Look through the following vocabulary notes which will help you understand the text and discuss the topic.
UNIT 5. OVERVIEW OF THE FINANCIAL SYSTEM
Getting started
Suppose that you want to start a business that manufactures a recently invented low-cost robot that cleans the house, mows the lawn, and washes the car, but you have no funds to put this wonderful invention into production. Walter has plenty of savings that he has inherited. If you and Walter could get together so that he could provide you with the funds, your company’s robot would see the light of the day, and you, Walter, and the economy would all be better off: Walter could earn a high return on his investment, you would get rich from producing the robot, and we would have cleaner houses, shiner cars, and more beautiful lawns.
Financial markets (bond and stock markets) and financial intermediaries (banks, insurance companies, pension funds) have the basic function of getting people such as you and Walter together by moving funds from those who have a surplus of funds (Walter) to those who have a shortage of funds (you). More realistically, when Apple invents a better iPod, it may need funds to bring it to market. Similarly, when a local government needs to build a road or a school, it may need more funds than local property taxes provide. Well-functioning financial markets and financial intermediaries are crucial to the economic health.
Discuss the following points.
1. Some economists suspect that one of the reasons that economies in developing countries grow so slowly is that they do not have well-developed financial markets. Does this argument make sense?
2. The US economy borrowed heavily from the British in the nineteenth century to build a railroad system. Why did this make both countries better off?
Look through the following vocabulary notes which will help you understand the text and discuss the topic.
| 1. | a bond | облигация |
| 2. | a capital market | фондовый рынок |
| 3. | a claim | требование, претензия |
| 4. | a commercial bank (a retail bank) | коммерческий банк |
| 5. | a commodity exchange | товарно-сырьевая биржа |
| 6. | a credit union | кредитный союз |
| 7. | a fund | фонд |
| 8. | a government retirement fund | государственный пенсионный фонд |
| 9. | a liability | обязательство, пассив |
| 10. | a maturity date | срок погашения |
| 11. | a money market | денежный рынок |
| 12. | a money market mutual fund | паевой инвестиционный фонд по ставкам денежных рынков |
| 13. | a mortgage | закладная |
| 14. | a mutual fund | паевой инвестиционный фонд |
| 15. | a net income | чистый доход |
| 16. | a pool | пул, объединение |
| 17. | a primary (secondary) market | первичный (вторичный) рынок |
| 18. | a principal | основная сумма кредита |
| 19. | a savings and loan association | кредитно-сберегательная ассоциация |
| 20. | a security | ценная бумага |
| 21. | a shortage | дефицит |
| 22. | a stake | ставка, доля, интерес |
| 23. | a stock exchange | фондовая биржа |
| 24. | a stock, a share, an equity | акция |
| 25. | a surplus | профицит, излишек |
| 26. | a thrift | сберегательное учреждение |
| 27. | an asset | актив |
| 28. | an exchange | биржа |
| 29. | an intermediary | посредник |
| 30. | an inventory | полный перечень |
| 31. | an investment bank (a merchant bank) | инвестиционный банк |
| 32. | an issuer | эмитент |
| 33. | an over-the-counter market | внебиржевой рынок |
| 34. | bank branching | создание банковских филиалов |
| 35. | common stocks (ordinary shares) | обыкновенные акции |
| 36. | contractual savings institutions | договорные сберегательные учреждения |
| 37. | debt instruments | долговые инструменты |
| 38. | depository institutions | депозитарные учреждения |
| 39. | efficiency | рентабельность |
| 40. | efficient | эффективный, рентабельный |
| 41. | equity | собственный капитал |
| 42. | excess | излишек |
| 43. | funds | средства |
| 44. | insider trading | сделки с использованием служебной информации |
| 45. | interest payments | выплаты процента |
| 46. | intermediation | посредничество |
| 47. | preferred stocks | привилегированные акции |
| 48. | principal payments | выплата основной суммы кредита |
| 49. | return | доход |
| 50. | risk exposure | риск потенциальных убытков |
| 51. | stock | капитал компании |
| 52. | to channel/ transfer/move funds | перераспределять, переводить средства |
| 53. | to expose | подвергать |
| 54. | to issue securities | выпустить ценные бумаги |
| 55. | to raise funds | привлекать средства, капитал |
| 56. | to time | распределять по времени |
| 57. | transaction costs | операционные издержки |
| 58. | welfare | социальное обеспечение, благосостояние |
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