Read the text and see if your ideas are right.
Financial markets provide a forum in which suppliers of funds and demanders of loans and investments can transact business directly. Whereas the loans and investments of institutions are made without the direct knowledge of the suppliers of funds (savers), suppliers in the financial markets know where their funds are being lent or invested. The two key financial markets are the money market and the capital market. Transactions in short-term debt instruments, or marketable securities, take place in the money market. Long-term securities (bonds and stocks) are traded in the capital market.
The money market is created by a financial relationship between suppliers and demanders of short-term funds, which have maturities of one year or less. The money market exists because certain individuals, businesses, governments and financial institutions have temporarily idle funds that they wish to put in some type of liquid assets or short-term, interest-earning instruments. At the same time, other individuals, businesses, governments and financial institutions find themselves in need of seasonal or temporary financing. The money market thus brings together these suppliers and demanders of short-term liquid funds.
The capital market is a financial relationship created by a number of institutions and arrangements that allows the suppliers and demanders of long-term funds -- funds with maturities of more than one year – to make transactions. The backbone of the capital market is formed by the various securities exchanges that provide a forum for debt and equity transactions. Major securities traded in the capital market include bonds and both common and preferred stock.
All securities, whether in the money or capital markets, are initially issued in the primary market. This is the only market in which the corporate or government issuer is directly involved in the transaction and receives direct benefit from the issue – that is, the company actually receives the proceeds from the sale of securities. Once the security begins to trade among individuals, businesses, government or financial institutions, savers and investors, they become part of the secondary market. The primary market is the one in which «new» securities are sold; the secondary market can be viewed as an «issued» or «preowned» securities market.
During the last two decades the Euromarket – which provides for borrowing and lending currencies outside their country of origin – has grown quite rapidly. The Euromarket provides multinational companies with an «external» opportunity to borrow or lend funds with the additional feature of less government regulation.
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1. Notes to the text:
supplier – поставщик
to transact – проводить
maturity - зрелость
asset – актив
demander - податель заявки
backbone - основа
benefit - выгода
initially - первоначально
to borrow - заимствовать
2. Match the following English expressions to their Russian ones:
1. transact business a. финансовые отношения
2. financial relationship b. долгосрочный капитал
3. direct benefit c. заключить сделку
4. provides for borrowing d. рынок ценных бумаг
5. long-term funds e. прямая выгода
6. securities market f. предусматривает заимствования
3. Read the text again and answer the questions:
1. What is financial market?
2. What are two keys of financial markets?
3. What is Euromarket?
4. Agree or disagree with the following statements:
1. The primary market is the one in which «new» securities are sold.
2. The money market exists because certain individuals, businesses, governments and financial institutions have constant idle funds.
3. Long-term securities (bonds and stocks) are traded in the capital market.
4. The backbone of the money market is formed by the various securities exchanges that provide a forum for debt and equity transactions.
5. All securities, whether in the money or capital markets, are initially issued in the secondary market.
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5. Discuss in pairs:
1. Financial market.
2. Two keys of financial markets.
3. The Euromarket.
Unit 7.
Inflation.
Discuss in pairs:
1. What is inflation?
2. What is deflation?
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