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II. Answer the following questions:

  1. What is the central economic function of a financial system?

  2. What are the two distinct approaches to the classification of the main economic function?

  3. Compare direct and indirect finance. What are the advantages and disadvantages of them.

  4. What is the main function of the general-purpose bank?

  5. What is “maturity transformation”?

  6. Are only banks engaged in “maturity transformation”?

III. Fill in the blanks. Rewrite the passage filling in the blanks from the list of words below.

Financial intermediaries not only transform ... , they also transform risk. With direct finance, the ultimate lender bears the risk of default by the ... , e.g. a person who buys a share in company X stands to lose money if company X goes into ... . The retail banks, who between them have millions of loans outstanding, also stand to lose when borrowers ... . But because they are large institutions with trained staff able to judge to whom it is safe to ... and to whom it is not, they are usually able to keep ... losses to a small proportion of total ... advanced. And as past experience enables them to ... the likely amount of bad debts, they can allow for this by adding a risk premium to the ... they charge borrowers. In this way banks, like other ... , can bear ... and absorb losses, whilst depositors, in normal times, can know that their ... are virtually riskless.

Financial intermediaries provide other ... . Retail banks not only offer deposits withdrawable on ... , they also provide facilities for deposits to be ... from one account to another, and thereby provide a ... system. Sight deposits in banks have become a superior form of ... to notes and coin for most purposes, other than small day-to-day ... . Life assurance companies, whose main ... nowadays is accepting regular ... from lenders of funds, over a number of years, combine this business with ... against death. Thus, while the lender expects to ... a certain sum of money after, say, 20 years, he knows that should he die ... , the same or another ... sum will be paid to his ... .

maturities

services

borrower

demand

liquidation

transferred

outstanding

money-transfer

default

money

lend

transactions

loan

business

sums

payments

estimate

insurance

interest

receive

intermediaries

prematurely

risks

guaranteed

deposits

dependants

IV. Match the Ukrainian and English equivalents:

  1. To withdraw money, funds

  1. Кінцевий позичальник

  1. Government stock

  1. Закон усереднення

  1. General-purpose bank

  1. Брати на себе збитки, пов’язані з позиками

  1. Money-transfer system

  1. На вимогу

  1. Maturity transformation

  1. Банкрутувати, припинити існування

  1. At little or short notice

  1. Універсальний банк

  1. On demand

  1. Позичати гроші під заставу (як правило, під нерухомість)

  1. To borrow short and lend long

  1. Надприбуток

  1. The law of averages

  1. Гарантована сума

  1. To lend money on mortgages

  1. Ощадний сертифікат (6 та 30 місячний дежавний позичковий інструмент зі ставками, прив’язаними до казначейських векселів)

  1. Bear, incur risk

  1. Безнадійні борги, борги, які скоріш за все не будуть повернені

  1. Ultimate lender

  1. Збільшувати кількість грошей

  1. To keep loan losses

  1. Державні цінні папери

  1. Loans outstanding

  1. Підлягати ризику несплати

  1. To bear the risk of default

  1. Система переказу грошей в безготівковій формі

  1. Creditworthy

  1. З короткостроковим повідомленням

  1. To go into liquidation

  1. Брати позику на короткий термін і надавати позику на довгий термін

  1. Total sums advanced

  1. Знімати гроші, кошти з рахунку

  1. Bad debts

  1. Трансформація строків

  1. Guaranteed debts

  1. Приріст капіталу

  1. Capital gains

  1. Брати на себе ризик

  1. Extra returns

  1. Несплачені позики

  1. Saving certificate

  1. Загальні суми позик

  1. Premium bond

  1. Преміальна облігація (облігація, ринкова ціна якої вища за номінальну)

  1. Raise money

  1. Кредитоспроможний (спроможність позичальника виконати свої зобов’язання по позичках у встановлені строки)