreement to exchange stipulated amounts of one currency for another currency at one or more future dates. Foreign market • Part of a nation's internal market, representing the mechanisms for issuing and trading securities of entities domiciled outside that nation. Compare external market and domestic market. Foreign market beta • A measure of foreign market risk that is derived from the capital asset pricing model. Foreign sales corporation • FSC. A special type of corporation created by the Tax Reform Act of 1984 that is designed to provide a tax incentive for exporting U.S.-produced goods. www.ftpall.com 5|Page Foreign subsidiary • An incorporated business established by an MNC that is completely separate from the parent. Foreign tax credit • Home country credit against domestic income tax for foreign taxes paid on foreign derived earnings. Integrated foreign subsidiary Find thousands of financial terms at www.ftpall.com • An operation that is financially or operationally interdependent with the parent company. Self sustaining foreign subsidiary • An operation that is financially and operationally independent of the parent company.