Find the pairs of synonyms and antonyms.

Read the text.

TAXATION

WHAT ARE TAXES?

Taxes are a compulsory financial contribution by a person or body of persons towards the expenditure of a public authority. In modern economies taxes are the most important source of government revenues. Taxes on income (i.e. on wages, salaries, profits, dividends, rent and interest) and on capital are known as "direct" taxes. Taxes on commodities or services are known as "indirect" taxes.

Taxes are considered to have three functions:

(a) fiscal or budgetary, to cover government expenditure, to provide the public authorities with the revenue required for meeting the cost of defense, social services, interest payments on the national debt, municipal services, etc.;

(b) economic, to give effect to economic policy, to promote stable economic growth, to influence the rate of economic growth of the nation;

(c) social, to increase the economic welfare of the community, to lessen inequalities in the distribution of income and wealth.

Businesses and individuals are subject to many forms of taxes. The various forms of business organization are not taxed equally. The tax situation is simplest for proprietorships and most partnerships; corporations or companies are treated differently.

In the United States of America nearly all of the federal government's revenues come from taxes. By far the most important source of tax revenue is the personal income tax. Gross receipts from corporate income taxes yield a far smaller percentage of total federal receipts. Individual states levy their own taxes. As a result, for example, the profits of a corporation are liable to federal and sometimes state corporate income taxes. This often imposes a double tax burden¹. When the after-tax income is paid out to stock-holders² as dividends, it is then taxed again as personal income.

In the United Kingdom there is no single code of tax law, the body of tax legislation being increased by each year's Finance Act.³

The United Kingdom operates a "schedular" system,⁴ whereby taxable income from different sources is calculated and taxed under the rules of a particular "schedule".

Tax assessments⁵ are normally based on returns issued by the Board of Inland Revenue⁶ (referred to simply as "Inland Revenue") for completion⁷ by the taxpayer. While companies may receive tax returns, they normally submit instead a copy of their annual accounts together with a computation of taxable profits.⁸

The United Kingdom does not yet operate a system of self-assessment⁹ for tax on income and capital gains¹⁰, but it is being introduced at the moment.

Under Ukrainian law, all Ukrainian legal entities, whether they have foreign investment or not, are subject to the profit tax law. Foreign entities that have a taxable permanent establishment¹¹ in Ukraine are also taxed under this law.

Ukrainian taxes provide revenue for three tiers of the budget: state, regional and local. The major taxes paid to the budget are: Profit tax; Value-added tax (VAT)¹²; Securities tax¹³; Withholding tax¹⁴.

The Ukrainian government tries to create a climate in which business can thrive, to keep the tax burden as low as possible. It also attempts to eliminate tax allowances, which deprive the budget of tax revenues, and to improve tax collection.

Tax returns for Ukrainian legal entities are audited by the tax authorities¹⁵ at the time they are submitted.

If the company or a person assessed believes the assessment is incorrect in any way, an appeal may be lodged¹⁶ against it. The appropriate financial organ is required by law to reply to such an appeal within five days.

When a company resident¹⁷ in one country receives income or gains from a source in another, or when shareholders and company are domiciled¹⁸ in different countries it is possible that incomes arising will be taxable in each country, i.e. taxed twice. Many countries seek to mitigate¹⁹ the potentially harmful effects of double taxation²⁰ by entering with other countries into double tax treaties²¹, or arrangements²² preventing the same income being taxed twice.

A number of countries have problems because of significant taxpayer non-compliance.

Along with cases of illegal evasion²³ of tax obligations there are entirely legal ways of avoidance by which a person may so arrange his affairs as to minimize, or even eliminate, tax liability²⁴ on his property and income.

Words you need:

¹ double tax burden - тягар подвійного оподаткування

² stock-holder - акціонер

³ the body of tax legislation being increased by each year's Finance Act - причому законодавство про податки поширюється за рахунок нових податків, які вводяться щорічно при прийнятті фінансового акту

⁴ The United Kingdom operates a "schedular" system - у Великобританії існує система «шедул», (частини, на які поділені прибутки у залежності від їх джерела

⁵ Tax assessments - установлення податкових ставок; визначення розміру прибутку, який обкладається податком

⁶ Board of Inland Revenue (referred to simply as "Inland Revenue") - Податкова служба Великобританії

⁷completion - заповнення

⁸ taxable profit - прибуток, який обкладається податком

⁹system of assessment - система, при якій розмір прибутку, який підлягає оподаткуванню, визначається безпосередньо платником податків

¹⁰ capital gains - прибуток від приросту капіталу

¹¹ taxable permanent establishment - підприємство, яке працює постійно та обкладається податком

¹² Value-added tax (VAT) - податок на прибавлену вартість

¹³Securities tax - прибуток на цінні папери

¹⁴Withholding tax - прибуток з суми дивідендів

¹⁵ tax authorities - податкові органи

¹⁶ be lodged - подавати апеляційну скаргу

¹⁷ resident - який постійно живе у країні

¹⁸ domicile - поселитися на постійне місце проживання

¹⁹ to mitigate - зменшувати, пом’якшувати

²⁰ double taxation - подвійне оподаткування

²¹ double tax treaties - договір про запобігання подвійного оподаткування

²² arrangements - заходи

²³ evasion of tax obligations - ухилення від податкових зобов’язань

²⁴ tax liability - зобов’язання по сплаті податків

 

Exercises

Answer the questions.

1. What are taxes?

2. What are the purposes of direct and indirect taxation?

3. Are businesses taxed equally?

4. How is taxation levied in the UK?

5. What taxes are paid to the state budget?

6. What bodies collect taxes?

7. Do taxpayers have the right to appeal against additional tax liability?

8. What is the difference between tax evasion and tax avoidance?

9. In what situations can incomes be taxed twice?

 

2. Find in the text English equivalents for the following Ukrainian phrases:

Прибутковий податок; податок на заробітну плату; податок на заробітну плату службовців; податок на прибуток податок на дивіденди; податок на рентні сплати; податок на відсотковий прибуток; податок на капітал; прямі податки; непрямі податки; покривати витрати; відсоткові сплати по зовнішньому боргу; добробут громади; підлягають обкладенню податком; відноситися по-різному; прибуток після оподаткування; податкова декларація; податок на прибавлену вартість; збирати податки; проводити аудиторську перевірку; подавати апеляційну скаргу; відхилення від податкових зобов’язань, яке є незаконним; заборгованість по податковим виплатам.

 

Grammar Exercises

 

1. Name the number of the sentences where the word most has the meaning a) «більшість, більша частина», в) «вельми, вкрай» (весьма, крайне).

1. In modern economies taxes are the most important source of government revenues.

2. By far the most important source of tax revenue is the personal income tax.

3. In 1999 there was a most sharp fall in world oil prices.

4. In a situation of full employment, the supply of most goods and services will be inelastic.

5. With some groups of population, payments from social security funds may be a most important contribution to household incomes.

 

Unit 13

 

 

international monetary system міжнародна валютна система

international monetary institutions міжнародні фінансові організації

to reconcile примиряти

balance-of-payments position стан платіжного балансу

to settle accounts урегулювати рахунки

adjustment коректування, виправлення

payment imbalances нерівновага виплат

employment opportunities вакансії

exaggeration прибільшення

to leave smb. worse off ставити когось в невигідне положення

imposition of controls введення контролю

 

Put the missing letters.

Int..rn..at…nal, mon..t..ry, s..stem, exag..r..ti..n, o..o..tunities, imp..s..t..on of contr..ls, ad..ust, rec..nc..le, to s..ttle a..ounts.

 

Read the text.

INTERNATIONAL MONETARY SYSTEM

INTERNATIONAL MONETARY INSTITUTIONS

 

There is little exaggeration in saying that international monetary developments affect all individuals as workers, consumers, travellers, businessmen producing goods for domestic or foreign markets, and investors at home or abroad. The channels which transmit the impact of monetary events to people in their various roles in society are numerous.

Employment opportunities for some workers are improved when exports thrive and are weakened for other workers when foreign products compete effectively in price or quality with domestic output. A movement in the exchange rate may benefit an individual in one his roles but leave him worse off in another. The individual as a consumer may have a different view of and a different interest in what happens in the international monetary sphere from that of the individual as a worker.

Business activity is heavily influenced by international monetary conditions affecting prices, exchange rates, interest rates, imposition of controls on exports or imports or on capital movements.

Interdependence among nations has intensified lately, thus there is great interest in the functioning of the international monetary system. The international monetary system is a set of arrangements, rules, practices, and institutions under which payments are made and received for transactions carried out across national boundaries¹. The international system is concerned not only with the supply of international money but with the relationships among the hundred or so currencies of individual countries and with the pattern of balance-of-payments relationships and the manner in which they are adjusted land settled.

International monetary relations are governed by rules of the Articles of Agreement² of the International Monetary Fund³ and also by agreements and consultations among nations through other international institutions: the General Agreement on Tariffs and Trade (GATT)⁴, the Organization for Economic Cooperation and Development (OECD)⁵, the Bank for International Settlements (BIS)⁶, the United Nations Conference on Trade and Development (UNCTAD)⁷, the World Bank Group⁸ and other organizations.

The international monetary system is afflicted with problems⁹. The main reason is that the nations that participate in it are politically independent but economically and financially interdependent.

This discrepancy¹⁰ determines the functions of the international monetary system; at its best, the system acts to reconcile the conflicting economic policies of its politically independent members.

In order to perform this reconciling function, the system is concerned, first, with how nations act to influence their balance-of-payments positions, with their policies that affect exchange rates.

The system is concerned, second, with how nations settle their accounts¹¹ with one another. Third, the system is concerned with the amount and form of international money.

In broad terms¹², the international monetary system involves the management, in one way or another, of three processes:

1) the adjustment of balance-of-payments positions, including the establishment and alteration of exchange rates¹³.

2) the financing of payments imbalances among countries by the use of credit or reserves; and

3) the provision of international money.

Words you may need:

National boundaries¹- державні кордони

Articles of Agreement2 - устав

International Monetary Fund³ - Міжнародний Валютний Фонд

the General Agreement on Tariffs and Trade (GATT)⁴ - Генеральне положення про тарифи та торгівлю

the Organization for Economic Cooperation and Development (OECD)⁵ - Організація економічного співробітництва та розвитку

the Bank for International Settlements (BIS)⁶ - Банк міжнародних розрахунків

the United Nations Conference on Trade and Development (UNCTAD)⁷ - Конференція ООН з торгівлі та розвитку

the World Bank Group⁸ - група Світового банку

is afflicted with problems⁹ - обтяжувати проблемами

discrepancy¹⁰ - розходження, протиріччя

to settle accounts¹¹ - урегулювати розрахунки

broad terms¹² - у широкому смислі

establishment and alteration of exchange rates¹³ - установлення та зміна обмінних курсів

 

Exercises

1. Answer the questions:

1. In what way are individuals affected by international monetary developments?

2. What is the international monetary system?

3. What is the international monetary system concerned with?

4. What are the international monetary relations governed by?

5. What are the major international monetary institutions?

6. Is the international monetary system afflicted with problems?

 

Grammar Exercises

 

1. a) Supply the articles where necessary.

b) Write down 3-5 questions about the text.

c) Describe the purposes for which the IMF was set up.

 

The International Monetary Fund

The International Monetary Fund, an association of governments was set up on 27th December, 1945, as a result of the Bretton Woods Agreements which were designed to translate the bitter lessons of global depression into... stable and cooperative international monetary system. The organizational structure of the IMF is set out in its Articles of Agreement, which entered into... force in December 1945. The goals of... IMF are to promote international monetary co­operation through a permanent institution; to facilitate the expansion and balanced growth of international trade; to promote exchange stability; to assist in the establishment of a multilateral system of payments in respect of current transactions between members; and to provide members with an opportunity to correct maladjustments in their balance of payments without resorting to measures destructive to national and international prosperity.

Over many years the IMF has been directly involved in supporting... efforts of developing countries to pursue broad structural reforms and achieve sustainable growth. As of August 1, 1994, 179 countries were members of the IMF. Each member government has been set... quota to be paid into the Fund, payable partly in... gold and partly in the member's own currency; the quota determines the member's voting power and... amount of foreign exchange that it may draw from the Fund. A member may purchase foreign exchange, paying its own currency, but... member must "repurchase" its own currency within three or, at the outside, five years to maintain the balance in the Fund pool. Currencies drawn from the Fund may be used to relieve... member's balance-of-payments difficulties; the funds may not be used for military purposes or for programmes of economic development. The aim is to assure... maintenance of fixed exchange rates in the face of short-term fluctuations. Many countries have been helped in this way. Each member undertakes to establish and maintain an agreed par value for its currency, and to consult the Fund on any change in... initial parity. In addition, the Fund consults with members on their international financial situation and on specific problems as they arise. On request, the Fund furnishes expert missions to advise and assist... governments in working out monetary problems on the spot. In any event, members are kept informed of... latest developments. Policies are laid down by a Board of Governors, representing all members, which normally meet annually. Many of its powers are delegated to a Board of Executive Directors. In recent years, the resources of the Fund have been supplemented by resources of... Group of Ten.

Words you may need:

to be designed бути призначеним

to enter into force вступати в силу

balanced збалансований

multilateral system багатостороння система

in respect of в відношенні

to correct maladjustments виправляти диспропорції

resort (to) v удаватися до

structural reforms структурні реформи

voting power голоси в органах, які керують

purchase v купувати

to maintain the balance підтримувати баланс

 

2. Prepare the short talk on the following:

1. In what way are individuals affected by international monetary developments?

2. Relations between Ukraine and international institutions such as GATT, OECD, BIS, UNCTAD, IMF. In what ways do countries benefit from the membership in these organizations?

3. Your opinion on Ukraine’s borrowings from the IMF. Is it the only way to cover the budget deficit?

 

Unit 14

 

bond market ринок облігацій

maturity строк боргового зобов’язання

to back гарантувати, давати поручительство

to deal (in) торгувати

to debt financing фінансування шляхом отримування позики

equity financing мобілізація капіталу за допомогою випуску акцій

share доля

debtor боржник

lender кредитор

to underwrite гарантувати розміщення цінних паперів

hard-currency market ринок твердої валюти

short-term securities короткострокові цінні папери

to issue stock випускати акції

to trade проводити угоди на ринку цінних паперів

Put the missing letters.

b..nd m…ket, m..t..r..ty, de..l, short-t..m sec.r…ties, e..ty financing, sh.re, de..tor, l..nd..r, to i…..ue, under…te.

 

Work in pairs.

One student has to name all the words she/he memorised from the word list another student has to translate them.

 

Read the text.

FINANCIAL MARKETS. THE BOND MARKET. TRADING IN THE BOND MARKET

People and organizations wanting to borrow money are brought together with those having surplus funds in the financial markets.

There are a great many different financial markets, each one consisting of many institutions, dealing with different instruments in terms of the instrument maturity¹ and the assets backing it, and serving different types of customers.

Generally, financial markets are classified as money or capital markets² and primary or secondary markets.

Money markets deal in short-term securities having maturities one year or less. Capital markets deal in long-term securities having maturities greater than one year. An investor who purchases new securities is participating in a primary financial market. An investor who resells existing securities is participating in a secondary financial market.

So, when businesses, units of government or individuals cannot satisfy their needs for funds by revenue from sales of goods and services, they can turn to either debt financing (any process by which the firm gets cash or some other assets in return for a promise to pay an agreed upon sum plus interest) or equity financing (any process by which a firm raises funds in return for a share in its ownership management).

Some sources of funds available to businesses (like issuing stock) are not available to governments. When revenues fall short expenditures³ governments go into debt⁴-they borrow short-long-term funds by issuing bonds.

A bond is an instrument in which the issuer (debtor/borrower) promises to repay to the lender/investor the amount borrowed plus interest over some specified period of time. It should be stressed that one of the most important characteristics of a bond is the nature of its issuer⁵. Issuers include federal (central) governments and their agencies, supranational⁶ (such as the World Bank, the Asian Development Bank), municipal governments, and nonfinancial and financial corporations.

By far⁷ the largest issuers are central governments.

There is no uniform system for classifying the global bond markets. Quite a number of financiers consider it appropriate to use the following classification. From the perspective of a given country, the global bond market can be classified into two markets: an internal bond market and an external bond market. The internal bond market is also called the national bond market. It can be decomposed⁸ into two parts: the domestic bond market and the foreign bond market.

The domestic bond market is where issuers domiciled⁹ in the country issue bonds and where those bonds are subsequently traded. The foreign bond market of a country is where bonds of issuers not domiciled in the country are issued and traded.

Bonds traded in the US foreign bond market are nicknamed¹⁰ Yankee bonds. In Japan, foreign bonds issued by non-Japanese entities are nicknamed Samurai bonds. Foreign bonds in the United Kingdom are nicknamed bulldog bonds, in the Netherlands-Rembrandt bonds and in Spain - matador bonds.

The external bond market, also called the international bond market, includes bonds with several distinguishing features: 1) they are underwritten by an international syndicate, 2) at issue they are offered simultaneously to investors in a number of countries, 3) they are issued outside the jurisdiction of any single country, and 4) they are in unregistered form. The external bond market is commonly referred to as the offshore bond market, or more popularly, the Eurobond Market. The Eurobond Market is divided into different submarkets¹¹ depending on the currency in which the issue is denominated.

Computerization in bond markets has reduced costs of trading bonds and made them more convenient to hold and transfer: they are not issued in certificate form - they are only computer entries.

Words you need:

in terms of the instrument maturity¹ - з точки зору терміну погашення фінансового інструменту

capital markets² - ринок довгострокового позичкового капіталу

When revenues fall short expenditures³ - Коли прибутки менше ніж витрати

governments go into debt⁴- уряди здійснюють запозичення

issuer⁵ - емітент(особа, яка випускає облігації) цінних паперів

supranational⁶ - наднаціональна організація

By far⁷ - значною мірою

decompose⁸ - розкладати на складові частини

domiciled⁹ - який постійно проживає

submarkets¹¹ - субринок

Exercises

Answer the questions.

1. What role do financial markets play?

2. In what ways do financial markets differ?

3. How can financial markets be classified?

4. In what way can capital be raised?

5. What ways of raising capital are available for governments?

6. What is a bond?

7. How can the global bond market be subdivided?

8. In what forms can government bonds be issued?

2. Find in the text English equivalents for the following Ukrainian phrases:

Мати справу з різними фінансовими інструментами; обслуговувати клієнтів; з терміном виплати менше одного року; брати участь в угодах на ринку; первинний(вторинний) фінансовий ринок; звертатися до; фінансування шляхом отримування позики; мобілізація капіталу за допомогою випуску акцій; випускати облігації; обговорений строк; емітент; єдина система класифікації; внутрішній ринок облігацій; емітент, який не проживає постійно у країні; облігації, якими торгують на ринку; випуск облігацій гарантовано міжнародним синдикатом; випускати у незареєстрованій формі; офшорний ринок облігацій; скоротити затрати, які пов’язані з купівлею та продажем облігацій; випускати облігації у формі сертифікату; випускати облігації у формі запису у комп’ютері.

 

3. Think of the verbs that are commonly used with:

Maturity, bond, stock, issue, investor, banks, return, depository, sale, credit, credit rating, placement.

 

4. Think of the nouns that are most often used with:

To raise, to sell, to issue, to borrow, to trade, to divide, to float, to create, to participate, to develop, to attract, to negotiate, to mature, to place, to generate.

 

Unit 15

 

stock market фондовий ринок

intermediation посередницька діяльність

expansion розширення

to draw up складати

equity звичайна акція

quotation котировка

to list вносити до курсового бюлетеню

preferred stocks привілейовані акції

listing допуск цінного паперу у офіційній торгівлі на фондовій біржі

share index фондовий індекс

indication показник

dealer дилер, біржовий торговець

cross-border trading міжнародна торгівля

over-the counter market позабіржовий ринок

 

Put the missing letters.

St..ck m..rket, int..rm..d….tion, dr..w up, c..s-b..rder trade, eq..ty, d..l..r, q..tation, sh..re ind..x.

 

Read the text.

FINANCIAL MARKETS. THE STOCK MARKET

STOCKS AND MARKETS

Stock Markets are the means through which securities are bought and sold. The origin of stock markets goes back to medieval Italy.¹ During the 17th and 18th centuries Amsterdam was the principal centre for securities trading in the world. The appearance of formal stock markets and professional intermediation resulted from the supply of, demand for and turnover in transferable securities. The 19th century saw a great expansion in issues of transferable securities².

The popularity of transferable instruments as a means of finance continued to grow and at the beginning of the 20th century there was an increasing demand for the facilities provided by stock exchanges, with both new ones appearing around the world and old ones becoming larger, more organized and increasingly sophisticated.

The largest, most active and best organized markets were established in Western Europe and the United States. Despite their common European origins there was no single model which every country copied.

Members of stock exchanges drew up rules to protect their own interests and to facilitate the business to be done by creating an orderly and regulated marketplace.

Investors were interested in a far wider range of securities ³ than those issued by local enterprises. Increasingly, these local exchanges were integrated into national markets.

The rapid development of communications allowed stock exchanges to attract orders more easily from all over the country and later the barriers that had preserved the independence and isolation of national exchanges were progressively removed, leading to the creation of a world market for securities.

The 1980s saw the growing internationalization of the world securities markets, forcing stock exchanges to compete with each other. Cross-border trading of international equities expanded.

Although many securities were of interest to only a small and localized group, others came to attract investors throughout the world. Increasingly, arbitrage between different stock exchanges ensured that the same security commanded the same price⁴ on whatever market it was traded. London, Paris, New York became dominant stock exchanges.

Stock exchanges emerged as central elements in the financial systems of all advanced countries.

Potential investors, insurance companies, pension funds, governments and corporate enterprises see securities as a cheap and convenient means of finance.

An investor who purchases new securities is participating in a primary financial market. An investor who resells existing securities is participating in a secondary financial market.

There are two basic types of stock markets – (1) organized exchanges, like the New York Stock Exchange (NYSE) or the London Stock Exchange (LSE), and (2) the less formal over-the-counter markets.

The organized security exchanges are tangible physical entities, which have specifically designated members⁵ and elected governing bodies – boards of governors.

In contrast to the organized security exchanges, the over-the-counter market is an intangible organization. It is a network of security dealers who buy and sell securities from each other, either for their own account or for their retail clients. The over-the-counter market is normally conducted by telephone and computer reporting of price quotations between brokerage firms that «make a market»; that is, agree to buy and sell a particular security. Securities that are not listed on exchanges are traded «over-the-counter». In general these include stocks, preferred stocks, corporate bonds, and other securities.

Investors need complete and reliable information about stocks and markets. In addition to the listings, the financial pages of newspapers in all countries contain price quotations and share indexes which give a broad indication of how the stock market, or a segment of the stock market, performed during a particular day.

Words you need:

The origin of stock markets goes back to medieval Italy¹ – зародження фондового ринку відноситься до епохи середньовічної Італії.

The 19th century saw a great expansion in issues of transferable securities² – у 19 сторіччі спостерігалося різке збільшення випуску цінних паперів.

were interested in a far wider range of securities ³ – проявляли зацікавленість до значно більшого числа цінних паперів.

same security commanded the same price⁴ – одні і тіж цінні папери мали однакову ціну.

The organized security exchanges are tangible physical entities, which have specifically designated members⁵ – організовані фондові біржі є реально існуючими економічними суб’єктами, які мають конкретних членів.

 

Exercises

1. Answer these questions:

1. What is the Stock Market? What contributed to the emergence and growth of stock exchanges?

2. Where were the best organized stock markets established?

3. What general trend in the stock market development has been observed over the years of its existence?

4. What stock exchanges have become most dominant? What part do they play in the financial systems of advanced countries?

5. What are the basic types of stock markets? How are they conducted?

 

2. Find in the text English equivalents for the following Ukrainian phrases:

Цінні папери продаються та покупаються; головний центр торгівлі цінними паперами; фондовий ринок з’явився у результаті; засіб фінансування; не існувало єдиної моделі; складати правила для захисту чиїх-то інтересів; полегшити ведення бізнесу; упорядкований ринок, який регулюється; цінні папери, які випущені місцевими підприємствами; місцеві біржі були об’єднані у міжнаціональні фондові ринки; торгівля корпоративними цінними паперами розширилася; позабіржовий ринок; покупати та продавати цінні папери за свій рахунок; позабіржовий ринок проводить операції по телефону та за допомогою комп’ютерів; цінні папери, які незареєстровані на біржі.

3. Think of word combination with:

Market, stock, share, securities, debt, placement, trading.

4. Match the verbs from (a) with nouns from (b) below:

a) To expand To develop To resell To remove To issue To list To possess To meet To submit

b)Barriers Securities Stocks Trading Shares Infrastructure Standards Capital Documents

5. Name the adjectives formed from the following verbs and nouns:

To differ, advantage, to clean, to free, to market, to add, to depress, to rely, to close, diversity, alternative, to direct, to vary, to lower, to warn, majority, practice, finance, to accept, origin, principle.

 

Unit 16

 

 

capital expenditure вкладення капіталу

physical productive assets матеріальні, виробничі фонди

real investment інвестиції у реальний капітал

tangible assets матеріальні активи

to embrace охвачувати

capital gains приріст капіталу

joint venture сумісне виробництво

diffusion розповсюдження

sharing участь у

quantitative security valuation кількісна оцінка інвестиційних активів

dividend discount models моделі дисконтування фінансових потоків

foreign direct investment прямі іноземні інвестиції

 

Put the missing letters.

d.. v.. dend disc..nt m..dels, d..ffus..on, jo..nt vent..re, sh..ring, embr..ce, re..l inv..stm..nt, t..ng..ble ass..ts, capital g..ns, qu..ntit..tive sec..rity val..at..n.

Read the text.

INVESTMENTS

 

In economic science, investment is capital expenditure on physical productive assets, e.g. machinery, factory buildings, roads, bridges, houses, and stocks.

Real investments generally involve some kind of tangible asset.

As a financial term investment embraces purchases of stock exchange securities or deposits of money in banks, building societies, or other financial institutions, with a view to income and, in appropriate cases, capital gains.

Users of capital, from governments to every kind of industrial or commercial joint-stock company, all depend for the supply of their financial resources on those who are willing to invest their funds, on investors.

Investment is closely associated with other aspects of economic order such as the role of financial centres, labour migration, and the regime of international trade prevailing at the time.

Technological advances, the removal of exchange controls¹ and financial deregulation² have all contributed to the expansion of international capital flows³. As a result foreign investment has become a fundamental feature of international economic development.

There are two main channels for international investment: foreign direct investment-(FDI) and foreign indirect investment, or portfolio investment⁴.

Foreign direct investment (FDI) occurs when citizens of one nation (the "home" nation) acquire managerial control⁵ of economic activities in some other nation (the "host" nation). Setting up a foreign operation⁶ through a joint venture, establishment of a foreign branch⁷ or the purchase or formation of a foreign subsidiary are examples of foreign direct investment.

Firms controlling activities in several nations have become known as "multinational enterprises" (MNSs), "transnational corporations" (TNCs) and, more recently, "global corporations". The reasons why effects of FDI are generally assessed as positive can be summarized as follows: first, FDI speeds the international diffusion of new technologies and other efficiency enhancing intangible assets, such as organizational skills. Then, FDI in many national markets will stimulate competition among firms.

The process of supplying capital to a foreign institution, through a loan or purchase of stock, without sharing in the institutions management is foreign indirect investment.

In financial circles, individuals or households that own securities are known as individual investors⁸. Along with them, there are institutional investors⁹.

Institutional investors are a group of investors who have funds to invest as a consequence of the conduct of their business. The group includes insurance companies, banks, investment trusts, financial and industrial companies.

The past 30 years have witnessed a concentration of financial power in the hands of institutional investors. In 1990 they controlled over $6 trillion in assets, the majority invested in common stock and corporate and government bonds.

An investor, when confronted with a list of investment possibilities, will want to assess the risks and general advantages and disadvantages connected with putting his or her money into this or that security. To receive higher return, investors must be prepared to accept a higher level of risk. Trying to limit or minimize the risk investors construct and diversify portfolios and spread their foreign investments among a number of different countries.

Institutional investors have contributed to development of new types of investment management¹⁰ techniques, sophisticated portfolio monitoring, have pioneered the application of quantitative security valuation techniques, such as dividend discount models.

In spite of the existing obstacles¹¹, recent years have seen a growing interest of foreign investors in the Ukrainian market.

Words you need:

exchange controls¹ валютний контроль

financial deregulation² скорочення об'єму втручання держави у фінансову сферу

international capital flows³ пересування іноземного капіталу

portfolio investment⁴ портфельні інвестиції

managerial control⁵ адміністративний контроль

operation⁶ організація: одиниця, яка хазяйнує

foreign branch⁷ закордонне відділення

individual investors⁸ приватний інвестор

institutional investors⁹ інституціональний інвестор

investment management¹⁰ керування портфелем цінних паперів

obstacles¹¹ перешкода

 

Exercises

Answer the questions.

1. What is investment?

2. Define the difference between real investment and financial investment.

3. In what ways can financial resources be raised?

4. Why does FDI take place?

5. What institutions handle investment in stocks and shares?

6. What role do institutional investors play?

7. How do investors make their choice of investment possibilities?

 

2. Find in the text English equivalents for the following Ukrainian phrases:

Інвестиції є вкладенням капіталу; реальні інвестиції зв’язані з матеріальними активами; фінансові інвестиції зв’язані з придбанням цінних паперів; депонування коштів у банках; користувачі; міграція робочої сили; режим міжнародної торгівлі, який існує на даний момент; досягнення у сфері технології; відміна валютних обмежень; скорочення об’єму втручання держави у фінансову сферу; розширення міжнародних фінансових потоків; головна риса міжнародного економічного розвитку; прямі іноземні інвестиції; портфельні інвестиції; придбати управлінський контроль; організація спільних підприємств; закордонне відділення фірми; організація закордонного філіалу фірми; багатонаціональна компанія; прискорювати розповсюдження нових технологій; організаційні навички; приймати участь в керуванні; приватні та інституційні інвестори; засоби керування портфелем цінних паперів.

 

3. Think of the verbs that are commonly used with:

Portfolio, intermediary, risk, loans, purchase, contributions, funds, money.

 

4. Think of words combinations with these nouns:

Investor, investment, accounts, securities, yield.

 

Grammar Exercises

 

Investment Companies

1.

a) Read the text

b) Supply the articles where necessary.

c) Write down 3-5 questions about the text.

d) Say what advantages individuals have when they invest in investment companies.

Investment companies are... type of financial intermediary. They obtain money from investors and use it to purchase financial assets such as stocks and bonds. In return, the investors receive certain rights regarding... financial assets that the investment company has bought and any earnings that it may generate. In …simplest and most common situation, the investment company has only one type of investor - stockholders.

For an individual there are two advantages of investing in such… companies instead of investing directly in the financial asset that these companies own. Specifically, the advantages arise from (1) economies of scale and (2) professional management. In describing these benefits, let's consider... individual with moderate financial resources who wishes to invest in... stock market.

In terms of economies of scale, the individual could buy stocks in odd lots and thus have... diversified portfolio. However, the brokerage commissions on odd lot transactions are relatively high. Alternatively, the individual could purchase round lots, but would only be able to afford... few different securities. Unfortunately, the individual would then be giving up... benefits of owning a well-diversified portfolio. In order to receive the benefits of both diversification and substantially reduced brokerage commission, the individual could invest in the shares of... investment company. This is because economies of scale make it possible for an investment company to provide... diversification at... lower cost per dollar of investment than would be incurred by a small individual investor.

In terms of professional management, the individual investing directly in the stock market would have to go through all... details of investing, including making all buying and selling decisions as well as keeping records of all transactions for tax purposes. In doing so, the individual would have to be continually on the lookout for mispriced securities in... attempt to find undervalued ones for purchase, while selling any that were found to be overvalued. Simultaneously, the individual would have to keep track of... overall risk level of the portfolio that did not deviate from some desired level. However, by purchasing stock of an investment company, the individual can turn over all of these details to... professional money manager.

Investment companies have... problems but potential advantages to be gained from... investing in an investment company still outweigh any disadvantages, particularly for smaller investors.

Words you may need:

generate v (зд.) получати

economies of scale економія, яка зумовлена ростом масштабу виробництва

odd lot неповний лот

round lot повний лот

incur v приймати на себе витрати, терпіти збитки

to keep records реєструвати

to be on the lookout бути насторожі

mispriced securities цінні папери за ціною, яка завищена або занижена

to keep track (of) відслідковувати

deviate v відхилятися

money manager менеджер, який займається купівлею та продажем цінних паперів

 

Unit 17

 

foreign exchange market валютний ринок

legal tender законний платіжний засіб

monies грошові суми

rate of exchange курс обміну

unit of currency грошова одиниця

currency mix структура грошової маси

spot market ринок готівки

forward market форвардний ринок

futures market ф’ючерський ринок

currency options market ринок валютних опціонів¹

bid – ask spread різниця між цінами продавця та покупця

currency arbitrage валютний арбітраж

clearing порівняння деталей фінансової угоди перед розрахунком

Option (опціон¹) право вибору; право купівлі та продажу цінних паперів за обумовлену ціну в обумовлений термін

 

Put the missing letters.

cl..ring, sp..t m..rket, c..rrency arb..tr..ge, futu…s m..rket, l..g..l t..nd..r, m..n..s, r,,te of exc….nge, f..ward ma…k..t, c…r….ncy m..x.

 

Read the text.

FOREIGN EXCHANGE MARKET. GLOBAL FINANCIAL MARKETS

TRADING IN THE FOREIGN EXCHANGE MARKET

Any one country's currency is a legal tender only within its national boundaries. To trade beyond these boundaries involves exchange of monies. Exchange of currencies is possible if national
currencies are interchangeable. The terms on which one currency will exchange against another are referred to as rate of exchange. The rate exchange is the value of one unit of the foreign currency expressed in the other currency concerned.

Currencies can be bought or sold in the Foreign Exchange Market. The Foreign Exchange Market is the oldest financial market in existence. It is also the largest international financial market in the world.

The Market performs two major functions: it facilitates the foreign exchange needs of exporters and importers, and it enables individuals, corporations and governments to obtain a desired currency mix of their portfolios.

Trading in the Market occurs 24 hours a day in various centers around the world. Deals are concluded bilaterally over telecommunications networks by different counterparties, some of whom serve as market makers or dealers.

The exchange market is global in character, it does not have one centralized location; trading is heavily concentrated in a handful of centers: London, New York, Tokyo, etc. The great majority of foreign exchange trading takes place in the interbank market¹ between traders or market makers who represent large commercial banks or other financial institutions.

Foreign exchange departments of large commercial banks are linked across the world through a sophisticated network of communication systems. The market consists of three major sectors: the spot market, the forward and futures markets and the currency options market.

Somewhat more than half of all transactions are spot deals. In other words, they are transactions which call for² the delivery of the two currencies exchanged within two business days. The remainder³ of the deals can be classified as outright⁴ forwards, swaps⁵, futures and options.

Such transactions are performed by customers who do not know when they will need foreign currency to overcome the growing exposure to currency risks in the conditions of foreign exchange rate volatility⁶.

The cost of transacting in the wholesale market is reflected in the bid-ask (or bid-offer) spread. Prices in the market depend on the volume of transactions, exchange rate volatility, the availability of relevant information and the strength of competition in the Market.

As prices are different in different markets, professional dealers take advantage of it buying, say, US dollars for Yen in Singapore and selling them in London for sterling and then back into Yen in New York - all for a profit. The operation is called currency arbitrage.

The delivery of the individual currencies involved in a foreign exchange transaction typically takes place through the payment systems of the two countries whose currencies are traded.

The reliance on the domestic currency payment system of individual countries for the clearing and settlement of foreign exchange transactions means that the stability and integrity of the global foreign exchange market depends on both the soundness of the individual counterparties and the robustness⁷ of national payment systems.

 

Words:

the interbank market¹ міжбанківський ринок

call for² вимагати, передбачати

remainder³ частина, яка залишилася

outright⁴ звичайний

swap⁵ своп (обмін одних цінних паперів на інші)

volatility⁶ мінливість

the robustness⁷ міцність

 

Exercises

1. Answer these questions:

1. Why is exchange of currencies necessary?

2. What makes exchange of currencies possible?

3. What is Rate of Exchange?

4. Where are currencies traded?

5. What major functions does the Foreign Exchange Market рerform?

6. How does the Foreign Exchange Market operate? (Forex)

7. What are the major sectors of the Forex?

8. What deals are transacted in the market?

9. Why does the market depend on payment systems of individual countries?

 

2. Find in the text English equivalents for the following Ukrainian phrases:

Валютний ринок; бути законним платіжним засобом; у рамках національних кордонів; обмін валюти; валюти, які можна обміняти (одна на другу); виконувати функції; сприяти задоволенню потреб в іноземній валюті; домогтися структури грошової маси свого інвестиційного портфелю, угоди заключають з використанням телекомунікаціонних систем; торгівля, яка зосереджувана в …; які представляють великі комерційні банки; ринок готівки; форвардний ринок; ф’ючерський ринок; більшість угод є угодами «спот»; угода передбачає постачання валюти протягом двох робочих днів; відражати різницю між ціною продавця та ціною покупця; валюти, які приймають участь у валютній угоді; розрахунок по фінансовій угоді.

 

3. Think of the verbs that are commonly used with:

Currency, deals, trading, price, trading activities, restrictions, operations, quotations, financial flows.

4. Think of the nouns that are most often used with:

To exchange, to sell, to buy, to express, to obtain, to deliver, to trade, to clear, to settle, to set, to convert, to determine, to express.

Grammar Exercises

1.

a) Supply the prepositions where necessary with, of, by, to, in, over, for.

b) Write down 3-5 questions about the text.

c) Describe the components of Eurocurrency market.

 

THE EUROCURRENCY MARKET

This market began …Eurodollars — US dollars lent outside the United States — and has developed into a powerful market in currencies lent outside their domestic marketplace. There are, for example, Euromarks and Euroyen in London, Eurosterling etc in Bonn, Tokyo and New York. Lon­don and Tokyo are the main world capitals for eurocurrency dealings. Deal­ing centres around Euroloans, involving commercial banks, and Eurobonds which involve investing institutions and banks.

Eumhans consist …large tranches of short-term money (usually repay­able in three to six months) lent… syndicates of banks and linked … the LIBORrate.

Eurobonds are bearer bonds, requiring no register of holders, issued … currencies other than that of the issuing country and operating over a longer period, usually between 5 and 20 years. Their issue is managed by a bank with the aid of underwriters and is placed … investors. Market participants include multinational corporations, non-bank financial institutions, govern­ments and the international banking community.

The Euromarket, as it has become known, has a single SRO (Self-regulating organizations) the Interna­tional Securities Market Association (ISMA). During 1993, some $23,167 trillion was traded …the eurobond market, an increase of almost 60 per cent … the 1992 total, which was itself a record year. UK members of ISMA accounted.. a considerable amount …this total. This huge increase … turnover was marked.. continued growth in cross-border trading in domes­tic instruments. As a global market emerges institutional funds will switch relatively smoothly from «domestic» to «international» and vice versa. This trend can be expected to continue.

Unit 18

(Part I)

 

finance function організація фінансової діяльності

management of fixed assets керування основними засобами

working capital management керування поточними активами

management of current assets керування оборотними засобами

management of current liabilities керування короткостроковими зобов’язаннями

cash management керування грошовими операціями

receivables management керування дебіторською заборгованістю

inventory management керування матеріально-технічним постачанням

financial statements фінансова звітність

balance sheet балансовий звіт

accounts payable кредиторська заборгованість

paid-up capital частина акціонерного капіталу, яка оплачена

retained earnings прибуток, який нерозподілений

 

Put the missing letters.

f..nance f..nct..on, m..n..g..ment of c..rrent a..ets, c..sh m..n..g..m..nt, r,,c,,v,,bles m..n..g..ment, b..l..nce sh..t, m..rt..ge, acc…nt pa..ble,p…d-up cap..tal.

Read the text. FINANCE FUNCTION

Any business - whether large or small, profit-seeking or not-for- profit - has important financial concerns:

How to get the funds needed to run the business on favorable terms and how to make sure that the funds are used