An agreement to exchange interest receipts or interest-payment obligations, usu. to adjust one’s risk exposure, to speculate on interest-rate changes, or to convert an instrument or obligation from a fixed to a floating rate — or from a floating to a fixed rate. • The parties to such an agreement are termed “counterparties.”
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cross-rate. The exchange rate between two currencies expressed as the ratio of two foreign exchange rates in terms of a common third currency (usu. the U.S. dollar). • Foreign-exchange-rate dealers use cross-rate tables to look for arbitrage opportunities. See ARBITRAGE.
International Monetary Fund. A U.N. specialized agency established to stabilize international exchange rates and promote balanced trade. — Abbr. IMF. [Cases: International Law 10.45. C.J.S. International Law §§ 59–65.]
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A company with operations in two or more countries, generally allowing it to transfer funds and products according to price and demand conditions, subject to risks such as changes in exchange rates or political instability. — Also termed transnational corporation.
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The simultaneous purchase of a currency in one market and sale of it in another to take advantage of differences or fluctuations in exchange rates.
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arbitrage (ahr-b[schwa]-trahzh), n. The simultaneous buying and selling of identical securities in different markets, with the hope of profiting from the price difference in those markets. — Also termed space arbitrage. [Cases: Securities Regulation 53.17(4). C.J.S. Securities Regulation § 153.] — arbitrager (ahr-b[schwa]-trazh-[schwa]r), arbitrageur (ahr-b[schwa]-trah-zh[schwa]r), n. covered-interest arbitrage. The simultaneous investment in a currency and
A tender offer in which the bidder offers to pay cash for the target’s shares, as opposed to offering other corporate shares in exchange. • Most tender offers involve cash. [Cases: Securities Regulation 52.30–52.50. C.J.S. Securities Regulation §§ 121–122, 127–128, 131–138, 140–141.]
The simultaneous investment in a currency and execution of spotand forward-rate foreign-exchange contracts to take advantage of exchange-rate and interest-rate differentials between currencies without assuming foreign-exchange risk.
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tender offer. A public offer to buy a minimum number of shares directly from a corporation’s shareholders at a fixed price, usu. at a substantial premium over the market price, in an effort to take control of the corporation. — Also termed takeover offer; takeover bid. Cf. public-exchange offer under OFFER. [Cases: Securities Regulation 52.30–52.50.
A conditional or partial acceptance that varies the original terms of an offer and operates as a counteroffer; esp., in negotiable instruments (bills of exchange), an acceptor’s variation of the terms of the instrument. [Cases: Bills and Notes 83. C.J.S. Bills and Notes; Letters of Credit § 38.]
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