Unit XXIII

WORD-STUDY

Exercise 1. Check the transcription in the dictionary, read and translate the words listed below.

Nouns

offer, spread, percent, percentage, amount, quantities, yield.

Adjectives

competitive, enormous, whole, elaborate.

Verbs

quote, adjust, connect, complete, force.

Exercise 2. Make these adjectives negative by adding the prefix inand altering it to suit the

consonant which follows.

Model: a) legal – in + legal – illegal

b)probable – in + probable – improbable

c)regular – in + regular – irregular

practical, possible, responsible, mobile, proper, rational, legible, logical, personal, relevant

UNDERSTANDING A PRINTED TEXT

How are bonds traded?

Bonds are traded around the world twenty-four hours a day, usually in trading rooms of banks and securities houses that are connected by an elaborate system of electronic communications equipment. The largest international capital markets are based in London, New York, and Tokyo, but bonds are traded in almost every financial center in the world, from Paris to Bangkok, from Abu Dhabi to Vancouver.

Since it is difficult for bonds investors to find individual buyers and sellers, they usually go to professional “market-makers” who buy and sell their bonds for them. Although some bond trading takes place on public trading floors like stock exchange, most of the world’s fixed-income securities, or bonds, are traded by banks and securities houses acting as market-makers on behalf of their clients.

Bond markets are just like any others competitive market in that trades make money by buying for less and selling for more. To buy or sell a bond, an investor goes to a trader who makes a “market” with two prices: a “bid” price and an “offer” price. A trader makes money by buying bonds at the lower bid price and by selling them at the higher offer price. The difference between the two prices is called the spread.

Bond traders are forced by the market to keep their prices and spread competitive. Some markets are so competitive that the bid and offer prices are quoted in fractions of a percent, sometimes given as 1/32nds.

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