Unit 9 Financial Markets

After studying this text, you are required to:  understand the meaning of finance;  name some famous financial markets;  learn the definition of foreign exchange and foreign exchange market  understand some inportant words and expressions

Text A: Financial Markets in General

 Discuss some information about the world’s financial markets.  1. Can you name some typical financial markets?  2. Do you know the characteristics of money.  3. What is finance and financial market?

 Read Text A and answer the following questions:  1. Is allocation of money in equilibrium at all times?  2. Under what condition is credit conducted?  3. What are finance and financial markets?  4. What distinguishes money market and capital market?  5. What methods can be used to prevent financial crisis?

 Check the exercises:  1. Is allocation of money in equilibrium at all times?  No, the allocation of money is lopsided in various areas at different date. Therefore, the quantity of currency is more or less.  2. Under what condition is credit conducted?  Credit is conducted on the condition that the principal and the interest should be paid back later.

 3. What are finance and financial markets?  Finance is usually defined as financing of money by penetration of payment, borrowing and lending of money. Financial markets are the markets for financing funds. There are two types of financial market: money market and capital market.

 4. What distinguishes money market and capital market?  A way of distinguishing markets is on the basis of the maturity of the securities. The money market is a financial market in which only short- term debt instruments are traded while the capital market is the market in which longer- term debt and equity instruments are traded.

 5. What methods can be used to prevent financial crisis?  We can take measures such as strengthening macroeconomic control, improving foreign trade structure, watching the financial markets closely, and if necessary, we can apply for the help of those international organizations

 Read the text again and finish the following exercise.  Fill in the blanks with corresponding words in the box.  In this rapidly changing economy, (1)_______ are linked in a wide network of individuals, enterprises, government agencies, news agencies, commercial banks, the central bank, securities firm, investment companies, insurance companies, and various funds. These participants have different (2) ________ when they operate in financial markets. They use the financial markets to (3) _________ the funds for short periods of time or to finance long-term investment. Commercial banks, for example, tend to lend in the money markets to (4) ________ their short-term liabilities. Insurance companies and pension funds tend to lend in the (5) _____ to counterbalance their long-term liabilities.

 Vocabulary  1. tangible adj 有形的  e.g. The buildings and machinery are the company’s tangible assets.  建筑物和机器是公司的有形资产。  intangible adj 无形的  e.g. The reputation is the company’s intangible assets.  声誉是公司的无形资产。

 2. exchange n 交易，交换  e.g. Is five apples for five eggs a fair exchange?  3. lopsided adj 不均衡的  e.g. There is a lopsided ratio of men to women.  男女比例存在失衡  4. inextricable adj 分不开的  e.g. Taiwan is an inextricable part of China.

 5. integrate  ~+into/with 融入，（使）成为一体  She has completely integrated into the school life. 她已完全融入学校生活。   ~sth with sth 结合  The school integrates maths lessons with computer lessons 学校把数学课和计算机课结合 起来。

 6. speculative 投机的  e.g. He made a speculative investment in the stock market.  他在股市作了投机性的一笔投资。  7. float v ( 货币 ) 浮动  Russia floated the ruble on the foreign exchange market.  俄罗斯让卢布在外汇市场上自由浮动。

 Difficult sentences.  1. As we have noted, there are two types of basic currency activities: payment of currency as well as borrowing and lending of currency.  我们知道, 有两种基本的货币活动 : 货币支付和货 币借贷.  2. The way to raise funds in financial markets can be categorized into the intermediated and the non-intermediated.  在金融市场筹集资金的方式可分为直接筹资和 间接筹资.

 3. International financial markets are markets for financial assets traded by residents and non-residents outside the internal markets.  国际金融市场是本国居民与外国居民交易金融 资产的场所.  4. The crisis came under speculative attack by the quantum fund of Soros.  该危机由索罗斯量子基金的投机性袭击直接所 致。

 Text B:  What is the Foreign Exchange Market?

 Have a discussion on the following questions:  1. What are the currencies for the United States and Japan respectively?  2. Can you name more currencies of different countries?  3. What are soft currency?  4. Is US dollar a soft currency?

 Read the following sentences and decide whether they are true (T)or false (F).  (1) The existence of the foreign exchange markets is simply because nations have to keep their sovereign right to have and control their own currency.  （ 2 ）（） The foreign exchange market can be divided into spot and forward markets if the element of time is taken into account.  （ 3 ）（） The forward market is for foreign exchange to be delivered within two business days.  （ 4) （） When a United States company exports to a foreign country ， foreign exchange is required.  （ 5 ）（） It happens sometimes that transactions are settled in third currency.

 Analysis of the text  1 foreign exchange  (1) the currency of a country other than one's own 外汇 — 非自己本国的某国货币  (2) the exchanging of the currency of one country for that of another 国际汇兑 — 用某国货 币换成另一国货币  (3) the practice of buying and selling the money of other countries 外汇买卖 — 买卖其他国 家货币的做法

 2 foreign exchange market ： a group of exchange dealers ， mostly representing the commercial banks ， and the exchange brokers. The market has two main divisions ， the spot market, in which deliveries are made and paid for on the spot （ immediately) ， and the forward market ， in which deals are arranged for future deliveries, to be paid for on agreed dates or after delivery.  外汇市场：指一群主要代表商业银行及外汇经纪 人的外汇交易商。该市场有两个主要部分：现货 市场，（当场）立即交货付款，远期市场，为将 来交货达成交易，在交货时或交货后的协定日期 付款。

 3. purchasing power ：  the amount of goods and services that money can buy at a given time. This power varies in the level of prices,‘e. when prices rise, the purchasing power of money falls.  货币的购买力：  在一个特定时间货币所能够买到的商品与劳务的 数量。购买力同物价水平变动呈逆向变化．即当 物价上涨，货币购买力就下降。

 4 secondary market ： that part of the money market in which investors and brokers buy and sell between them- selves without the original issuer being concerned.  二级市场：货币市场的一部分，在其中投资者和 经纪人之间进行买卖，无须牵涉原发行者。  5 the value date; the date on which foreign exchange is due to be delivered  交付日：外汇应交付日期

 6 invoice vt. 开发票  to invoice sb. for stll 给（某人）开（某物的） 发票  7 offset: vt. balance, compensate for 抵消，弥补  He has to offset his small salary by living economically.  他薪水微薄，不得不节俭度日。

 8 soft currency:  that of a country which has a weak balance of payment and therefore a currency for which there is relatively little demand. It can usu. be bought cheaply, esp. in exchange for hard currency.  软通货，软币：  一个国际收支能力薄弱的国家发行的，因此对其 需求童较小的货币。这种货币一般用低价就可获 得．特别是在兑换硬通货时。

 hard currency:  that of a country which has a strong balance of payments and a currency that is unlikely to fall in value. It is, therefore ， much in demand. Its price is high, esp. in exchange for soft currency.  软通货，软币：  国际收支地位较强的国家所发行的，币值不大可 能贬值的货币。因此这种通货十分抢手，其价格 （特别是兑换成软通货时）很高。

 Conclusion  Have a discussion on the following questions:  1. Why is it necessary for us to establish the foreign exchange market?  2. How can we benefit from the transactions in the foreign market? Can you gibe some examples to show how you understand it?

 Assignment:  Finish the exercises  Preview Unit 10