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Study Guide Chapter 7

Study Guide Chapter 7 - Chapter 7 Review Definitions...

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Chapter 7 Review Definitions Examples and Questions Concepts Loans are profolio investmnets Recession: a sharp slowdown in the rate of economic growth and economic activity. Default: to fail to make payments on a debt. Foreign Direct Investment: investment and corresponding management control by a corporation in a foreign affiliate, through a merger, acquisition, or greenfield investment. toyota opens a truck facotyr in Thaniland. Investors maintain managerial control and bear the full long tem risj of the investment Foreign banks considered the U.S. housing market a stable asset. Banks often bundled together many mortgages and sold them in securities markets to buyers from around the globe. Large sums of money crossed borders, often with borrowers knowing no details of the collateral and borrowers ignorant of who held their debt International Monetary Fund: the international organization that provides loans of last resort to back a country’s currency in times of crisis. Lost Decade: tough economic times Latin American countries experienced after the 1982 onset of the debt crisis. Foreign and domestic banks that lent to U.S. homeowners lost all balance on their balance sheets. In turn, the banks appealed for government bailouts, often financed by selling government bonds abroad.
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