2. Unit 12: Bond Basics Financial English

3. Unit 12: Revision of Unit 11Revision of Unit 11Revision of Unit 11Revision of Unit 11 Background information of Unit 12Background information of Unit 12Background information of Unit 12Background information of Unit 12 TextTextText ExercisesExercisesExercises AssignmentAssignmentAssignment

4. Review of Unit 11 DictationDictationDictation Exercises Check-up Exercises Check-up  Blanks filling Blanks filling Blanks filling  Multiple Choices Multiple Choices Multiple Choices

5. Dictation Ⅰ.Dictation! You are going to hear 5 sentences. Each will be read three times. Write down the sentences according to what you hear. 1.2.3.4.5. Check-up

6. Key to Dictation: 1. Some people consider playing the stock market to be a form of gambling. 2.As a part owner of the company, you receive information about the company’s financial performance and you have voting rights in determining who runs the company. 3.Investors buy stocks with the belief that the company will grow continuously to raise the value of their shares. 4.Unlike common stock, preferred stock does not usually include voting rights and pays a specified dividend. 5.A bear market indicates the continuous downward movement of the stock market. Dictation

7. II. Fill in the blanks with proper words or phrases given below Check-up dividend strategy flexibility dividend strategy flexibility option inflation return share option inflation return share fund invest opportunity

8. Stock market investment gives you the unique ________ to take a direct part in the growth and success of companies. When you buy ________ in a company, it means that you actually own a portion of that company. As part owner, you benefit by receiving part of the profits or ________ and sharing in the growth of the value of the company. The company benefits by raising ________ or capital when your shares and other shares are first sold. These funds are used to operate and expand the business. In general, share investments produce better ________ than fixed interest investments, particularly when money is invested long term. Stock market investment gives you the unique ________ to take a direct part in the growth and success of companies. When you buy ________ in a company, it means that you actually own a portion of that company. As part owner, you benefit by receiving part of the profits or ________ and sharing in the growth of the value of the company. The company benefits by raising ________ or capital when your shares and other shares are first sold. These funds are used to operate and expand the business. In general, share investments produce better ________ than fixed interest investments, particularly when money is invested long term. Check-up

9. Stock market investment gives you the unique opportunity to take a direct part in the growth and success of companies. When you buy shares in a company, it means that you actually own a portion of that company. As part owner, you benefit by receiving part of the profits or dividends and sharing in the growth of the value of the company. The company benefits by raising funds or capital when your shares and other shares are first sold. These funds are used to operate and expand the business. In general, share investments produce better returns than fixed interest investments, particularly when money is invested long term. Stock market investment gives you the unique opportunity to take a direct part in the growth and success of companies. When you buy shares in a company, it means that you actually own a portion of that company. As part owner, you benefit by receiving part of the profits or dividends and sharing in the growth of the value of the company. The company benefits by raising funds or capital when your shares and other shares are first sold. These funds are used to operate and expand the business. In general, share investments produce better returns than fixed interest investments, particularly when money is invested long term. Check-up

10. Although there are rises and falls in the stock market, history shows that over the long term, the value of the stock market rises. In the US, which has a long history of deregulated stock market, the average real return per annum after ________ is approximately 10%. Direct investment in the stock market also gives you control over where you put your money. You decide which companies you want to ________ in and when the time is right for you to see your shares. If you want to be in control, stock market investment is a good ________. Although there are rises and falls in the stock market, history shows that over the long term, the value of the stock market rises. In the US, which has a long history of deregulated stock market, the average real return per annum after ________ is approximately 10%. Direct investment in the stock market also gives you control over where you put your money. You decide which companies you want to ________ in and when the time is right for you to see your shares. If you want to be in control, stock market investment is a good ________. Check-up

11. Although there are rises and falls in the stock market, history shows that over the long term, the value of the stock market rises. In the US, which has a long history of deregulated stock market, the average real return per annum after inflation is approximately 10%. Direct investment in the stock market also gives you control over where you put your money. You decide which companies you want to invest in and when the time is right for you to see your shares. If you want to be in control, stock market investment is a good option. Although there are rises and falls in the stock market, history shows that over the long term, the value of the stock market rises. In the US, which has a long history of deregulated stock market, the average real return per annum after inflation is approximately 10%. Direct investment in the stock market also gives you control over where you put your money. You decide which companies you want to invest in and when the time is right for you to see your shares. If you want to be in control, stock market investment is a good option. Check-up

12. Check-up Another attractive feature of stock market investment is the ________ to change your investments when your personal circumstances change. For example, if you need money for a well-earned break, an extension on our house or your children's education, all you need to do is sell your shares. Stock market investment allows you to follow your investment. You'll receive regular information from companies you invest in and can attend meetings. This enables you to gain a unique insight into the results and ________ of the organization and learn a lot in the process. Another attractive feature of stock market investment is the ________ to change your investments when your personal circumstances change. For example, if you need money for a well-earned break, an extension on our house or your children's education, all you need to do is sell your shares. Stock market investment allows you to follow your investment. You'll receive regular information from companies you invest in and can attend meetings. This enables you to gain a unique insight into the results and ________ of the organization and learn a lot in the process.

13. Check-up Another attractive feature of stock market investment is the flexibility to change your investments when your personal circumstances change. For example, if you need money for a well-earned break, an extension on our house or your children's education, all you need to do is sell your shares. Stock market investment allows you to follow your investment. You'll receive regular information from companies you invest in and can attend meetings. This enables you to gain a unique insight into the results and strategies of the organization and learn a lot in the process. Another attractive feature of stock market investment is the flexibility to change your investments when your personal circumstances change. For example, if you need money for a well-earned break, an extension on our house or your children's education, all you need to do is sell your shares. Stock market investment allows you to follow your investment. You'll receive regular information from companies you invest in and can attend meetings. This enables you to gain a unique insight into the results and strategies of the organization and learn a lot in the process.

14. III. Choose the best answer 1. Most stocks are traded on ______. A. primary markets 1. Most stocks are traded on ______. A. primary markets B. secondary markets C. credit markets D. capital markets

15. Choose the best answer 2. When an investor is buying stock as an investment, the value of most direct concern is______. A. par value B. Liquidation value C. market value B. Liquidation value C. market value D. book value D. book value

16. Choose the best answer 3 3. According to diversification principle in investment, suppose you invest Stock X and Stock Y with equal funds, which of the following is not true? ______. A. A.If X and Y are totally independent with each other, the risk of the portfolio is reduced B. B.B. If X and Y are perfectly negatively correlated, the risk of the portfolio is perfectly offset C. If X and Y are perfectly positively correlated, the risk of the portfolio is neither reduced nor increased D. If X and Y are perfectly negatively correlated, the risk of the portfolio is neither reduced nor increased

17. Choose the best answer 4. An analyst estimates that a stock has the following probabilities of return depending on the state of the economy: State of economy Probability Return State of economy Probability Return Good 0.1 15% Good 0.1 15% Normal 0.6 13% Normal 0.6 13% Poor 0.3 7% Poor 0.3 7% The expected return of the stock is ______. A. 7.8% B. 11.4% C. 11.7% D. 13.0%

18. Choose the best answer 5. The holder of preference shares has preference over the ordinary shareholders under the following circumstance: _______. A. A.his voting rights are considered more important B. B.he has the greater right in choosing the board of directors C. C.he receives his dividend before the ordinary shareholder D. D.he has the right to buy ordinary shares more cheaply

19. Text : Background Information 本章旨在 介绍债券的基础知识。债券是国家、地方政府、 上市公司，或私人公司为解决财政上的困难而发行的有价 证券。债券的利息承诺是契约性的，不论债券人的财务状 况如何，债券发行商均有义务于利息发布或债券到期当日， 交付利息或本金予债券持有人。按发行主体，债券可分为 政府债券，市政公债和企业债券。进行债券信用评级方便 投资者进行债券投资决策，评级机构最著名的两家是美国 标准 · 普尔公司和穆迪投资服务公司。提前赎回条款可以使 发行者在预定时期内重新购买或者赎回债券。债券和股票 从筹资的性质、存续时限、收益来源、价值的回归性和风 险性上有所不同。

20. Text : Background Information 本章重点 : 通过本章学习，学生应该掌握 ●债券的定义 ●债券的分类 ●如何计算债券收益 ●债券和股票的区别

21. Unit 12: Part I: 12.1 Introduction to Bond Part II: 12.2 Bond Market Part Ⅲ :Part : 12.3 Differences between stocks and corporate bonds

22. Listening Text 12.1 Introduction to Bond Listen carefully to the first part of the text and then try to translate it.

23. Listening Listening Text TextText Language Points Language PointsLanguage PointsLanguage PointsText

24. ● WHAT IS BOND? A bond is a debt security, similar to an I.O.U. When you purchase a bond, you are lending money to a government, municipality, corporation, federal agency or other entity known as the issuer. In return for the loan, the issuer promises to pay you the amount borrowed (called “principal”) at a designated future date plus a fixed amount of interest. Some bonds pay the interest or coupon at designated intervals (i.e. on a specific date each year). Others pay both principal and interest when the bonds mature at a specified date in the future.I.O.U. In return for principalcoupon Text :

25. . Once a bond is issued, it becomes a tradable commodity. Its value on the open market will rise and fall as interest rates change or as faith in the issuer changes. But when it reaches its maturity date, any interim variations in price are of no consequence because the bondholder receives the par value assuming that the issuer is capable of repaying the loan. maturity Text :

26. ● ● WHY INVEST IN BONDS? Bonds provide a known rate of return. Thus bonds provide a steady, known income. Bonds return a known value on their maturity date. This provides security for your money provided you hold the bond to maturity. Bond yields are generally superior to money market funds, certificates of deposit, and bank accounts. Yields are related to liquidity and risk. Since bonds vary in price during their life, you could take a loss if you unexpectedly had to sell a bond prior to its maturity. Also, the issuing company might go bankrupt and be unable to repay the loan.yield certificates of depositbank accounts liquiditygo bankrupt Text :

27. Government and municipal bonds can have tax advantages. In general, it is in a nation’s interest that bonds issued by its government pay their coupons and pay the principal sum upon maturity, so that the credibility of the government remains strong and it can continue to raise capital through the future issuance of bonds.Government and municipal bonds Standard & Poor's and Moody's provide independent "safety" ratings for corporate bonds. These ratings indicate how likely it is that the bondholder will be able to repay the loan. Lower rating bonds have to provide higher yields to attract investors, but represent higher risk. Ratings provide a standardized and valuable tool for the bond investor. Text

28. ● ● DIFFERENT TYPES OF BONDS Bonds are classified according to their maturity terms as short- term, medium-term or long-term. What constitutes short-term, medium-term or long-term debt securities vary from one rating agency to another, and from one textbook to another. Some describe short-term debt securities as those having maturities of one, three, or six months, usually less than a year. Medium-term bonds as having maturities of between one to seven years, while long-term bonds, usually government bonds as having maturities up to 30 years. There are other rating agencies that classify short-term bonds as those with maturity of one to five years, medium-term bonds as between five to twelve, and long-term bonds as those above twelve years. Text

29. In general, there are three main types of bonds:   Municipal Bonds These are issued by state and local governments or their agencies to pay for public improvements, reducing debt, or other public purposes. If you buy bonds issued by your home state, you will not have to pay state income tax or federal income tax (or city tax, if you have one). If you buy bonds issued by another state, you will not have to pay federal tax, but you will pay tax to your own state (and city if applicable). Text

30.   Corporate BondsCorporate Bonds These are issued by corporations that want to raise money for their business ventures, ranging from balancing their cash flow to buying new equipment, building new facilities, or spending on new research. Interest earned from corporate bonds is taxable, so they tend to pay higher rates than government or municipal bonds, which have some tax benefits. Corporate bonds are often considered appropriate investments for the bond portion of your retirement plan investments, because you get the higher interest and still aren't taxed until the earnings are withdrawn. A municipal or government bond will pay you less interest and already offers a tax benefit, so they offer less incentive to include them in your retirement portfolio.portfolio Text

31.   Government Bonds Government bonds are those issued by the federal government or one of its agencies. From a credit perspective, these are the safest of all investments because they're backed by the "full faith and credit" of the U.S. government; so unless the U.S. goes bankrupt, you're guaranteed to get your money back. Text

32. Common types of U.S. government bonds include Treasuries and Savings Bonds.Savings Bonds ☆ Treasuries Treasury bills, notes, and bonds are collectively called "Treasuries."Treasury bills, notes, and bonds Treasury bills (T-bills): These are short-term securities that mature in a year or less. You buy them at a discount price and at the end of the term, you're repaid the full price. The difference is what constitutes your earnings. These earnings are exempt from local and state income taxes, but must be reported on your federal tax return. Text

33. Treasury notes: These are issued for the intermediate term, such as 2 years up to 10 years. Expect to earn a little higher interest rate than what you could get from a T-bill. Interest is paid every six months. Earnings are exempt from local and state income taxes but must be reported on your federal tax return. You can sell your Treasury note before it matures, if you wish. Treasury bonds: These are issued for the long-term, generally from 10 years to 30 years. Expect to earn a higher interest rate than what you could get from a T-note. Interest is paid every six months. Earnings are exempt from local and state income taxes but must be reported on your federal tax return. You can sell your Treasury bond before it matures, if you wish.exempt from Text

34. ☆ Savings Bonds ☆ Savings Bonds Savings bonds are government bonds designed especially for individual investors. As such, they can generally only be redeemed by their original owner, except in limited circumstances. Savings bonds are government bonds designed especially for individual investors. As such, they can generally only be redeemed by their original owner, except in limited circumstances.redeem Text

35. ● THE ISSUERS A key feature of a bond is the nature of the issuer. Bonds can be issued by either governments or corporations. Before its issuance, the bond usually had to go through specialized companies for assessment of the issuer’s credit standing. Such companies, like Standard&Poor Corp. and Moody’s Investment Service Corp., are mostly located in international security centers. The state of an issuer’s credit standing will be listed according to its rating, with the best as 3A and the worst as C or D. issuers, with creditworthy grades, will enjoy favor in deciding the bond interest rate. Text

36. Text : Language Points I.O.U. I owe you I.O.U. I owe you To the Finance office of the University I. O. U five thousand yuan only. 今借到院财务处人民币五千元整。

37. Text : Language Points in return for 作为... 的报答 someone who earn wages in return for their labor. 用工作来换取工资的人。 someone who earn wages in return for their labor. 用工作来换取工资的人。 action taken in return for an injury or offense. 偿还伤害或攻击的行为。 An answer or response in return for something done. 答谢，致谢为回报已做事情的答复或回复

38. Text : Language Points principal 本金 principal 本金 calculate principal and interest. 以本金和不断累计的利息为基数计算利息。

39. Text : Language Points coupon （公债等的）息票 This coupon can redeem at any of our branch. 这种息票可在我们的任何分行兑现. In Singapore, for example, a government bond maturing in 2004 with a coupon of 3.5% will currently yield about 3.4%. 举例说，在新加坡，一个 2004 年到期，息票利率为 3.5% 的政府债券，目前能提供的收益大概是 3.4% 。 In Singapore, for example, a government bond maturing in 2004 with a coupon of 3.5% will currently yield about 3.4%. 举例说，在新加坡，一个 2004 年到期，息票利率为 3.5% 的政府债券，目前能提供的收益大概是 3.4% 。

40. Text : Language Points maturity ( 债务、票据等的 ) 到期 ; 到期日 a dividend paid in addition to the regular dividend. 固定股息之外另发的股利 The company raised its dividend by 10%. 公司提高股息 10 ％。 These show the dividend amount and the exdividend date. 它们会显示股息额和除权日期。 We pay a dividend of 10 per cent. 我们所付的股息为 10% 。

41. Text : Language Points yield 产量；收成；收益 This year's yield from the coal mine was very large. 今年这煤矿产量甚丰。 今年这煤矿产量甚丰。 Bonds that yield well. Bonds that yield well. 获利很多的债券 获利很多的债券

42. Text : Language Points certificate of deposit 存款单 I understand time certificate of deposit pays a higher rate of interest than regular deposits do. 据说定期存款的利率比一般存款高。 There are several categories of time deposits in the US. First, CDs (certificate of deposit) of $ 100, 000 or more, which are primarily large negotiable certificates of deposit of corporations. 在美国，定期存款分为几类：第一， 10 万美元以上 ( 含 10 万美元 ) 的存单，主要是由公司持有的大面额可转让存单 构成。

43. Text : Language Points bank account 银行存款, 银行往来帐 My bank account stands at ￡ 550. 我的银行存款有五百五十镑。 I have an account with Midland Bank. 我在米德兰银行开有户头。 He have a non- resident bank account. 他有一个非本国居民银行帐户。 She kept her bank account open. 她的银行帐户随时可以使用。

44. Text : Language Points liquidity 流动性, 流畅 The bank has progressively increased its liquidity. 银行逐渐地增加其流动资产。 They are largely held by financial institutions for trading and liquidity management purposes. 这些债券大部分由金融机构持有，以用作买卖及管理流动资 金的需要。 This permits their trading on an exchange thus enhancing liquidity. 它们能在交易所交易，增加流量。

45. Text : Language Points go bankrupt 破产 He go bankrupt after two year in business. 经商两年后他破产了。 Unless he pumps more funds in, the firm will go bankrupt. 若他不投入更多资金，公司将破产。 We have to produce new products to get out of the red otherwise we will go bankrupt. 我们应该生产新产品来谋求盈余，否则我们就会破产了。

46. Text : Language Points government bond 政府债券 For example, in Singapore, current short-term fixed deposit rates are now about 1%, compared with 3% for a 5-year Singapore government bond and 3.6% for a 5-year HDB bond. 例如，在新加坡，目前的短期定期存款利率大约是 1% ，而 5 年 期政府债券是 3% ， 5 年期建屋发展局债券是 3.6% 。 Bonds, measured by the UOB Government Bond Index, are less volatile although the probability of earning higher returns than equities is lower. 以大华银行政府债券指数衡量的债券，虽然赚取比股票高的回 报的可能性低，但是波动比较没有那么大。 municipal bond 市政公债

47. Text : Language Points corporate bond 公司债券 Investors looking for a medium-to low-risk route to income in- vesting are increasingly turning to the corporate bond market as an alternative to equities and government bonds. 为收入而投资，但只接受中低风险者，很多都转向公司债券，以 替代股票和政府债券。 The corporate bond market in Singapore is likely to develop in both the variety of stock available and the liquidity of the secondary market. 新加坡的公司债券市场预料会得到发展，以致证券种类更多，二 手市场流通性更大。 The corporate bond market in Singapore is likely to develop in both the variety of stock available and the liquidity of the secondary market. 新加坡的公司债券市场预料会得到发展，以致证券种类更多，二 手市场流通性更大。

48. Text : Language Points portfolio ( 保险 ) 业务量, 业务责任 ; 有价证券 ( 组合 ) Portfolio investment in the form of ‘China funds’ is also popular. “ 中国基金 ” 形式的投资组合亦颇受欢迎。 International portfolio investments are financial investments made in foreign countries. 国际有价证券投资指在别国进行的金融投资。 My stockbroker manages my portfolio for me. 我的证券经纪人替我管理投资组合

49. Text : Language Points savings bond 储蓄公债 Tom's parents gave him a savings bond for his marriage. 汤姆的父母亲给他储蓄公债做为他的结婚礼物。

50. treasury bill 国库券，财政部库券。 treasury notes( 美国的 ) 中期国库券或政府债券 treasury bonds( 美国的 ) 长期国库券或政府债券 Text : Language Points

51. exempt from 免除, 豁免 Food is exempt from sale tax. 食品可免销售税。 Religious organizations are exempt from taxation. 宗教机构被免除赋税。 He is exempt from punishment about this thing. 关于此事对他已免于处分。

52. Text : Language Points redeem 赎回, 挽回, 恢复, 补偿, 兑换 This coupon can is redeem at any of our branch. 这种息票可在我们的任何分行兑现。 How much must I pay to redeem my necklace from pawn? 赎回我的项链要花多少钱

53. Listening Text 12.2 Bond Market Listen carefully to the second part of the text and then try to translate it.

54. Listening Listening Text TextText Language Points Language PointsLanguage PointsLanguage PointsText

55. ● HOW ARE BONDS TRADED? There are two main markets for bonds: · primary market: bonds sold for the first timeprimary market · secondary market: the resale of bonds some time after their initial offeringsecondary market When the issuer (government or corporations) first offers new issues, that first trading is done at the primary market. What this means is that the issuer is able to raise funds for its use and the money raised from the sale of the bonds come directly to the issuer. Subsequently, the bonds bought from the issuer can be bought and sold among other investors, and this is referred to as the secondary market. Text

56. The secondary market provides liquidity to the individuals or institutions that have acquired the bonds, which are now able to sell off the bonds before the maturity date, should they wish to do so. The trading of bonds in the secondary market creates a market pricing of the bonds that depends on the supply and demand of the bonds, and prevailing interest rates, among other factors. When the market price of the bond is less than its par value, the bond is considered as being sold at a discount. When the market price of the bond is more than its par value, then the bond is being sold at a premium.at a premium Text

57. ● ● HOW MUCH WILL YOU EARN? The amount that you earn will be based on the bond's face value, coupon rate and yield. The face value, or par value, of a bond is the value of the bond at maturity, the date when the loan is paid off. A common face value is $1,000 per bond. It's important to keep in mind that the actual market price of a bond may be higher or lower than the bond's face value. A bond's market price can fluctuate over time, depending on a variety of factors including investor demand, interest rate movement, the bond's maturity date and the creditworthiness of the issuer.paid off Text

58. A bond's coupon rate refers to the amount of interest that will be paid based on the face value of the bond. Interest may be divided into quarterly, semiannual or annual payments, depending on the issuer and the individual bond. For example, if the nominal value of the bond is RMB100,000 and the coupon rate is 7%, then the bondholder will receive an annual interest of RMB7,000. If the agreed periodic payment is every six months, then the bondholder will receive RMB3,500 every six months. A rate that stays as a fixed percentage of the par value like this is a fixed-rate bond. Another possibility is an adjustable interest payment, known as a floating- rate bond. In this case the coupon rate is tied to market rates through an index such as the rate on Treasury bills. A bond's coupon rate refers to the amount of interest that will be paid based on the face value of the bond. Interest may be divided into quarterly, semiannual or annual payments, depending on the issuer and the individual bond. For example, if the nominal value of the bond is RMB100,000 and the coupon rate is 7%, then the bondholder will receive an annual interest of RMB7,000. If the agreed periodic payment is every six months, then the bondholder will receive RMB3,500 every six months. A rate that stays as a fixed percentage of the par value like this is a fixed-rate bond. Another possibility is an adjustable interest payment, known as a floating- rate bond. In this case the coupon rate is tied to market rates through an index such as the rate on Treasury bills.nominal Text

59. You might think investors will pay more for a high coupon than a low coupon. All things being equal, a lower coupon means that the price of the bond will fluctuate more. There is often confusion between the yield and the coupon rate of a bond. While the coupon rate is fixed at issue, and does not change till maturity, the yield is the discount rate or interest rate that an investor wants from investing in a bond. Price bonds are quoted in relation to their yields. As the required yield increases, the price of the bond decreases. The reverse is also true.discount rate Text

60. If you purchase a bond at face value, your coupon rate and actual earned yield will be the same. However, bonds are often sold at higher or lower prices than their face values. As a result, your actual yield can be different from the bond's coupon rate. Buying a bond at a discount, or less than its face value, results in a higher yield than the stated coupon rate. In contrast, buying a bond at a premium, or more than its face value, results in a lower yield than the stated coupon rate. If you purchase a bond at face value, your coupon rate and actual earned yield will be the same. However, bonds are often sold at higher or lower prices than their face values. As a result, your actual yield can be different from the bond's coupon rate. Buying a bond at a discount, or less than its face value, results in a higher yield than the stated coupon rate. In contrast, buying a bond at a premium, or more than its face value, results in a lower yield than the stated coupon rate. Text

61. primary market 一级市场 secondary market 二级市场 Text : Language Points

62. at a premium 在票面价值以上, 非常珍贵 Text : Language Points Shares are selling at a premium. 股票按超出票面价值出售 Experienced personal assistants are always at a premium. 有经验的私人助手总很难找到。 If you're a student,time is at a premium. 如果你是一个学生，时间是宝贵的。

63. pay off 还清 ( 债务等 ) 付清, 报复, 赢利 Text : Language Points I ‘ll pay you off for your insult! 我要报复你对我的侮辱 Joel wanted to pay Wailliam off for backbiting him. 乔尔因威康在背后说他坏话而要施行报复。 Next he undertook to pay off the debts. 然后，他同意负责偿还债务。

64. nominal 票面上的, 名义上的 Text : Language Points The old man is only the nominal head of the business. 那老人只是这个企业的挂名的总裁。 nominal demand for money and actual demand for money 名义货币需求与实际货币需求 a nominal par 票面价格

65. discount rate 贴现率, 折现率, 外汇汇率 Text : Language Points the discount rate fixed by a central bank. 中央银行规定的贴现率。 They receive slightly better discount rate from the bank of England. 他们从英格兰银行得到略为好的贴现率。 The interest deducted prior to purchasing, selling, or lending a commercial paper; the discount rate. 贴现率在购买、出售或贷款的商业票据前削减利息；贴现率

66. Listening Text 12.3 Differences between stocks and corporate bonds Listen carefully to the second part of the text and then try to translate it.

67. The differences between stocks and bonds can be summarized into the following six points: 1. Stocks are written evidence of ownership, while bonds are written evidence of debts. 2. Stocks such as common stocks do not have a fixed dividend. In contrast, bonds normally have a fixed interest or income. 3. Stockholders can elect a board of directors which controls the corporation. Bond holders have no voice in or control over management of the corporation. Text

68. 4. Stocks don’t have a maturity date, because the corporation does not ususally repay the stockholders. Bonds have a maturity date when the corporation is to repay the bondholder the face value of the bond sometimes plus the total interests. 5.All corporations issue or offer to sell stocks, but corporations do not necessarily always issue bonds. 6. Stockholders have a claim against the property and income of a corporation after all creditors’ claims have been met. Bondholders have a claim against the property and income of a corporation that must be met before the claims of stockholders. Text

69. Bonds do not have the long term growth potential of stocks but can provide steady income and security of capital if held to maturity. Because of this, bonds are recommended as an increasing percentage of a portfolio as the portfolio owner becomes older. However, bonds are not fixed value investments since their market value can change with interest rates especially when far away from maturity dates. Text

70. Ⅰ. Explain the following terms: bonds face value government bond treasury bill secondary market Exercises Check-up

71. Exercises 1. 1.A bond is a debt security, similar to an I.O.U. When you purchase a bond, you are lending money to a government, municipality, corporation, federal agency or other entity known as the issuer. In return for the loan, the issuer promises to pay you the amount borrowed (called “principal”) at a designated future date plus a fixed amount of interest. 2. 2.Face value is the value imprinted on a security, such as a stock certificate or bond, used to calculate a payment, such as a dividend or interest.

72. Exercises 3. Government bonds are those issued by the federal government or one of its agencies. 4. Treasury bills are short-term securities that mature in a year or less. You buy them at a discount price and at the end of the term, you're repaid the full price. 5. Secondary market refers to the resale of bonds some time after their initial offering.

73. Ⅱ. True or False ( ) 1. Bonds with a redemption provision usually have a lower annual return. ( ) 2. Interest earned from corporate bonds is taxable, but most of the time they will have some tax benefits. ( ) 3. Bond market prices and interest rates are directly related. Exercises

74. Ⅱ. True or False ( F ) 1. Bonds with a redemption provision usually have a lower annual return. ( F ) 2. Interest earned from corporate bonds is taxable, but most of the time they will have some tax benefits. ( T ) 3. Bond market prices and interest rates are directly related. Exercises

75. ( ) 4. Investors of bonds are quite clear about the exact amount of cash they will get back, provided they hold these securities until maturity. ( ) 5. If a bond is capitalized over a period greater than one year (one period), it involves the calculation of compound interest. Exercises

76. ( T ) 4. Investors of bonds are quite clear about the exact amount of cash they will get back, provided they hold these securities until maturity. ( F ) 5. If a bond is capitalized over a period greater than one year (one period), it involves the calculation of compound interest. Exercises

77. Exercises III. Translate the following English sentences into Chinese. 1. Bonds are known as fixed-income investments, because the yield to maturity is predetermined. 2. Corporate bonds are debt contracts requiring borrowers to make periodic payments of interest and repay principal at the maturity date. 3. A rating change can reflect a variety of events that affecting the ability of an issuer to repay the principal and interest on its debt. Check-up

78. Exercises 4. When the coupon rate is lower than prevailing interest rates, the bond will sell at a discount from its face values. 5. Issuing Treasury securities is a means for government to regulate the money supply. Check-up

79. Exercises 1. 债券投资被成为固定收入投资，因为到期收益是预先确定了 的。 2. 公司债券就是要求借款人在兑换日期结束时按期偿还本金并 支付定期的利息的债务合同。 3. 债券级别的变化可以反应出一系列影响债券发行人的偿还本 金的能力和债务利息的能力的事件。

80. Exercises 4. 当息票率低于现行利率水平时，债券的卖出价格将低于 其券面的价值。 5. 发行国库券是政府调节货币供给的一种手段。

81. Exercises IV ． Use your own words to name out the differences between bonds and stocks IV ． Use your own words to name out the differences between bonds and stocks

82. Assignments 1. Review the Text. 2.Keep in mind the special terms learned in this Unit. 3.Do exercises in the book.