American Depository Receipt (ADR) | A security issued in the United States to represent shares of a foreign stock, enabling that stock to be traded in the United States.
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cross rate | The exchange rate between two foreign currencies, neither of which is generally the U.S. dollar.
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Eurobanks | Banks that make loans and accept deposits in foreign currencies.
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Eurobonds | An international bond sold primarily in countries other than the country in whose currency the issue is denominated.
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Eurocurrency | Money deposited in a financial center outside of the country whose currency is involved.
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Eurodollar | A dollar deposited in a bank outside the United States.
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European Currency Unit (ECU) | An index of foreign exchange consisting of about 10 European currencies, originally devised in 1979.
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exchange rate | Price of one country's currency for another's.
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foreign bonds | An international bond issued by foreign borrowers in another nation's capital market and traditionally denominated in that nation's currency.
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foreign exchange market | Market in which arrangements are made today for future exchange of major currencies; used to hedge against major swings in foreign exchange rates.
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forward-exchange rate | A future day's exchange rate between two major currencies.
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forward trades | An agreement to buy or sell based on exchange rates established today for settlement in the future.
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gilts | British and Irish government securities.
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interest-rate–parity theorem | The interest rate differential between two countries will be equal to the difference between the forward-exchange rate and the spot-exchange rate.
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law of one price (LOP) | A commodity will cost the same regardless of what currency is used to purchase it.
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London Interbank Offered Rate (LIBOR) | Rate the most creditworthy banks charge one another for large loans of Eurodollars overnight in the London market.
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purchasing-power parity (PPP) | Idea that the exchange rate adjusts to keep purchasing power constant among currencies.
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relative purchasing-power parity (RPPP) | Idea that the rate of change in the price level of commodities in one country relative to the price level in another determines the rate of the exchange rate between the two countries' currencies.
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spot-exchange rate | Exchange rate between two currencies for immediate delivery.
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spot trades | An agreement on the exchange rate today for settlement in two days.
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swap rate | The difference between the sale (purchase) price and the price to repurchase (resell) it in a swap.
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swaps | Exchange between two securities or currencies. One type of swap involves the sale (or purchase) of a foreign currency with a simultaneous agreement to repurchase (or sell) it.
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triangular arbitrage | Striking offsetting deals among three markets simultaneously to obtain an arbitrage profit.
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Yankee bonds | Foreign bonds issued in the United States by foreign banks and corporations.
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