English for Economists. Практикум

UNIT 11

1. Find in the text as much international words as you can and guess their meaning.

What are capital markets?

A capital market is an organized market in which both individuals and business entities (such as pension funds and corporations) sell and exchange debt and equity securities. This market is a key source of funds for an entity whose securities are permitted by a regulatory authority to be traded, since it can readily sell its debt obligations and equity to investors. Governments also use capital markets to raise funds, typically through the issuance of long-term bonds. Governments do not issue shares, and so cannot issue equity securities.

A capital market is intended to be for the issuance and trading of long-term securities. When a publicly held company sells its securities in the capital markets, this is referred to as primary market activity. The subsequent trading of company securities between investors is known as secondary market activity.

Short-term securities are traded elsewhere, such as in the money market. Examples of highly organized capital markets are the New York Stock Ex-

change, American Stock Exchange, London Stock Exchange, and NASDAQ. Securities can also be traded "over the counter," rather than on an organized exchange. These securities are usually issued by entities whose business fundamentals (such as revenue, capitalization, and profitability) do not meet the minimum standards of a formal exchange, which forces investors to use other avenues to trade the securities.

Capital markets are highly interconnected, so a disturbance in a capital market on the other side of the globe will likely impact trading in markets located in other countries.

The Securities and Exchange Commission (SEC) is an example of a federallevel agency that regulates the reporting of information by any entity that wishes to issue securities in a capital market, or have its securities traded in a capital market.

Vocabulary

Trade — обменивать, торговать.

Issuance — выпуск.

Subsequent — последующий.

Ver the counter — внебиржевой.

Evenue —доход, выручка.

Disturbance — нарушение, беспорядок.

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Exercise 1. Match the words from column A with the words from B to make phrases from the text:

Exercise 2. Find words and word-combinations in the text that mean the following:

1.A type of retirement plan, usually tax exempt, wherein an employer makes contributions toward a pool of funds set aside for an employee's future benefit.

2.The business of buying and selling commodities, products, or services; commerce.

3.The act of making something available or distributing something: the act of issuing.

4.The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise.

5.An occurrence in which people give things of similar value to each other: the act of giving or taking one thing in return for another thing.

6.One whose primary objectives are preservation of the original investment (the principal), a steady income, and capital appreciation.

7.Something valuable that an entity owns, benefits from, or has use of, in generating income.

8.A final product or end result; consequence; issue.

Exercise 3. Read the text again and answer the questions:

1.What do governments use the capital markets for?

2.What do we call primary market activity and secondary market activity?

3.What examples of capital markets are mentioned in the text?

4.Why are capital markets highly interconnected?

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UNIT 12

1. Work on the vocabulary of the article and find in the text the words with the same meaning of the following:

What is financial analysis?

Financial analysis is the examination of financial information to reach business decisions. This analysis typically results in the reallocation of resources to or from a business or a specific internal operation.

This type of analysis applies particularly well to the following situations:

Investment decisions by external investor. In this situation, a financial analyst or investor reviews the financial statements and accompanying disclosures of a company to see if it is worthwhile to invest in or lend money to the entity. This typically involves ratio analysis to see if the organization is sufficiently liquid and generates a sufficient amount of cash flow. It may also involve combining the information in the financial statements for multiple periods to derive trend lines that can be used to extrapolate financial results into the future.

Investment decisions by internal investor. In this situation, an internal analyst reviews the projected cash flows and other information related to a prospective investment (usually for a fixed asset). The intent is to see if the expected cash outflows from the project will generate a sufficient return on investment. This examination can also focus on whether to rent, lease, or purchase an asset.

The key source of information for financial analysis is the financial statements of a business. The financial analyst uses these documents to derive ratios, create trend lines, and conduct comparisons against similar information for comparable firms.

The outcome of financial analysis may be any of these decisions:

Whether to invest in a business, and at what price per share.

Whether to lend money to a business, and if so, what terms to offer.

Whether to invest internally in an asset or working capital, and how to finance the acquisition.

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Financial analysis is one of the key tools needed by the managers of a business to examine how their organization is performing. For this reason, they are constantly querying the financial analyst about the profitability, cash flows, and other financial aspects of their business.

Vocabulary

Reach — достигать.

Apply — относиться.

Involve — включать.

Derive — получать, извлекать.

Generate — создавать.

Extrapolate — обобщать.

Asset — имущество, активы.

Outflow — вытекать.

Outcome — результат.

Query — запрашивать.

Exercise 1.

1. Match the words as they occur together in the text:

2. Find the sentences with these word-combinations and give literary translation.

Exercise 2. Complete the sentences using the words from the table:

Sufficient, involved, generate, review, derive, asset, decision

1.It is the … of this court that the appeal is granted.

2.Tom could use a little extra time to … for the upcoming test.

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3.I don't want to get … in that business.

4.Since the car was an … that Joe owned, it was the first thing seized by the bank when he could not pay off his loans.

5.For example, an organization might need to regularly … customized Word documents for both users and customers.

6.He has a … income to support his family to buy everything they need.

7.The river … its name from a Native American tribe.

Exercise 3. Give a short summary of the text.

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GLOSSARY

ATM card — a card that allows you to get basic financial services from an automated teller machine.

Bank — an establishment for lending, borrowing, exchanging, and safeguarding money.

Capital — human-made items, such as machines and tools, that are used to produce goods and services.

Certificate of deposit (CD) — a debt instrument from a financial institution. When you purchase a CD from your credit union (usually some multiple of $500 or $1,000), you're lending the institution an amount of money for a specific period for which you'll earn a specific amount of interest. If you want your money back early, you'll usually have to pay a penalty.

Checking account — an agreement that allows you to write a check for payment from deposits in a financial institution. Some credit unions call a checking account a share draft account.

Consumer — someone who buys and uses goods and services.

Credit union — a not-for-profit financial cooperative whose members own it. You are eligible to join a particular credit union if you belong to the field of membership defined in its charter. All members have the right to democratically elect a board of directors. Historically, credit unions encourage thrift among members and provide them with credit at a low rate.

Customer service — the services and manner in which a business performs for its customers.

Debt — money owed when you or a government buy something or credit or borrow money.

Debit card — a plastic card that you can use like a credit card. The difference is that a credit card lets you borrow money for a purchase, while a debit card makes payment immediately and electronically from your checking account or savings account; also called a "check card" or "cash card".

Deposit — money you place in a savings account at a financial institution or to put money into your credit union account.

Economics — the study of how people, businesses, and governments choose to use their limited (scarce) resources.

Economic system — the way that a country or culture produces and distributes goods and services.

Employer — a person or company for whom other people work for pay.

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Employee — a person who works for another in return for pay.

Income — the money a person gets from salary or wages, profits, interest, investments, and other sources.

Interest rate — a percentage that tells what borrowed money will cost or what savings will earn. An interest rate equals interest earned or charged per year divided by the principal amount and expressed as a percentage. In the simplest example, a 5% interest rate means that it will cost you $5 to borrow $100 for a year or you'll earn $5 for keeping $100 in a savings account for a year. (It is more complicated when the financial institution uses a daily or monthly interest rate).

Loan — an agreement in which a lender gives money or property to a borrower who has to repay or return it, with interest, at a specified time.

Mortgage — legal agreement that conveys the conditional right of ownership on an asset or property by its owner (the mortgagor) to a lender (the mortgagee) as security for a loan.

Online Bank — a bank which has few, if any, physical locations, that performs traditional banking services via the Internet, typically at reduced rates and fees.

Online banking — a system allowing individuals to perform banking activities at home, via the Internet. It allows customers to perform all routine transactions, such as account transfers, balance inquiries, bill payments, and stop-payment requests. Some even offer online loan and credit card applications. Account information can be accessed anytime, day or night, and can be done from anywhere.

Overdraft protection — a line of credit established when a checking account is opened to protect the account holder from bouncing a check. Should the account holder write a check exceeding her/his account balance, the financial institution draws on the line of credit to fully clear the check. The account holder pays interest on those funds.

Partnership — an arrangement in which two or more individuals share the profits and liabilities of a business venture.

Profit — the money a business makes after expenses are paid. Property tax -- tax on land and property.

Safe deposit box — a container in a secure vault that is rented to individuals for the safekeeping of personal valuables.

Savings — money that is put away to be used later.

Savings account — a business agreement in which a credit union or other financial institution agrees to hold and pay interest on money you've deposited. Using standard forms from the financial institution, you may withdraw some or all of your money. You can write a share draft or check to get these funds.

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Savings and loan (S&L) — a business, with a state or federal government charter, that takes deposits from individuals and uses them to make loans, especially mortgage loans. Depositors or shareholders receive part of an S&L's profits as a return on their investment in the S&L, represented by the money they've deposited or the stock that they've purchased.

Service fees — a charge or fee a bank charges for handling checking accounts and performing other financial services to its customers.

A sole proprietorship — an unincorporated business with a single owner who pays personal income tax on profits earned from the business.

Taxes — generally an involuntary fee levied on individuals or corporations that is enforced by a government entity, whether local, regional or national in order to finance government activities.

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2. Choose the correct answer:

1.A person that combines land, labor, and capital to start a business: a) capital;

b) consumer; c) entrepreneur.

2.The most desirable alternative given up as the result of a decision: a) efficiency;

b) opportunity cost; c) marginal.

3.An economic system in which the central government makes all the decisions on the production and consumption of goods and services:

a) communism;

b) command system; c) market system.

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4.A political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government:

a) communism; b) market system; c) capitalism.

5.The price paid for use of borrowed money:

a)marginal;

b)interest;

c)productivity.

6.Possibilities made for production: a) factors of production;

b) product possibilities; c) allocation.

7.The effort that people devote to a task for which they are paid: a) opportunity cost;

b) efficiency; c) labor.

8.Someone who produces something:

a)consumer;

b)producer;

c)entrepreneur.

9.Specialization of cooperative labor: a) factors of production;

b) division of labor; c) efficiency.

10.Land, labor, and capital:

a)product possibilities;

b)factors of production;

c)capital.

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