3. Find the English equivalents.

ринок цінних паперів

Рада Директорів

податок

борг

акціонери

акція

зобов’язання

балансовий звіт

актив

прибутковий

4. Answer the questions:

1. What is a stock certificate?

2. What do certificates indicate?

3. In which forms could dividends be distributed?

4. Is equity financing a good way to raise long-term funds? Why do you think so?

5. What are the advantages of issuing stock?

6. What for are funds available?

7. What is “retained earnings”?

8. How can the company become stronger financially?

9. What are the disadvantages to selling equity?

1. What does the board of directors decide?

2. Is paying dividends tax deductible?

3. Why do managers often use short-term tactics?

5. Look at the term in the left-hand column and find the correct definitions in the right-hand column:

1. 2. 3.	stock certificate par value dividends		the purchase of stocks by borrowing some of the purchase cost from the broker
4. 5.	buying on margin stock splits		the part of the firm’s profits that goes to stockholders
			tangible evidence of stock ownership
			giving stockholders two or more shares for each one they own
			an arbitrary dollar amount printed on the front of a stock certificate; used to compute the dividends of preferred stock

Unit 15 International Finance

1. Read and memorize the following words and word combinations:

• ... in influencing standards of living – які впливають на життєвий рівень

• capital flows – потоки капіталу

• current account movements – рух фондів по поточному рахунку

• capital account movements – рух капіталу

• Balance of Payments favourable unfavourable – баланс платежів актив ний пасивний

• trade balance – торговий баланс

• the Balance of Payment is said to be in balance – тоді кажуть, що платіжний баланс у балансі

• debtor nation – країна-боржник

• creditor nation – країна-кредитор

• fluctuations in foreign currencies exchange rates – коливання курсів обміну іноземних валют

2. Read, translate and retell the text:

The history of the international financial system is a complex one. Throughout the XX century there has been an increase in international links through both trade flows and capital movements. This has led to a rise in thedegree of interdependence between different countries. As a result, the form of the international financial system has become more important in influencing standards of living in all countries throughout the world.

1. Capital flows. The movements of capital between countries are classified either as current account movements or capital account movements. Current account movements mean payments for imports and exports, as well as the payment of interest and dividends. During any year a given country will have either surplus or a deficit of current account transactions. Capital account movements mean buying or selling of securities in one country by citizens of another country. Such transactions will also result in a net surplus or deficit for a given country. A net deficit of both current account and capital account transactions represents the net financial resources that have flowed out of the country; a net surplus represents the financial resources that have flowed into a country. Trading, nations have developed an accounting concept, called balance of payments, which records a country's trade and capital movement in relation to other countries. The part of the balance of payments which records imports and exports is called thetrade balance. Deficits have to be financed. Large deficits can have a disturbing effect on a country's national economy (as inUkraine), and governments usually try to avoid them. Deficits are financed by borrowing from international organizations or by shipping gold or foreign money to the surplus country abroad. If the deficit has been financed and the surplus lent, the balance of payment is said to be in balance. Countries with a deficit are called debtor nations. Countries with a surplus are called creditornations.

2. Fluctuations in foreign currency exchange rates. All financial andeconomic transactions between countries are measured in terms of money. But each country has its own currency (dollars, marks, francs, etc.) in which it willdemand payment for net surpluses. The value of one currency relative to another depends on which country has a net deficit to the other. If Germany, for example, has a net surplus to Ukraine, the value of the German mark will rise relative to the hryvnia. This relative value is indicated by the exchange rate, which represents the cost of one unit of a given currency in terms of another. For example, an exchange of 5,6 hryvnias per dollar means that 5 hryvnias and 60kopeks must be paid to obtain one dollar. Exchange rates fluctuate over time depending on changes in the net deficit and surpluses of different countries. These fluctuations influence future deficits and surpluses. If, for example, Germany has a net deficit to Japan, the value of the mark will fall relative to the value of yen. It will take then more marks to buy yen and more marks for Germans to buy Japanese goods, causing German imports of Japanese goods to decline. The exchange rate is important because of its role in restoring a balance between deficit and surpluses in different countries. Capital movements are the field of exchange rate movements giving rise to interest rate (securities and currencies transactions at different stock exchanges).

3. The next field of the international finance is methods of payment that are agreed between the buyer and the seller (a. payment in advance, b. different types of letters of credit, c. payment upon shipment of the goods, d. open account; e. documentary collections); and the instrument (where instructions are written) by which the payment is made, that is the method of settlement (payment by check, bank transfer, SWIFT, draft, bank money order, TT (telegraphic transfer), MT (mail transfer), Bill of Exchange).

4. And at last,financial institutions acting as financial intermediariesbetween potential lenders (savers) and potential borrowers. These institutions may be classified in a number of different ways:

1. By nature of the business transacted (banking, insurance, stock broking).

2. By the source and use of funds (local/foreign, demand or savings deposits).

3. By ownership (private or public, that is State owned or local/foreign).

4. By the nature of the market and the end user (retail or wholesale).