TRANSLATION
GLOSSARY
F
48-HOUR DOLLAR EXCHANGE RATE
Interbank exchange rate wholesale, also called Spot. Most of interbank operations in
U.S. dollars are conducted in this mode, providing a margin of two business days to
cover the operation. This type of exchange, as parity of reference, reflects
expectations of banking brokers.
FACTORING
This word exists in Spanish, but nobody uses it and instead has adopted the English
word factoring.
Financial activity under the General Law on Organization and Auxiliary Credit
Activities, whereby is established a credit agreement to obtain immediate liquidity,
as a lump sum or line of credit; the guarantee of that loan in assignment of a
factoring company (who provides the service) of the value of documents
(receivables) generated by the production of goods and/or service provision of the
billed (the receiver of credit).
The financial cost of factoring is the one assumed by the services billed for the
management and collection of receivables, as well as for the risk for non-payment
of agency documents.
FEASIBILITY STUDY
When a Bank is asked to finance a specific project, it is customary and desirable to
present a feasibility study for the project.
FIDUCIARY
Financial institution expressly authorized by law, which has the ownership of the
property or rights in trust. Is in responsible for the management of trust assets by
exercising statutory rights received from the trustor, to provide the necessary to
safekeeping the constituted equity and compliance with the trustor’s objectives or
instructions.
FIELD OF COMPETENCE
Exercising jurisdictional authority that a body practices within a framework of
action, the same that determines the limits and scopes of its actions.
FINAL OPERATIONS
Spot or forward transactions whose contracts cannot be amended after is closure.
No. Ref: SG-TRAD-2010156
Prepared by: S.L. de Sánchez
Date: 22/06/2010
TRANSLATION
FINANCIAL ACTIVITY
The set of transactions made in the market for buyers and sellers of financial
resources, including those operations involved in the formation of currency and
capital markets.
FINANCIAL ANALYSIS
Procedure used to evaluate the structure of the sources and uses of financial
resources. Is applied to establish the modalities under which the money flows are
moving, and explain the problems and circumstances that influence them.
FINANCIAL BROKER
Legally constituted institutions that facilitate transactions in the financial market.
FINANCIAL BROKERAGE
Intervention function carried out by national credit institutions, auxiliary organisms,
insurance and bond institutions, and other institutions or entities legally authorized
to become links, between the creditor of financing and the borrower, obtaining a fee
for its work to entering into credit in the national and international currency
markets.
FINANCIAL COMPANY
A financial company is usually referred to as only financier. Its main activities can
be the granting of small and medium loans, organizing syndicated loans, spot and
futures exchange transactions, swaps purchase and sale of securities (bonds,
stocks, etc.)
FINANCIAL COST
It consists of the costs of raising financing funds, which is why it represents the
expenditures to cover the national or foreign currency, interests, fees, and expenses
derived from a security or respective contract, outlining the specific conditions and
agreed rates; are calculated on the capital amount and must be covered during a
certain period of time. This includes exchange rate fluctuations and currency
position results.
FINANCIAL CREDIT AGREEMENT
It is the loan granted to acquire raw materials, equipment and payment of wages,
salaries, and direct operating expenses.
FINANCIAL EXPENSES
All those expenses incurred as a result of financing a company with external
resources. In the account of financial expenses are included among others the
interest on debentures and bonds, interest on debt, interests on discount,
differences of exchange losses, and are also included the expenses for losses of
financial assets value.
No. Ref: SG-TRAD-2010156
Prepared by: S.L. de Sánchez
Date: 22/06/2010
TRANSLATION
FINANCIAL GROUPS
Associations of intermediaries of various kinds, with legal recognition that are
committed to follow common policies and to jointly respond for their losses.
Financial groups are composed of a holding company and at least three of the
following entities: general warehouses, financial leasing, stock exchange, foreign
exchange, financial factoring companies, commercial banks, securities institutions,
and insurance companies.
The Law on Credit Institutions and the Law to Regulate Financial Groups allow other
forms of partnership between brokers, but only the financial group is allowed the
union of banks with stock exchanges and insurance companies; this means, the
three types of key intermediaries.
FINANCIAL HIERARCHY
Classification of the different funding sources, both own as external, depending on
variables such as cost, capital return formulas, securities, risks, and so on.
FINANCIAL INFORMATION
Dataset issued in connection with activities resulting from the use and management
of financial resources allocated to an institution.
It is the information showing the relationship between rights and duties of the
agency or entity, as well as the composition and variation of its capital in a given
period.
FINANCIAL INSTITUTION
An entity involved in financial markets and whose business activity consists on
attracting or brokering funds from the public and invest them in assets such as
securities, bank deposits, etc.
FINANCIAL LEASE
It is a contract under which is granted the temporary use or enjoyment of tangible
goods, as long as it meets with the following requirements: 1. To establish a force
period equal or not less than the minimum to derive the investment in terms of tax
provisions or when the term is lower, to allow the person receiving the property,
which at the deadline exercises any of the following options: a) transfer ownership
of the goods to the contract by paying a certain amount, which should be lower to
the market value of the property at the time of exercising the option; b) extend the
contract for a determine period of time during which payments will be for an
amount less than the set during the initial term of the contract; and c) get
something from the sales price of the property to a third party; 2. The reconvention
is equal or above the value of the property when granting its use or enjoyment; and
3. To establish an applicable interest rate to determine payments and the contract is
made in writing.
No. Ref: SG-TRAD-2010156
Prepared by: S.L. de Sánchez
Date: 22/06/2010
TRANSLATION
FINANCIAL OPERATION
Contracting a financial service or product; is distinguished from the commercial
operations because it does not necessarily involve direct sale or purchase of a
tangible good, but easy access to monetary resources to carry out various
operations.
FINANCIAL SECTOR
Set of entities or public and/or private institutions engaged in credit, securities,
insurance and financial activities, among others.
FINANCIAL SITUATION
Statement of assets, liabilities and net equity of a company at a given moment as it
is stated on the balance sheet.
FINANCING
The set of financial monetary resources to carry out an economic activity, with the
characteristic that is usually of borrowed sums that complement their own
resources.
It is the credit agreement that is intended for the procurement of raw materials,
payment of wages, and direct operating expenses for the promotion of a business.
FIXED ASSET
Properties, material goods or rights in the normal course of businesses that are not
intended for sale, but represent the investment of capital or equity of an agency or
entity that uses it, permanently or semi-permanently, in production or
manufacturing of goods for sale or provision of services to the entity itself,
customers or general public. For example: machinery of manufacturers; facilities
and equipment of public service companies; furniture and fixtures of businesses;
cost of concessions and rights, etc. Also are included in fixed assets the investments
in shares, bonds, and securities issued by affiliated companies. The item “fixed
asset” implies the fixity of purpose or intention to continue using or possessing
goods covered; denotes restrain in the service of business. Eventually, such assets
can be sold or discharged either they are considered not useful, because they are
replaced by new facilities or other causes similar to those exposed. Expenditures are
made to improve the value of a property or service to be effective, can be
considered as fixed investments. From a narrow point of view, can only capitalize
those expenditures aimed at increasing reviews or decreasing expenses.
The “fixed asset” is classified into three groups: a) “tangible”, which includes
properties or goods that can be touched, such as land, buildings, machinery, etc.;
b) “intangible”, which includes things that cannot be physically touched, such as
patent rights, right of way, commercial credit, the value of certain concessions, etc.;
and c) investments in affiliated companies.
No. Ref: SG-TRAD-2010156
Prepared by: S.L. de Sánchez
Date: 22/06/2010
TRANSLATION
FIXED EXCHANGE RATE
The one established by the financial authorities as a fixed ratio between the value of
national currency and a commodity (for example, gold or silver) or a foreign
currency. Such commodity or currency is then said to serve as a standard.
FIXED INCOME SECURITIES
Titles eligible to receive a fixed income during the amortization period previously set
in the issuance.
Are the financial documents legally establishing the existence of a monetary debt
and an obligation to repay, with a fixed rate to a predetermined time period.
FIXED INTEREST
Interest rate which will remain unchanged throughout the duration of a deposit or
loan, this means, until its maturity.
FIXED RATE
Single percentage applied during the life of a loan granted to a customer or an
investment, under the agreed contract.
FLAT FEE or FLAT COMMISSION
The term is applied to indicate that the fee or commission will be charged once,
regardless of the duration of the operation which is charged. Therefore, flat fee is
different from the annual rate or pro temporis fee charged.
FLOATING EXCHANGE RATE
Rate resulting from act or intervene market forces.
FLOATING INTEREST
Floating interest could be thought of as the synonymous of adjustable interest. But
it is not, though there is close relationship between the two. While the adjustable
interest is changed voluntarily (usually in connection with the evolution of the
floating interest) by decision of the bank or financial institution that applies it to
some of their transactions, the floating interest fluctuates according to supply and
demand of money in the stock market. That is, the adjustable interest rate changes
periodically, while the floating interest rate fluctuates continuously.
Floating interest rate is the opposite of fixed interest rate.
FOREIGN BANK
It is made by all financial institutions which parent companies are abroad and are
governed by the laws of the countries to which they belong.
No. Ref: SG-TRAD-2010156
Prepared by: S.L. de Sánchez
Date: 22/06/2010
TRANSLATION
FOREIGN RESERVE
Gold, precious metals and convertible currencies reserves which a country has and
guarantees its solvency and liquidity in meeting the commitments of international
payments.
FOR LIFE
An adjective that describes that which has lasted since obtained or contracted until
the end of life. Usually applied to charges, fees, insurance, pensions, etc.
FORWARD OPERATIONS. See closing transactions.
FRANCHISE
Contract under which a company (franchisor) grants to another (franchisee) the
right to sell their products or provide services under the same corporate name or
brand, in a given territory, in exchange for financial compensation and commitment
to meet rules established.
FRAUDULENT BANKRUPTCY
Bankruptcy caused intentionally, by criminal means. It involves the willful
misconduct, misleading and distorted of the debtor, resulting in criminal liability.
FREE EXCHANGE
It is the one whose determination is solely to supply and offer of currencies. This
means, the price resulting from the free currency market.
FREE TRADE ZONE
Degree of integration of countries which suppose a further step to the system of
custom preferences or preferential regime, and that is the total elimination of trade
barriers between countries that signed the agreement, but with the maintenance by
each one of them of their own tariff to third countries.
FREE ZONE
Territory of a country clearly defined, usually located on the coast, and with an own
or nearby port, where they can get goods without paying customs duties, and where
they can set all kinds of industries with the sole condition to not harm the national
economy.
Surface of a national territory that, for customs purposes, is considered foreign
territory. The goods placed in it do not pay import taxes and can be easily reexported./Free port.
FREELANCE OCCUPATION
A freelance occupation is difficult to define precisely because it has many aspects
and elements that must be taken into account.
No. Ref: SG-TRAD-2010156
Prepared by: S.L. de Sánchez
Date: 22/06/2010
TRANSLATION
FRONT MAN
In a business or a company, the person who replaces another who, for whatever
reason, does not want to appear as party or holder.
In fact, the front man lends his name and takes risks on behalf of another. Usually,
receives or expect to receive compensation from the person being replaced.
FUNDING RATE
Rate obtained in the market for overnight lending.
FUNDRAISING
It is the process by which the financial system collects savings from the public and
uses them as source of the financial market. In the case of bank fundraising are
those resources banks obtain through collection instruments (checking accounts,
savings account, term deposits, etc.), which constitute the liabilities of the banking
system and include resources in domestic and foreign currency.
FUTURE
Contract whereby is established a commitment to buy or sell a commodity at a
specific date, at a prearranged price.
FUTURES CONTRACT
It is the one who held credit institutions when buying and selling foreign currency
futures, gold, or trust securities. The procedure to be followed for this kind of
operation is to open an account called “futures”.
The agreement whereby is established a commitment to buy or sell certain amount
of goods, currency or securities at a specified price at the future time. In this type
of contracts, the physical delivery of goods is unusual as only the profit or loss from
the price fluctuation is settled.
FUTURES OPERATIONS. See closing transactions.
--------------Sources:
Decree Law No. 9 of 26 February 1998 and its by-laws
Commercial Code
Encyclopedic Dictionary, Guillermo Cabanellas
Dictionary of Financial and Banking Terms, Robert Marcuse
Banking and Securities Dictionary, Armando Ibarra Hernández, Ed. Porrúa.
Dictionary of Business and Economics, Arthur Andersen, Ed. Espasa Calpe
No. Ref: SG-TRAD-2010156
Prepared by: S.L. de Sánchez
Date: 22/06/2010