Exercises

Ex. 1. Answer these questions:

A. 1. What role do financial markets play?

2. In what ways do financial markets differ?

3. How can financial markets be classified?

4. In what ways can capital be raised?

5. What ways of raising capital are available for governments?

6. What is a bond?

7. How can the global bond market be subdivided?

8. In what forms can government bonds be issued? B. 1. What are the components of the Ukrainian financial market?

2. Are volumes of issuance big in the market?

3. Who are the main players in the bond market?

4. What tendencies have been registered in the market lately?

5. How will the introduction of the Euro affect the market?

Ex. 2. Give derivatives of:

different	serve	purchase	participate
existing	satisfy	need	important
measure	classification	trade	depend
experience	dominant	reliable	doubt
divide	refer

Еx. 3. Say in a few words what the main text is about.

Ex.4. Sum up the content of the main dialogue.

Ex. 5. Work on vocabulary and grammar.

a) Study the key words of the unit in the dictionary:

bond, maturity, debt financing, equity financing, placement, surplus, issue, trading, credit rating, investor, return, securities, liquidity;

b) Think of the verbs that are most commonly used with:

maturity, bond, stock, issue, investor, banks, return, depository, sale, credit rating, placement;

c) Think of the nouns that are most often used with:

to raise, to sell, to issue, to borrow, to trade, to divide, to float, to create, to participate, to develop, to attract, to negotiate, to mature, to place, to generate;

d) Make your own sentences with any five word combinations from (b) and (c).

e) Match the verbs from (a) with the nouns from (b) below:

a) to bring together to classify to underwrite to invest into to speed up to raise to broaden to rely on to enhance to issue

b) capital people issue debt financing role use real sector financial instruments placements bonds

Ex. 6.

a) Supply the articles where necessary.

b) Write down 3-5 questions about the text.

c) Explain how the Eurobond Market operates.

The Eurobond Market

The Eurobond Market is ... major source of corporate financing in … unregulated international capital market.

This market permits lenders to lend directly to borrowers across ...national borders.

The borrowers or issuers of the bonds include MNCs, public sector organizations, sovereign states and ... commercial banks. The lenders or purchasers of the bond securities are individual and institutional investors, with ... latter group dominating. Generally, purchasers buy Eurobonds in currencies other than their own and ... major attraction of these bonds for investors is that in most currencies they are anonymous bearer bonds that exempt individuals from capital gains and withholding taxes in their own domestic system.

Banks play a major role in ... Eurobond market by bringing together lenders and borrowers, underwriting the bond issue, selling or placing the bonds, supporting the secondary market in bonds, and managing the repayment of interest and capital to ... investors. The participating banks will receive ... fee for each of these services rendered to the borrower or investor.

The key to the market is ... established and high quality credit rating with an internationally recognised rating agency such as Moody's or Standard and Poor's.

Eurobonds, of whichever currency denomination, are listed in another country and trade independently of any domestic market. In recent years there has been ... continued rapid expansion of Eurobond issuance that has been one of... most significant developments in bond markets worldwide.

In this context, there was one more fast-growing market that deserves ... mention. It is the ECU (European Currency Unit) bond market which proved to be popular a few years ago and paved the way to the single Eurobond market.

Words you may need:

Англійський варіант	Російський варіант	Український варіант
MNC (multinational company)	многонациональная компания (корпорация)	багатонаціональна компанія (корпорація)
anonymous	безымянный, анонимный	безіменний,анонімний
Moody's (Investors Service)	ведущее агенство по установлению рейтингов ценных бумаг	ведуче агенство по встановленню рейтингів цінних паперів
Standard and Poor's (Corporation)	ведущая фирма по установлению рейтингов ценных бумаг	ведуча фірма по вста новленню рейтингів цінних паперів
list	зарегистрировать на бирже	зареєструвати на біржі
ECU	Eвропейская валютная	Європейська валютна
(European Currency Unit)	единица (ЭКЮ)	одиниця (ЕКЮ)

Ex.7.

a) Supply the prepositions where necessary.

b) Say what you have learnt about the debt market in India.

The door is slowly opening on India's debt markets. Foreign investors can now invest 100% of their Indian portfolios in corporate debt as against the 30% allowed previously. The market itself is booming. ... long-term debt worth Rs55 billion ($1.54 billion) raised by Indian corporate in the past few months and fixed-income returns overtaking those of equities, the market is ripe ... reform.

The driving force ... India's debt market reforms is the need to raise capital ... infrastructure projects. India needs ... about $300 billion ... the next 10 years for infrastructure alone. Only half of this can be raised from the commercial banks, the equity market, the government and multilateral agencies like the World Bank. The other half must come from its domestic debt markets. But the Indian debt market is too small to meet this requirement at the moment.

So the market is moving ... the right direction and bonds-not shares - are the hottest selling investments in India today. In the past, equity markets overshadowed debt markets ... both size and returns. While India's total stock market capitalization is still equal ... $138.6 billion, analysts say that investors are increasingly choosing bonds ... equity. Of the total Rsl6.74 billion raised from the capital markets in the month of August, 78% or Rsl3 billion was raised in debt floats. Returns ... debt are also higher than from equity.

In spite of the government's efforts, two major obstacles remain. The government bond market is still closed ... investment banks. The other problem is liquidity.

Besides, secondary market trading in debt is limited ... government securities and is done mainly on the wholesale debt market of the National Stock Exchange. Allowing market-making in government securities is the key ... creating an active secondary debt market in India.

Having this in mind the Reserve Bank of India - the Indian central bank-set ... a system of primary dealers or market government securities. But for debt trading to be successful, several structural changes need to be put in place, including setting up a depository and establishing a REPO market.

Words you may need:

Англійський варіант	Російський варіант	Український варіант
corporate debt	oблигации, выпущенные корпорацией	облігації, які випустила корпорація
The market... is booming.	Ha рынке … наблюдается повышение деловой активности	На ринку … спостерігається підвищення ділової активності
fixed-income return	доход по бумагам с фиксированным доходом	доход по паперам з фіксованим доходом
overtake	oбгонять	обганяти
ripe	готовый к чему-л.	готовий до чогось
overshadow	омрачать, затмевать	затьмарювати
capitalization	капитализация	капіталізація
debt float	выпуск долговых обязательств	випуск довгострокових зобов’язань
market-making	«делание рынка»	“створення ринку”
primary dealer	nepвичный дилер	первинний дилер
depository	депозитарий	депозитарій
REPO market	pынок РЕПО	ринок РЕПО

Ex. 8.

a) Open the brackets putting the verbs in the correct form. b) Explain the essence of public debt management in France.