Glossary for International Finance
Bottom of Form Glossary for International Finance Absolute Purchasing Power Parity (PPP) A theory stating that the exchange rate equalizes the price of a market basket of goods in the two countries. Since the composition of market baskets and price indexes varies substantially across countries, and because many goods are non-traded or are subject to tariffs, it is unlikely that absolute PPP will hold in the real world. Adaptive Expectations A model of price behavior in which expectations of the future spot price are formed from a weighted average of the current spot price and lagged expected prices. African Development Bank (AfDB) A regional development bank for Africa established in 1964 and located Abidjan , Ivory Coast . Agency Theory A theory of firms that deals with the conflict of interest between managers and stockholders. Agent Bank A bank appointed in a syndicated credit to oversee the loan. Allocational Efficiency A state in which resource allocation is optimal ...