Business English Texts

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MONICA PONTA OTILIA HUIU

BUSINESS ENGLISH TEXTS


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MONICA PONTA OTILIA HUIU

BUSINESS ENGLISH TEXTS

Editura Universitii Aurel VlaicuARAD, 2008


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Descrierea CIP a Bibliotecii Naionale a Romniei

PONTA, MONICABusiness English texts / Monica Ponta, Otilia Huiu - Arad :

Editura Universitii Aurel Vlaicu, 2008Bibliogr.ISBN 978-973-752-248-1

I. Huiu, Otilia Liana

811.111:336


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CONTENTS

Introduction 7

Part I. Business Texts 9Unit 1 - English Banks 9

Unit 2- The Banking System (1) 11

Unit 3 The Banking System (2) 13

Unit 4 Financial Markets 15

Unit 5 The Euro 18

Unit 6 Money Market 21

Unit 7 Euromarkets 23

Unit 8 Banking Risk Management 25Unit 9 Securisation 28Unit 10 Money Laundering 30

Unit 11- What is Business ? 32Unit 12 Organization of Business 34Unit 13 What is a franchise? 36Unit 14 Microeconomics and Macroeconomics 38Unit 15 Two Basic Concepts in Finance: Assets andLiabilities

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Unit 16 What is marketing ? 43Unit 17 The Stock Exchange Market 46Unit 18 Functions of Commerce 49Unit 19 An Export Transaction 51Unit 20 Methods of Payment in Foreign Trade 53

Part II . English Grammar 56The Noun 56

Exercises 61The Article 63

Exercises 71

The Adjective 73

Exercises 77

The Numeral 79

Exercises 83

The Verb 83

Exercises 98


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The Adverb 115

Exercises 119

Part III. Commercial Correspondence 121

Addressing envelopes 121Parts of a letter 121

References 122

Enquires and replies 124

Quotations, estimates and tenders 128

Orders and their fulfillment. Printed Order Forms. 129

Letter order 129

Invoices and adjustments 138

Debit and credit notes 139Statement of accounts 140Methods of payment 141

Complaints 142Contracts 144Special business letters 151Memorandums 154Report 157Leaflet 159

Notice 160Minute 161Letter of application 162Curriculum Vitae 165Banking and Home Business 167Transport 171Refrences 174


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INTRODUCTION

The present collection of business texts is intended

mainly for the use of those who study for a degree in economics

and finance and who have an intermediary level of English.

The book has three main parts: Part I includes texts and

specialized vocabulary from the field of economics, finance,

accounting and trade. Part II offers a theoretical background for

the most important issues of English grammar followed by a

series of exercises. Part III comprises the Commercial

correspondence with the most frequently used types of letters,

contracts, as well as other types of documents pertaining to

finance, commerce and accounting.

The contribution of the two authors is as follows :

Monica Ponta: Units 1-10; Part II- Grammar (the theoretical

outline); Part III (Commercial Correspondence).

Otilia Hutiu : Units 11-20 ; Part II (Grammar exercises ).

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PART II. BUSINESS TEXTS

UNIT 1ENGLISH - BANKS

There are a lot of banks in our tows and villages and eventhe internet offers you the opportunity to do on line banking asyou can pay for goods and services with a little smart card.

Speaking about the UK, one has to go back in time, threehundred years ago, to find the beginning of the banking system.The banks were subject to the provisions of the various Acts of the

Parliament. The Bank of England was established in 1694 and itwas nationalized in 1946 due to the Bank of England Act and gotlegal powers to enforce its directives. After the second world war,many companies set themselves all over the country, calledthemselves banks, had freedom to develop themselves but somerestrictions were also imposed. The financial markets developedvery quickly. London became an important banking town andstarted to attract international banks.

In 1987, the Banking Act was passed; it peplaced another

Banking Act, that of 1979, which, at its turn, answered to the 1973-1974 banking crisis. This crisis was caused by the fringe bankswhich got into difficult situations because of their short term

borrowing and long term lending. These banks were not subject torigorous supervision, they operated speculatively with the fundsowned by their customers.

The Banking Act abolished a two-tier system of therecognized banks; it licensed deposit-takers. Its purpose is theintroduction of a prudential supervision. But it does not regulatethe day to day banking operations. All the institutions that are

banks are under the control of the Banking Act; there are otherinstitutions that have the right to take deposits and they aresubjects to the Acts of Parliament which are relevant to theiroperations.

Banks and insurance companies are allowed to own stockexchange subsidiaries. A new electronic system has beenintroduced bringing the old fashioned banking system up to date.In fact the banks act as intermediaries between borrowers andlenders. This is done in different ways.

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Text Comprehension

1. Answer the following questions:

When was the Bank of England founded?What acts control the banks?What happened in 1946?What happened after the Second World War?When was an important bank crisis and what happened?What did the Banking Act abolish and license?Does it regulate the every day operations?Who control the banksWhat o the acts of Parliament do?

What are the banks?

2.Banking vocabulary:

Asset (orice posesiune, tangibila sau intangibila, care arevaloare pentru posesorul sau)

Bank (banca; institutie comerciala autorizata sa atragadepozite)

Borrower(persoana care face un imprumut) Deposit ( suma de bani, platita in avans de catre un

comparator, ca parte a pretului de vanzare a unui produs, inscopul rezervarii acelui bun; suma de bani depozitata intr-obanca)

Financial adviser (orice persoana care ofera consiliere pe plan financiar altei personae, in special in privintainvestitiilor)

Interest(dobanda perceputa la imprumutarea unei sume de

bani) Intermediation(activitatea unei banci care actioneaza ca

intermediary intre doua parti ale unei tranzactii) Liabilities(datorie; obligatie) Loan(imprumut, credit) Payer(persoana sau organizatie care face o plata)

3. Topics for speaking and writing

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Write a short composition about the bank you are working withBuild up a conversation about a bank; you are a bank clerk and try

to convince somebody to become the bank customer

UNIT 2

THE BANKING SYSTEM (1)

Banking and financial market operations involve specialinstitutions and financial markets; they act within a legislativeframework and offer specialized services to individuals,

companies, governments. Lets present some of them.The Bank of England is the central bank of the kingdom. It

acts as a banker to all the other banks and government; it issues thebank notes; it manages the national debt; it lends money to all the banking institutions; it regulates the monetary and creditconditions and supervises the banking system.

The commercial banks are ruled by the Banking Act of1987 and

are allowed to take deposits and lend money on the retail and

wholesale markets. They offer banking services.Retail banks offer their services to the individuals andmedium sized businesses. They operate through branches whichoffer cash deposits, withdrawal facilities as well as possibilities oftransferring funds. They provide facilities to different types ofaccount such as current accounts, deposit accounts; they offerloans and different financial services.

International banking is developing. Foreign banks havebranches everywhere, especially in the large cities and important

towns of the countries. London is famous for this. There are bankswhich operate mainly overseas and are specialized in particularareas of the world: Far East, Asia, South Africa, and SouthAmerica.

Text Comprehensiona) Answer the questions:

1. What do banking and financial markets involve?2. What does the Bank of England do?

3. Do you know anything about the National Bank of Romania?11


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4. What do you know about the commercial banks?5. What do the retail banks do?6. Can you describe some Romanian banks?

7. What can you tell about international banking?8. Are there international banks in Romania?9. Are there Romanian banks abroad?

Banking vocabulary:

Account (cont gestionat de o banca) Balance of payments (registrele care reflecta tranzactiiunei companii cu lumea din afara) Bank deposit (deposit bancar) Bank charge (comision bancar) Bank draft (trata) Current account (cont curent) Drawer (persoana care semneaza o cambie) Drawee (persoana careia i s-a tras o cambie) Insurance (asigurare) Liquidity (masura a lichiditatii activelor uneiorganizatii) Market (piata) Negotiable (negociabil) Overdraft (plafon de creditare) Penalty (penalizare) Profitability (capacitatea de a face profit)) Savings (economii) Share (actiune, parte sociala) Withdrawal (retragere )

3.Topics for speaking and writing :- Write a short composition (200 words), using the above given

vocabulary- Translate the following sentences:

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UNIT 3BANKING SYSTEM (2)

Merchant Banks have their roots in the banking activitythe merchants were involved in, as an extension of their owntrading. They used to help foreign governments to get loans, toaccept bills of exchange. Nowadays, they offer services includingcorporate finance, foreign exchange dealings, security trading.

National Savings is a saving scheme supported by thegovernment which aids government borrowing using a set ofsaving instruments. Some of these are the fixed-interest and index-linked Savings Certificates. The National Savings, at the very

beginning, offered deposit services to customers, through PostOffice branches. It does not make loans.Discount Houses are specific to Britain and are an

important element of the British monetary system. They arebetween the Bank of England and the rest of the banking sector;they promote the orderly flow of funds between the authorities andthe banks. They receive the liquid money of the banking sector,lend to the government for the weekly offer of Treasury Bills.They trade on the wholesale money market.

Investment institutions collect the savings from thepersons and corporation sectors; they invest them in securities andin different assets. Some of them are: insurance companies,insurance brokers, pension funds, unit trusts, investment trusts.

Special financial institutions operate in the public sectorand in the private one. They offer loan finance and equity capital.The latter include finance houses, leasing houses, factoringcompanies, venture capital companies.

Text Comprehension

1. Answer the questions:1. Who founded the merchant banks and why?2.Do we have such banks in Romania?3.What can you tell about the National Savings ?4.Does Romania have such a system and how does it act?5. How do discount houses act?

6.What are the investment institutions?13


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7.Where do special finance institutions operate ?

Banking vocabulary

Acquisition accounting (proceduri contabile efectuate cand ocompanie este preluata de o alta )

Bill of exchange (un tip de cambie) Bill of lading (conosament) Charge (ipoteca legala asupra unui teren/ proprietate) Collateral (categorie de titluri de valoare) Commercial loan selling (tranzactie care implica doua banci si un

client industrial)

Due date (scadenta de plata, de ex. data maturitatii unei cambii) Financial intermediary ( o banca care detine fonduri imprumutate de

la creditori , spre a imprumuta debitori ) Finance house (societate de credit) Fund (fond comun de resurse monetare si de alt tip ) Funds transfer (transfer al fondului ) Home banking (sistem bancar national) Interest (dobanda perceputa la imprumutarea unei sume de bani) Liability (datorie, obligatie) Merger (fuziunea a doua sau mai multe firme) Principal (mandat; persoana in numele careia actioneaza un

mandatar) Solvency (suma cu care activele unei banci depasesc obligatiile) Unit banking (sistem bancar, in care o banca infiinteaza o companie

unica, fara filiale ) Wholesale (banking imprumuturi interbancare sau imprumuturi

acordate catre sau de catre alte mari institutii financiare)

3. Topics for speaking and writingBuild up sentences using the above given vocabularyWrite a short composition (about 200 words) about Romanian

banks

UNIT 4

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FINANCIAL MARKETS

One of the most important financial markets is representedby the stock exchangeAnd the most famous one is the one existing in London.

The exchange has a dominant position in international equitytrading, particularly in the cross border securities. The securityhouses offer selling and buying prices for domestic securities,oversea securities; the prices are displayed on the informationscreens all over the world. London has regional offices. A greatnumber of people own shares directly and indirectly (through

collective investment schemes - pension funds, insuranceinvestments).The market is coordinated electronically and operates in

three markets:1) domestic equities (they include listed securities of

large corporations and unlisted securities for smaller and growingcompanies)

2) gilt-edged stock (gilts are issued by the Bank ofEngland under the government control; they are traded in a

secondary market through exchange)3) international equitiesThe money markets are directed between buyers and

sellers which are banks, financial institutions, private persons.There is no physical market place; the negotiations are done by

phone, automated dealing system, the financial instruments beingCDs, bills of exchange, treasury bills, bonds.

Parallel markets are to be found and are known undernames such as:

1) inter bank market (it lets the banks to deposit surpluscash with each other)2) CDs market (it involves large companies, institutions;

it deposits large surplus sums for a given rate of interest)3) Commercial bills market (it deals with unsecured

promissory notes, short term ones; these are issued by thecompanies listed on the Stock market)

4) Euro currency market (it deals with currencies lentoutside the domestic market place; London and Tokyo are famousfor these dealings)

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The Foreign Exchange Market conducts transactionsthrough the phone and data links between banks, financialinstitutions, firms, the brokers act as intermediaries. The quotes are

given in many currencies for the buying and selling rates on a dailybasis for all types of transactions.

Text comprehensionAnswer following questions:

1. Where is the most important financial market?2. What do the security houses offer?3. How are the prices displayed?4. Do people own shares and how?

5. How the money market managed and which is are itselements?6. How is the money directed?7. Can you describe the parallel markets?8. What do you know about the Free Market Exchange?

Banking vocabulary: Affiliate (afiliere) Bank branch (filiala bancara) Bond (obligatiune) Bearer (purtator al unui cec sau cambii) Bearer bond (titlu de valoare) Bullion (lingouri de aur, argint, metale pretioase) Clearing cycle process (procesprin care, o plata, efectuata pe baza

unui cec, este transferata dintr-un cont in altul) Clearing house (sistem centralizat si computerizat de stabilire a

sumelor datorate reciproc) CD = Clearing deposits Corporate bond (obligatiune sau titlu de valoare care reprezinta un

imprumut obisnuit) Creditworthiness (evaluarea capacitatii unei persoane/firme de a

achitabunurile/serviciile primite ) Equity (activele nete ale unei companii, dupa ce u fost platiti toti

creditorii) Financial instruments (ocumente financiare)

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Gilt edged security (itlu de valoare cu dobanda fixa, emis deguvernul britanic sub forma obligatiunilor guvernamentale sau abonurilor de tezaur)

To issue ( a emite) Margin (marja) Share ( actiune ; parte sociala) Stock(stoc de active; titlu de valoare cu dobanda fixa) Subsidiary (iliala, sucursala,)

WritingBuild up sentences using the above mentioned vocabulary

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UNIT 5

THE EURO

It is a strategic and technical challenge for the Europeannations, members of the European Union. The Euro assurescurrency stability and an advance towards European integration.The business has eliminated the exchange risk; the functioning ofmarkets has been improved (i.e. an easier flow of goods andservices, lower transactions costs, a.s.o.). The trade between EUcountries is done in Euro, an euro area has been created. It has

brought about a change in the life of the Europeans (businessmen,

tourists, bankers. The major banks have made the technologychanges which have been required for euro compliance as theyneed to minimize the euro impact to their customers.

Banks have been confronted with the losing of revenuestreams due to the introduction of the single currency, the impactof the new cross border payment systems.

The companies have faced important strategic, marketingand organizational challenges. It has been set up a legal frameworkfor the use of the euro which helps the market operators to have thelegal security for contracts and obligations.

1 January 1999 and 1 January 2002 was the period whenthe euro coexisted with the national currency. For this, it wasestablished the legal framework that ensured the legally-enforceable equivalence between the single currency (euro) and thenational currency units.

The introduction of the single currency has three phases:1. the launch of the EMU (early 1998)2. the start of the EMU (1 January 1999)3. the single currency (begins with 1 January 2002)

Beginning with this date, euro is used in the EU countries,new coins and banknotes have been issued. The banks havecompleted the changeover and the national currencies have beenwithdrawn.

Text comprehensionAnswer the questions:1. What does the euro assure?2. Which is the currency used by the businessmen?

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4. What has the introduction of the euro bring about?5. What did the companies face?6. Was it a coexistence of the euro with the national

currencies?7. Can you mark the main EMU phases ?

Vocabulary

Ballon ( suma mare de bani platita pt. rambursarea unuiimprumut, care nu este o rata obisnuita)

Base rate (rata a dobanzii, folosita ca referinta de catrebanci, pt dobanzile percepute clientilor)

Bridging loan (credit punte) Business credit (imprumut facut corporatiilor) Capital (valoarea totala a activelor unei persoane, fara

obligatiile aferente) Consumer credit (credit pentru bunuri de folosinta

indelungata) Credit line (limita unui credit) EMU ( European Monetary Union= Uniunea monetara

europeana) EMS ( European Monetary System= Sistemul monetary

european) Exposure (riscul pe care il asuma clientul) Franchise (licenta acordata unui producator, distribuitor

care le permite acestora sa produca/vanda un anumit produs/serviciu, intr-o zona determinate, pe o perioadastabilita)

Installment (o plata dintr-o serie, mai ales la achizitionareabunurilor in regim de vanzare in rate)

Money market unit trust ( fond de investitii finaciare care

investeste in instrumentele pietei monetare, pentru a oferiinvestitorilor venit fara risc) Open market operations (cumpararea/vanzarea de catre

guvern a obligatiunilor guvernamentale, in schimbul banilor)

Personal loan (credit pentru nevoi personale) Ratio analysis (utilizarea indicatorilor pentru evaluarea

activitatii operationale si stabilitatii financiare a uneicompanii)

Revolving credit (forma de credit bancar, negociat pentru o

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Secured (denota un imprumut /garantat/ in care creditorulobtine active de vandut ca despagubire)

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UNIT 6

MONEY MARKETS

In the last decades, one may speak about aglobalization ofthe economic activity of the European countries. Trade, productionand investment have become more international. The new markethas facilitated the settlement of debts resulting from theinternational trade. The capital flows from a country to another oneeasily because the fixes rates of exchange have been dropped andone currency is used in the EU.

Deals are transacted with a counter party, i.e. customers,banks, financial institutions; the dealer is doing this job. Deals areeffected by phone or electronic system, either directly or by meansof a broker who gets a commission for this.

An inter bank foreign exchange market is created; it is aform of network, between commercial banks, central banks,

brokers, customers who can communicate easily, using computers,phones, e-mails. Foreign exchange traders make markets, speculatein different currencies.

Money markets can be defined as market places for short

term lending and borrowings (it means less than 90 days) and are,in fact, networks of dealers and institutional investors. For dealingon such markets, there are used short debt instruments which arefinancial instruments such as certificates of deposits, commercial

papers, bankers acceptances, treasury bills. New York, London,Tokyo are famous for their money markets. The dealers are inconstant communication with each other, with borrowers andinvestors taking advantage of the arbitrage opportunities.

Answer the following questions:

1. Can you tell what the last decades look like?2. How are deals transacted?3. What do you know about bank foreign exchangemarket?4. What is a money market?5. What do you know about it?6. What do the dealers do?

Vocabulary

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Arbitrage (transfer non speculative de fonduri, de la o piatala alta )

Asked price (pret solicitat)

Bid (pret la care un market maker cumpara actiuni) Broker (agent care pune in legatura doua parti, oferindu-le

acestora posibilitatae de a incheia un contract intermediatde el)

Capital market (piata de capital) Cross rate (rata de schimb intre doua sisteme valutare

exprimata intr-un altreilea sistem valutar) Currency backing (aur sau valori care mentin puterea

internationala a unui sistem valutar

Currency future (contracte futures in care se cumpara/vinde,la o anumita rata de schimb)

Dealer (comerciant de orice fel) Financial market (piata financiara) Foreign exchange (schimb valutar) Hard currency ( sistemul valutar al unei tari care are o

economie puternica) Hedging (operatiune facuta de un comerciant/ dealer care

doreste sa protejeze o pozitie vulnerabila) Investment securities ( active financiare folosite pentru

investitii) Maturity date (data la care un document ajunge la

maturitate) Money market (piata britanica a imprumuturilor pe termen

scurt) Primary market (piata care vinde pentru prima data titlurile

de valoare)

Secondary market ( piata secundara care comercializeazatitluri de valoare existente)

Spread (diferenta intre pretul de vanzare si cel decumparare)

Trader (persoana care face negot)UNIT 7

EUROMARKETS

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Euro is the currency used by the EU countries, so, themarket the Euro is used for, can be named Euro market. It has inview all the transactions done by the banks in Euro currencies,

Euro-notes, Euro commercial papers, Euro bonds. It is a marketthat has developed itself in Europe. The market deals with USdollars as well and it can be named Euro dollar market.

Currency is borrowed and lent by institutions located indifferent countries, there is a capital flow which seems to beuncontrolled. Theoretically, it cannot be a national control overthis market. From the practical point of view, the market forcesdictate the lending rates; the rates do not diverge from thedomestic lending ones, it happens only for short interval of time.The international banks are the main operators; financialinstitutions are also allowed to enter the market.

The Euro dollar market is complemented by Eurobond andmakes longer term funds available. The bonds are payable to

bearer without deduction of tax. They are issued by bank consortiaand are placed with investors (national industries, governments,multinational corporations, municipal authorities). London andLuxemburg have developed a secondary market in bonds whichhas become a supranational market; it is not subject to normaldomestic regulations but it is affected by the international events.Important sums of dollars have been deposited in banks which areoutside the USA and many USA banks have branches overseas.

Euro-notes are notes issued in bearer form and negotiable.A note issuance facility is a credit facility, the company obtains aloan underwritten by banks which issue series of short termEurocurrency notes used for replacing the already expired ones.Euro notes are short term notes issued in US dollars.

Commercial papers relate to short term promissory notesissued by companies; they are purchased by investors. They are

issued at a discount to the face value they have. The corporationscan borrow more cheaply than via bank loans; the investors mayearn a higher return on their funds than it is available on bankdeposits. A bank usually undertakes the issuing of these paperseither directly or through dealers.

Text Comprehension

Answer the following questions:

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1. What is the Euro market?2. What happens to the currency?3. Which complements the Euro dollar market?

4. What do you know about Eurobond?5. What about the supranational markets?6. What are Euronotes?7. What is a commercial paper?

Vocabulary

Bond (obligatiune; document emis de debitor unui creditor)

Ceiling (cantitatea cea mai mare de bani pe care o poatedepune un client)

Deficit financing (crearea unui deficit bugetarguvernamental)

Direct investment (investitii in operatiile straine ale uneicompanii )

Eurobond (euro obligatiune ) Eurocurrency (valuta depozitata intr-o tara europeana, alta

decat tara deorigine) Eurodollar (dolari depozitati in institutii financiare in afara

SUA) Eurocredit (imprumut intr-o euro-valuta) Money supply (masa monetara emisa de autoritatile

monetare ale unei tari) Treasury bill (bon de tezaur; cambia) Underwriting (a garanta o emisie de obligatiuni, actiune

realizata de catre o banca)

UNIT 8

BANKING RISK MANAGEMENT

All the businesses are confronting themselves withmacroeconomic and microeconomic risks; the former are including

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different effects of recession, for example, while the latter have inview competitive threats.

The companies face breakdowns in technology,

commercial failures of suppliers/ customers, political interferences,natural disasters, wars.The banks are supposed to manage the risks which arise

from balance sheet business; banks have fee generating activitieswhich do not appear directly on the balance sheet. Risks can becaused by business transactions and processes of the banks withdifferent customers; banks can get profits if they charge priceshigher than the costs of delivering products/ services. So the banksare supposed to identify the risks which are associated with each

business they are running. Banking transactions are to take intoaccount the following type of risks: credit risk, liquidity risk,interest rate risk, currency risk, market risk, operational risk, legaland regulatory risks, environmental risk, health and safety risk.

The methods and instruments the banks use for carryingout this purpose are very different and are permanently changingand up dating. Monetary authorities try to develop new anddynamic systems of controlling the banks money adapting them tothe environment and seek to control the risks caused by new typesof operations.

Competition among banks exists but it can be tempered bya strict surveillance which prevents banks to take excessive risks.If competition reaches a very high peak, the banks can move inother areas of higher profitability for them. Risks can becomeexcessive because of hostile reactions of the institutions alreadyexisting and acting in the new area banks have moved in. Bankscan also suffer because of the problems caused by the financialmarkets, economic bad management of the government, fraud,corruption and other problems that can affect the prosperity of the

area the work in.Bank managers are supposed to analyze the risks, find out

new procedures to diminish them or to get rid of them. They mustcreate effective risk management systems which can manage therisks the banks are exposed to because exposure to risks reducesthe value of future cash flows they expect.

Text Comprehension

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Answer the following questions:1. What are the businesses facing?2. Do banks manage risks?

3. Which risks do banks face?4. What do monetary authorities try to do?5. Is there competitions among banks?6. What are banks supposed to do under

these circumstances?7. What are managers supposed to do

under these circumstances?

Vocabulary

Bankruptcy (faliment) Bank cash flow (Flux de fonduri reprezentand miscarea

fondului monetar prin banca) Cash flow (plati in bani lichizi) Credit risk(riscul ca oposesiune sau imprumut sa devina de

nerecuperat ) Forfaiting (forma de rabat) Gearing (efectul de levier ) Gearing ratios( indici care caracterizeaza intensitatea

efectului de levier ) Insolvency (incapacitatea de a onora datoriile) Interest rate risk (risc provocat de rata dobanzii ) Market risk( risc provocat de piata) Payment risk (plata facuta de catre un partener inainte de a-

si primi proprii sai bani) Price risk (bancile suporta preturile pe instrumentele

negociate pe pietele bine stabilite)

Risk management (management de risc) Risk of global banking (diversificarea globala a activelor

permite bancii sa si imbunatateasca managemntul de riscmarind profitabilitatea si valoareaadaugata actiunilor)

Sovereign risk ( se refera la riscurile pe care un guvern nule indeplineste cu privire la o datorie pe care o are la obanca private)

Systematic risk (posibilitatea ca esecul unei banci de a reglaplatile cu alte banci sa provoace o reactie in lant privandalte banci de fonduri)

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Volatile (o piata/marfa/actiune etc. a carei valoare poatefluctua rapid si frecvent)

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UNIT 9

SECURISATION

Securisation is a phenomenon according to which it ischeaper and more convenient for the borrowers to issue securitiesrather than to borrow money from the banks. Some of the banks

borrowers raise money in securities markets.Securisation is the conversion of bank loans and assets into

marketable securities for sale to investors. Securities offered forsale can be purchased by other depositary institutions, non bankinvestors.

Securisation turns traditional non marketed financial assetsinto marketable securities. It involves transfer of block of assets toa special purpose vehicle company (issuer) which finances its

purchase by the issue of debt . The bank does not have to allocateloan loss reserves against these assets. The capital ratios areimproved; it can grant new loans from security proceeds sold toinvestors. If the securisation is successful, the bank can sell assetsand enhances its capital adequacy ratio retaining some of theservicing income.

The note holders are protected from risks associated withthe assets. An institution that transfers the assets continues tomanage them as servicing agent. The process merges the creditmarkets and the capital markets; banks receivables are repackagedas bonds and other types of credit. Activity banks tend to act assellers of assets rather than portfolio lenders who keep all the loansin their own portfolio. The bankers consider the loan quality interms of their marketability in the capital markets rather than the

probability of their repayment by borrowers.In the UK securisation loses popularity, the mostly used

form being the securisation of mortgages; in the USA it is morecommon and covers a greater variety of loans.

Banks securitize and sell a broader base of loanreceivables. These arrangements are facilitated by an investment

bank and involve a letter of credit guarantee from a foreign bank/insurance company.

Text Comprehension

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Answer the questions:1. What is securisation?2. What conversion is it?

3. What does it involve?4. What happens if the securisation is successful?5. What happens to note holders?6. What does this process merge?7. How do the bankers consider this loan?8. What can you tell about securisation in the

UK, USA and Romania?9. Who facilitate these arrangements?

Vocabulary:

Borrower (persoana care imprumuta) Convertion (delictul echivalental crimei sau furtului) Holder (persoana aflata in posesia unei cambia) Lender( persoana care imprumuta bani) Marketable securities (titluri de valoare ce pot fi vandute

sau cumparate la o bursa de valori) Marketability (posibilitatea de a vinde ceva usor) Proceeds (bani primiti dintr-o vanzare dupa deducerea

cheltuielilor) Repack = to pack again (a reimpacheta ) Receivables (creante) Securities (gajuri/ ipoteci) Securisation (actiunea de transformare a imprumutului intr-

un gaj) Securitize( a trasforma un imprumut intr-o ipoteca/un gaj) Servicing agent (agent care achita dobanda unui imprumut) Servicing a loan (achitarea dobanzii unui imprumut)

UNIT 10

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MONEY LAUNDERING

Money laundering is a process used by offenders who

attempt to conceal the true origin and ownership of the proceeds;these proceeds are results of criminal activities. It allows them tomaintain control over the proceeds and provide a legitimate coverfor their source of income.

The laundering of the proceeds that result from criminalactivity is done through the financial system. The people who areinvolved in such an action exploit the facilities of the financialinstitutions of the world. Such an action is done easily under theseconditions of free movement of capital. Banks involved in such

actions risk to lose their market reputation.Money laundering is accomplished in three stages,involving numerous transactions of the launderers. Here they are:

1. placement it means a physical disposal of cashproceeds got from illegal activity

2. layering it implies a separation of illicit proceedsfrom their source; there are created complex layers of financialtransactions meant to disguise the audit trail

and they assure anonymity

3. integration supposing that the laundering processwas successful, the proceeds are placed back into the economy;they re-enter the financial system and seem to be normal businessfunds.

Text Comprehension

Answer the following questions:1. What is money laundering?

2. Where does it come from?3. What do the people involved in launderingdo?

4. How is money laundering accomplished?5. Which are the stages?6. Can you describe them?7. Is money laundering to be found in Romania?

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Vocabulary

Accounting (contabilitate)

Arrears (bani datorati dar care nu sunt platiti la scadenta) Audit (examinarea independenta a rapoartelor financiare

ale unei organizatii si formularea ulterioara a unei opinii) Balance sheet (bilant) Book value (valoarea contabila a unui active) Capital gain/ loss (castig/ pierdere rezultat/a din

operatiunile de capital) Depreciation (diminuarea valorii unui active imobilizat) Financial accounting (contabilitate financiara)

Goodwill (diferenta dintre valoarea activelor nete separateale unei companii si valoarea totala a acesteia)

Gross margin (diferenta dintre incasarile din vanzari aleunei firme si costurile bunurilor vandute)

Money laundering (spalarea banilor) Net interest (dobanda platita la un cont de economii sau la

unul current, la o banca britanica) Net margin (marja neta/ bruta ) Outstanding (expirat, neachita)t

Profit and loss account (cont de profit si pierderi) Reconcilement (reconciliere) Trial balance( balanta de verificare) Value data (data la care anumite fonduri devin disponibile

pentru utilizare)

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UNIT 11

WHAT IS BUSINESS?

In recent years, Western countries have been goingthrough major changes. After a period of 25 yeas following WorldWar II in which these countries enjoyed unprecedented growthand prosperity, some economic difficulties appeared in the 70'sand early 80's .Though some of these difficulties now seemed tohave lessened, people no longer feel assured of the livingstandards their parents took for granted .Besides these difficulties,a speedy development of technological progress has brought forth

some undreamed-of amusements and conveniences : robots, videorecorders, "smart" telephones" computers, that flash informationon displays in seconds.

These changes have affected to a great extent traditionalways of running business. Managers have been forced to adoptnew techniques, to tighten financial controls and sometimes evento close plants or cut jobs. More than ever, people are wonderingnowadays what the social responsibility of business is to thesociety it operates in.

Is making profits the only goal of businesses? Shouldbusinesses strive for the achievement of some other goals as well-such as environmental protection or fairness to consumers?

In a traditional and very broad sense, we can definebusiness as all the work involved in providing people with goodsand services for a profit. Defined as such, business implies anenormous variety of tasks.

Text comprehension

1) Answer the following questions.a) How can you define profit?

b) How can you define business?c) What are the goals of businesses?d) What are the benefits of competition in a free- market

economic system ?e) How can demand and supply affect prices?

2. Give synonyms for the following words : profit ,32


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company, entrepreneur, to supply , to lesssen , to boost, purchasefoundation , to strive ,to demand

Basic Vocabulary

achievement = realizare

to boost = a dezvolta rapid goal = tel, scop

economic growth = crestere economica to lessen = a micsora, a scadea

supply = oferta

demand = cerere business= afacere , firma (mica) profit and loss = profit si pierdere

environment = mediu inconjurator to purchase = a cumpara, a achizitiona

to run a business = a conduce o afacere to tighten = a strange

labour market = piata fortei de munca

Speaking and Writing Topics

1) Speak about the advantages and disadvantages of amarket

economy2) Influences of the speedy technological development on

the labour market

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Unit 12

ORGANISATION OF BUSINESS

Legal and financial aspects are closely linked to businessbecause, before any business starts, capital must be obtained. Theamount and nature of capital, methods of raising it as well as themanner of its control obviously depend on the type of businessorganization

The simplest form of business organization is the one-man business or sole trader (sole proprietor) who has control ofhis capital with almost complete freedom from external

interference.This business can succeed particularly where commoditiessuch as foodstuffs tobacco, sweets, newspapers are in regulardemand and where the market is local But there are also seriousdisadvantages since a sole trader's responsibility is great and theexpansion of such a business is limited to the financial' resourcesof the owner.

When further capital or specialization is needed thisgenerally leads to another type of organization, the partnership.

A partnership may consist of a small number of personscalled partners that contribute the capital for the business, either inequal or in agreed proportion. They may take an active part in themanagement of the business but the share the resulting profit orloss as well. The partners who play an active part in themanagement of the business a known as active partners as distinctfrom the other sleeping partner Accountants, solicitors, doctorsand brokers usually work in partnership.

A company is a more complex business organization consistingof an associate: of people who both contribute capital and agree toshare the resulting profit or loss.

In the UK, the joint stock companies can be set up byRoyal Charter of England), by a special Act of Parliament(companies which are usually monopoly of public utility servicessuch as railways, canal, gas, water and by registration.

Registration is the most usual way and the companies inwhich the members are limited to the value of their shares are oftwo types: private companies and public limited companies.

The private limited companieshave the letters LTD after

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their name and consist of a number of; members (shareholders).The shares are held among their members companies are notallowed to invite public to subscribe shares or debenture; to

transfer shares is only with the consent of the directors and thisrestriction implies a high degree of risk.The public limited companies have the letters PLC added

to their name and consist of a number of members and they canoffer their shares for sale. Like the private ; companies, the PLCshave limited liability but, unlike the former, the shareholder cansell their shares to people who wish to buy on the Stock Exchange.The capital of the PLCs must amount a minimum of 50.00

Another form of business, i.e. temporary partnerships

constituted for carrying out one particular trading objective arecalled joint ventures. The partnership is dissolved after the ventureis completed.

Topic comprehension

1. Answer the following questions

VocabularyTopics for speaking and written essays

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UNIT 13

WHAT IS A FRANCHISE?

Although owning your own business has proved to berather risky, many people prefer to work fourteen hours a day,seven days a week for themselves than eight hours a day, five daysa week for a large corporation. Therefore buying a franchise seemsto be the perfect solution because it brings together independenceand a measure of security .The franchise operation brings acorporation with a famous product together with an individualdesiring to start a small business.

The franchisor grants this franchisee the exclusive right to

use the franchisor's name in a certain territory, in exchange for aninitial fee plus monthly royalty payments .This: type of operationenables the company to establish outlets for its product o servicewithout major capital in vestment. At the same time the franchisefaces less risks than an independent entrepreneur, because the largeorganization provides financial and managerial assistance.

Franchising began in America already in the nineteenthcentury. At present the fastest growing franchise operations in theareas of foodstuffs soft drinks, hotels, motels, fast foodestablishments and even real estate dental care and video.

According to some experts, during times of highunemployment people are more likely to buy franchises. Some willeven mortgage their homes to buy franchises.

Franchising helps to solve two major problems the smallbusinesses are constantly faced with: lack of money and of know-how. The franchisor unlike many independent proprietors hasenough experience to estimate start-up costs realistically andtherefore he will not grant the franchise unless the prospectivefranchisee has enough money for the start-up costs. But ifaccepted, the franchisee has the advantage of being able to buy

supplies and to obtain credit and insurance at low costs.Training, advice on advertising, taxes and other businessmatters, as well as instructions in the routine day-to-day operationsare also provided bythe large company.

Still, there are also some important drawbacks to beconsidered. Chief among the disadvantages is the monthly

payment or royalty .If the outlet does poorly, most of the profitmay end up going to the franchisor.

Another drawback of franchises is that they allow verylittle independence .If the business is so tightly controlled ,some

franchises might in the end, feel like employees.36


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Although franchises can offer the small business person agood way to set up a shop, they should be carefully considered

before every decision is made.

Text Comprehension

1. Read the text carefully and try to explain thefollowing key words:

- franchise- small businesses- royalty- managerial assistance

- real estate- mortgage- lack- grant- advertising- venture-capital

- start-up company

2. Answer the following questions :

- Why do many people prefer to work on their own ?- Which is the perfect solution for independent

businessmen without financial means?- What is a franchisor?- What are the duties of a franchisee?

- Has franchising any advantages for a largecompany?

- What kind of assistance does the large organizationprovide to the franchisee?

-When did the first franchising businesses start inAmerica?

-Mention some drawbacks of franchising.

Topics for speaking and written essaysa) The bright side and the dark side of

franchisingb) Possible franchise businesses in the town you

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livec) Advantages and disadvantages of small

businesses as compared to large corporations.

UNIT 14

MICROECONOMICS AND MACROECONOMICS

People involved in economic activities who want to startand run successfully their own businesses must understand bothmicroeconomics and macroeconomics so that they may make

sound economic decisions.Microeconomics refers to the study of costs and revenues

of individual enterprises .Prices of individual items are set at the"microeconomics" level , by means of the demand and supplycurves. If the price of a certain product declines, it generates agreater demand. Correspondingly, the supply of a product (i.e. the

production) increases following a rise of its price. By combiningthe demand and the supply, the market places manage to establisha point of equilibrium where the ideal price of a product can be

found. But the prices have a great influence not only on producersbut on investors as well. Therefore, the customers or the buyers arethose who through their willingness to buy a certain product

basically shape the allocation of resources and production ofgoods.

Price affects the supply of a product by helping businesspeople to decide which industries to invest in .New factories andnew companies came into being because the market price of a

certain item signaled high profit potentials to managers andinvestors. These signals come largely from the behavior ofconsumers.

Whereas eighteenth century economists believed that allproduction and allocation decisions could be made bybusinesspeople on the basis of prices set by the free-market, in ourmodern society, the government can use its power to change pricesor change the way resources are allocated.

Society needs things such as: police, fire protection, road building or satellite launching, which the free-market system

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cannot supply properly. This is where government intervenes,supplying public goods and services, setting up taxes and duties toregulate business and making transfer payments.

The macroeconomic level helps us view a nationaleconomic system as a whole .At the macroeconomic level, theconcept of circular flow illustrates the interrelationships among

businesses, households and governments .If one looks at aneconomy as a giant circulatory system, then businesses andconsumer households can be regarded as two vital organs: the heartand the lung. Each needs the other to keep going just as the

bloodstream carries in one direction and carbon dioxide in theother, the economy carries goods and services on way and moneythe other .Consumer households pay money for the goods andservices provided by businesses. With this money businesses payfor raw materials and for the labor force which also comes fromhouseholds. Meanwhile, the government is involved in the systemas well. It buys goods and services, as well as labor. Households,which provide workers, are producers and consumers at the sametime, businesses are consumers of labor and producers alike.Money in this pattern appears under different names (taxes, pay,and purchase) depending on what goods and services areexchanged for money. The circular flow shows the interrelations

between all the elements taking part in the economic activity .Thisflow is measured in terms of the gross national product (GNP)which indicates a nation's economic growth and provides acomparison with the output of other nations.

Every year thousands of hopeful entrepreneurslaunch new businesses. If they come up with a good product orservice, if they manage to get enough financial aid to see themthrough the first difficult months or even years, they may make ago for it.

Text Comprehension1. Answer the following questions- How can you define microeconomics?- What does macroeconomics involve?- What does the concept of circular flow mean ?- What are the effects of prices ?- What is the role of the market places ?-What does GDP indicate?

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- What is the role of government in a market-orientedeconomy?

2. Vocabulary- sound decision = decizie corecta, potrivita- to be involved = a fi implicat- cost and revenues =cheltuieli si venituri- demand and supply curve = curba cererii si ofertei-to rise- rose- risen = a creste, a se ridica, a se inalta- to raise (ed) = a creste, a mari, a ridica- customer = client-household = gospodarie

- allocation of resources = alocare de resurse- flow = flux- raw materials = materii prime- GNP (gross national product) = produsul national brut- entrepreneur = intreprinzator- to launch = a lansa- output = productie

3.Topics for speaking and written texts

Should governments intervene in economic activities ?When and why ?

Give examples of good/bad interventions atmacroeconomic level .

How do supply and demand influence product prices?

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UNIT NO. 15TWO BASIC CONCEPTS IN FINANCE - ASSETS

AND LIABILITIES

Finance is the management function through whichmoney is effectively obtained and used.

Managing a company's finances means thinking in termsof two opposite categories: assets and liabilities. Assets' are theitems 'of value that the company owns (including moneyitself).Liabilities are debts, the sums that the company owes toother businesses or individuals. If a company subtracts itsliabilities from its assets , it knows exactly where it stands

financially: the reminder is what belongs to the owner of the business .This is often called owner's equity, or shareholder'sequity namely the portion of a company's assets that belongs to theowner after obligations to all other creditors have been fulfilled.

Inmost corporations shareholders' equity consists ofcommon stock shares of ownership of a business) sold tothousand of individual investors through a stock exchange , plusretained earnings- the total net income a company has earned overits life ,minus the funds returned to shareholders as dividends.Dividends are sums of money paid to shareholders of thecorporation out of earnings.

There are different kinds of assets and liabilities, eachwith its own advantages and disadvantages.

The short-term assets are often termed current assets andare defined as the resources that can be turned back into cashwithin a year. Raw materials, like for instance, steel, cotton, or awarehouse of T-shirts ready to be dispatched to stores are allshort-term assets. Cash itself is a short-term asset. Others includea company's accounts receivable, i.e. the money that is owned tothe company for items or services it has sold. The faster any assetcan be converted into cash, the higher its liquidity. Borrowedmoney that must be paid back within the year is a prime exampleof a short -time liability, or a short-time debt. Other short-timeliabilities include: rent, salaries, and unpaid bills for rawmaterials.

Companies that may have excess cash on hand for shortperiods, must place it in short-term investments.

The financial managers must be informed about interest

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rates as well as the overall economy in order to time borrowingto their best advantage.

Text comprehension

Answer the following questions- How can you define assets?- Give example of short term assets?- Why are current assets important for a company?- What does equity consist of?- Which are the short-term liabilities in a company?- What are the advantages and disadvantages of long-term

assets?

Vocabulary

assets = active

accounts receivable = sume de incasat liabilities = passiv, datorii

debt =datorie

to own = a detine in proprietate ownership = proprietate equity = capital

shareholder = actionar stock exchange = bursa de actiuni

earnings = castiguri dividend = dividend

interes rate = rata dobanzii

short-term = pe termen scurt long-term = pe termen lung to substract = a scadea

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UNIT 16

WHAT IS MARKETING?

The business environment has been continually changingand business people are worried about keeping up with it.

Consumer values change rapidly and competition in themarket becomes fiercer. As a result business peoples attentionfocuses on customers and they try by means of polls, interviews orquestionnaires to win the customers overEvensuch conservativeindustries as 'railroads and utilities are courting consumers, for as

one marketing consultant pointed out: "The customer is the mostimportant product ......... because if he doesn't like what we have,he can go elsewhere ...."

Many companies are learning that they need not only goodproducts but also marketing skills in order to succeed. They mustbe able to identify consumer needs and to satisfy in a mutuallybeneficial manner. Those people who want a given product andcan buy it constitute its market.

Marketing has changed radically over the past half-

century. At one-time, most firms were production-oriented andrestricted marketing activities mainly to taking orders and shippinggoods. Then came sales-oriented marketing and it emphasizedselling. Since World War II , however, most large companies in theworld have shifted to a consumer-oriented approach known as thetotal marketing concept. This concept relies heavily on marketingresearch activities .The total marketing approach gives

The buyer has a say in what goods or services thecompany sells. Therefore the efforts of the companys departmentsshould be coordinated to produce what the consumer wants.

Essentially marketing research gets -.information about : a)what products or services the consumers want ; b) what forms,colours, packaging, prices and retail shops they prefer ; c) whattype of advertising, public relations and selling practices are mostlikely to appeal to the consumer.

Population statistics are a basic marketing tool. They canindicate with reasonable precision how many people there are, howold they are, what they earn, how they spend their money andwhere they live.

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The reasons why consumers decide to buy a product may be rational or\and emotional. Rational factors include cost,dependability; usefulness. Emotional factors are satisfaction of the

senses, fear, pride, sociability and emulation.Besides individual consumers, there are also industrialconsumers and the marketer has to adopt a different marketingstrategy for them .For instance, a major banking institution wantsto overhaul its entire computer system. The motivation foracquiring technical business equipment or services is usuallyrational, based on its usefulness to the buyer. Businesses try toavoid investing in unnecessary services or products. Emotionalmotives do not influence such buyers to a great extent .Moreoverthe business buyer possesses technical background and negotiatingskills that ordinary consumers lack.

Text comprehension

1. Answer the following questions- Why do businesses today focus on customers?- What is marketing ?

- How has marketing changed over the years and why?

- Why do consumers decide to buy products?- Which are the rational factors involved in buyingdecisions?

- In what way are the industrial customers different fromthe individual ones?

2. Vocabulary

to keep up with = a tine pasul cu

business environment = mediu de afaceri

consumer needs = nevoile consumatorului fierce competition = competitie stansa/ feroce to focus on= a se concentra asupra

pollls = sondaj to win over = a castiga de partea sa, a atrage

skill= aptitudine, talent to emphasize = a accentua

approach = abordare

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retail shops = magazine cu vanzare en detail

3. Topics for speaking and writing

Compare the different approaches used in marketing.Give examples of emotional motives used by marketing

strategies to sell their products.Ethical and unethical marketing strategies. Give

examples of your own .

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social trends and the state of the national and internationaleconomies.

Customers may also invest through a mutual fund or an

investment company in which many investors pool their money tobuy securities .Each investor owns shares in the fund and the funduses the pooled money to buy stocks or bonds issued by variouscompanies.

These investment societies are especially useful forsmall investors who don't have time or experience to findinvestment opportunities .Due to their diversified portfolio, mutualfunds diminish investment risks. They also offer liquidity to theircustomers that can turn their shares into cash whenever they want.

Many business people are interested in the prices of theraw materials they use to produce finished goods .These rawmaterials, which are known as commodities, are traded oncommodity exchange markets. These markets operate just as thestock exchange market.

Text Comprehension

1. Vocabulary

Securities = hartii de valoare Stocks = pachete de actiuni Share = actiune individuala

Shareholder/ stockholder = actionar Bonds= obligatiuni

OTC (over the counter- la vedere/pe tejghea)market = piata actiunilor necotate la bursa

Bearing = influenta

Average = mediu (adj.), medie (subst.) A bull market= pata bursiera in crestere

A bear market = piata bursera in scadere Commodities = bunuri de larg consum

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2. Answer the following questions:

- What are the functions of the stock exchange market?

- Who were C.H. .Dow and E. D. Jones ?- Who influence the increase and decrease of the stock exchange ?- What is the OTC market ?- What do investment companies do ?

Speaking and writingStock exchanges all over the world react to various events

whose nature may or may not be economic. . Give examples of theway in which such events (wars, earthquakes, change in politicalregimes, rising prices, etc.) have influenced the stock exchangeand the economic life as a whole.

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UNIT 1 8

FUNCTIONS OF COMMERCE

Commerce as a human activity is essentially themoving of goods from the seller to the buyer, namely the exchangeand distribution of goods and services. As the goods are almostalways produced far away from the place of consumption, theirway from the producer to the consumer is a long and complicatedone. Moreover, the goods are produced in large quantities but usedin small ones.

While the manufacturer has a limited production range,

the consumer's requirements are almost unlimited in variety and itis the function of commerce to provide links between the stages ofthis process and the actual tools needed to make it work.

The main functions of commerce are as following.Trade is essentially the general exchange of goods and

services between producers and consumers. Trade consists ofHome Trade including Wholesale Trade and Retail Trade andForeign Trade dealing with Imports and Exports.

Transport concerns the moving of goods by land, sea or air

as well as the work of agents, travelers, trade representatives, etc.,people who altogether carry it out.Communications are generally linked to the commercial

activity as a whole since no transaction is possible withoutcommunications. Also, without communications endless delaysand hindrances occur in all stages of commerce. Communicationsare made possible through the postal and telegraph system,telephones, facsimile (fax), E-mail, cables, radio mobile systemsand satellite.

Warehousing is a major function in modern conditions asproduction is usually in advance of demand and goods have to bestored appropriately in the warehouses of the manufacturer,wholesaler or retailer until they are required.

In this respect, each producer makes use of numerousdepots at specially arranged places, usually at the consumer'sreach. This function not only enables goods to be suppliedwhenever they are wanted, but also wherever they are wanted.Warehousing also provides a central pool for goods from wheresupplies may be taken at any time so that the wide fluctuation of

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prices caused by glut or short supplies can be avoided.The risk of loss or damage in a business is covered by

insurance policies which render trade secure and stable, since it

enables the businessman or businesswoman survive losses bydamage, fire, shipwreck, etc.

Text comprehension1. Vocabulary

Seller = vanzator

Buyer =comparator Goods= marfa

Production rang = gama de productie Requirement = cerinta

To provide = a furniza Wholesale trade = comert en gross

Retail trade = comert cu ridicata Foreign trade = comert exterior To deal with = a se ocupa de To carry out = a efectua

Whare housing = activitatea de depozitare Damage = paguba

Insurance policy = polita de asigurare

2. Written work- Write briefly on one of the followingtopics:

the function of trade; transport function and requirements for an efficient

transport activity; means of communications used in the commercial

activity; the need of storing goods in adequate places; services the banks provide their customers with; the importance of the insurance functi

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UNIT 19

AN EXPORT TRANSACTION

When an exporter receives an order from an old customer,the exporter first acknowledges it. If the price and terms aresatisfactory and the goods do exist in stock, they are packed andmade ready for dispatch. When the indent may require goods fromseveral manufacturers it has to be split up accordingly and separateorders are placed with the various firms which are giveninstructions as to time and place of delivery, make-up, packing,marks, etc.

The goods are packed in lined cases (containers) which are

sent to a Shipping Firm. The shipping agents charge a commissionand relieve the exporter of a lot of complicated formalities. Thegoods are sent to the port of embarkation either by truck or railway and the superintendent at the docks is informed of the dispatchof the goods by a Shipping Note. Then, the shipping companymakes out the Freight Note which is sent to the exporting firmexpected to pay the amount of freight to the company.

A Customs Specificationis sent to the Customs Office ofthe point of shipment within six days of the clearance of the ship.This specification gives all the particulars of the goods incompliance with the Official Export List.

The staff in the exporting firm now has all the datarequired for making out the Invoice.This is usually made out intriplicate and gives all the necessary details of the goods, themarks, and numbers of the containers and the total value of thegoods. If the Invoice is marked Loco it means that he importer hasto pay all charges from the exporter's warehouse to his own, i.e.the charge for the containers, the carriage to the port, the freightand other shipping charges, the insurance premium and the cost of

the Bill of Lading. The quotation F.O.B. (free on board) means thatthe seller bears all the expenses until the goods are loaded on boardthe ship; C.l.F. (cost, insurance, freight) means that all chargesfrom the warehouse to the port of destination are borne by theexporter, while under C&F the insurance premium has to be paid

by the importer. FRANCO means a free of charge delivery to thecustomer's premises. On the back of the Invoice is printed theCertificate of Origin certifying the origin of goods.

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UNIT 20

METHODS OF PAYMENT IN FOREIGN TRADE

For the payment of debts and settlement of accounts in theforeign trade, both the organization and instruments are provided

by the banks with their branches and correspondents all over theglobe.

1. For bank notes and coins the banks issue TravelersCheques which can be mainly used for traveling and personalexpenses. Credit Cards also meet the same needs. The banks

provide an international system of Bank Transfers in place of the

cheques system and, in case of urgency, the payment can be madeby Cable Transfer.2. The oldest method of payment in foreign trade is the

Foreign Bill of Exchange which differs from the Inland Bill in twoimportant points: the payment method and the number of copies.The Foreign Bill of Exchange is made payable either at sight, i.e.the day when it is presented to the drawee, or at a given periodafter sight(30, 60, 90 days after sight or even later) and it is drawnin sets of two or three copies.

In case of dishonour, the Foreign Bill of Exchange must beprotested in order to protect the creditor's rights in the Bill.The due date of the Bill is determined by the number of

days after sight, e.g. 30 days after sight. The specimen given is theoriginal Bill which is called First of Exchange having two morecopies.

The drawee accepts or pays the Bill and can either hold ituntil maturity or have it discounted in his bank, thus recovering theuse of his capital.

When the Shipping Documents (the Bill of Lading,Insurance Policy and Invoice) are attached to the Bill of Exchangethey create a Documentary Bill of Exchange and it is then sent tothe bank for collection.

Depending on the arrangements between the importer andexporter, the documents which form the title to the goods can behanded over either against payment (D/P) or against acceptance ofthe Bill (D/A).

The bank is generally instructed not to present the Billbefore the merchandise has actually arrived. On the other hand, if a

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Bill is drawn 60 or 90 days after sight and the documents are to bereleased only against payment, the importer can get possession ofthe documents by paying earlier, e.g. 30 days after sight.

Since the disadvantage of this method is that the exporterhas to wait quite a lot before he receives the money, he oftenapproaches his bank for an advance on the shipment which isgenerally granted on the signing of a Letter of Hypothecation,

For contracts that imply a large amount of money and timea Letter of Credit (L/C) is preferred as a secure means of payment.The correspondent bank will be then prepared to accept the Bill on

behalf of the exporter; the importer consequently draws the Bill onthe bank and not on his customer thus establishing an Irrevocable

Documentary Credit which gives the exporter a completeprotection. The Irrevocable means that the Letter of Credit cannotbe changed or cancelled without the agreement of all parties.

Text Comprehension1. Vocabulary

Payment =plata

Bank note = bancnota Coin =moneda

Payable at sight = platibil la vedere Drawee = tras, platitor

In case of dishonour = in caz de neplaa Bill of lading= conosament , foaie de expeditie

Bill of exchange = cambia , trata Merchandise = marfa Letter of credit = acreditiv To cancel= a anula

Irrevocable = irevocabil

2. Answer the following questions?

- Which payment methods are given in the text forexport /import transactions?

- How does the Foreign Bill of Exchange differ from theInland Bill of Exchange ?

- Explain how the letter of credit works and what are the54


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advantages of such a payment method?

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PART II

ENGLISH GRAMMAR

THE NOUN

Definition: part of speech that denotes beings, things, states,actions, phenomena, abstract notions, qualities, relationships; ex.

boy, table, flower, sleep, departure, rain, beauty, courage,darkness, friendship,

Stem building morphemes: -er: worker; -ship: friendship;-ment:movement; -dom: freedom; -ness: darkness

Grammatical categories: number and case.

Syntactic functions: subject, predicative, object: My father is ateacher. I see a man. He spoke about his invention.

Classification of nouns:

On the morphemic level:a) simple or root nouns : man, fish, chair, room,

house b) derived nouns: work-er, friend-ship, move-

ment, dis-agree-mentc) compound nouns: hand-bag, snow-ball, pen-

holder,On the derivational level:a) simple nouns : man, fish, car, cat

b) derived nouns, obtained from different kindsof derivation: - affixation: work-er, ill-ness,

- conversion: (the)work / (to) work; the rich / rich(adj.)

- shortening andabbreviation:

exam/ examination; lab/laboratory;

- sound interchange: tofeed food; to import-import;

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c) compound nouns: composition of variousstems: lamp-shade; pen-holder

Substantivization of adjectives:a) wholly substantivized: native(adj)/ anative(noun), a natives house; Italian,Italians

b) partially substantivizedSubstantivization of Participle II: the accused;Substantivization of other parts of speech: by conversion, any

part of speech may become a noun: a try, a go, a somebody

Classification of noun according to meaning:1. animate-inanimate: boy, girl, -tree, book2. concrete-abstract: table, pencil idea, friendship3. common-proper: city, country- Bucharest, Italy

Classification of noun according to number1) countable (denotes countable objects): a book-two

books2) uncountable (denoting materials, qualities,

phenomena): sand, milk3) collective nouns; the singular form connotes either a singular or a plural concept: family-families

My family is here.(family= a single unit)My family are here. (all the members)Many families are here. (several fam.)

Number: Singular, Plural

Plural formation: -(e)s added to Singular form

Pronunciation :a) /s/ after voiceless consonants: lamps /lamps/

b) /z/ after voiced consonants: boys /boiz/c) /iz/ after sibilants: classes /klasiz/

-es ending after sibilants and o when the letter is preceded bya consonant: potatoes, heroes, cargoes

Not to be applied to the foreign nouns:

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a) foreign nounscompletely adoptedinto English: cantos,

concertos b) shortened formsof longer words:

photos/ photographs

Spelling peculiarities:a) y ies: country- countries

b) -y ys : boy- boysc) -f -ves: half halves

d) -f -fs: cliff-cliffse) -th -ths: bath-baths

Irregular Plural Forms: woman womenman - menchild childrentooth teethgoose geesefoot feet

mouse micelouse licedie - diceox - oxen

Foreign Plural kept in English:Latin: radius radii; stratum strataGreek: analysis analyses; phenomenon - phenomenaFrench: bureau bureaux

Italian: bambino bambiniHebrew: seraph seraphimMost of them have already an English plural form equivalent.

Plural Formation of Compound Nouns:a) the main element gets the Plural formfellow-workers; editors-in-chief; mothers-in-law; passers-by;

b) compounds with -man, -woman, change these into Plural:Englishmen; Frenchwomen;

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c) when man-, woman- are the first, then all of them get the plural :menservants; womenservants

c ) the compound does not contain a noun, the plural

ending is added to the last element: forget-me-nots, merry-goes-rounds,

Plural of Letters, Abbreviations and Words which are notNouns

a) withoutapostrophe: Writetwo ls.

b) give withapostrophe: Writetwo ts.c) their

pronunciation: Writetwo els.d) add s withapostrophe or not :M.P.s / M.P.s

e) s is added to theend of the word or tothe last word of thegroup, the spellingwith apostrophe andwithout it varies: Hislife was full of upsand downs. I am tiredof your ifs and buts.

Singular and Plural Nouns - Agreement Problems1) town names asBrussels, Lyons,

Naples get a Sg. verbNaples is a seaport.

2) geographicalnames that usuallyget a plural form

verb:59


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The Hebrides are situated near the West costs of Scotland.

Countables

a) used with uncountable meaning as nouns of material, nodeterminatives : a goose-two geese; I have goose for dinner.

b) man used in the Sing., no article = human race: Man is mortal.c) used in the Plural with a non countable content to express anintensified concept: to stroll through fields and woodsd) plurals of some countables :colour = culoare; colours = culori; steag/drapele) have the same plural form identical with that of the sg.: sheep;

deer; swine; The sheep is here/ the sheep are there. fruit

Units of measure: foot, pound etc. have the pluralform identical with that of the Sg. and it is used when the nouns arefollowed by numerals expressing their subdivisions: three foot/feeteleven high; two pound(s) tenHundred, thousand, million, dozen,score get the plural form when used without any numerals; hundredsof people; tens of books, but five thousand books

Pluralia tantum nouns: scissors, spectacles, tongs, pincers,trousers; A pair of trousers is on the chair. Two pairs of trousersare here.

Uncountables are with Sg. verbs : advice = sfat; furniture =mobilier; income = venit/venituri

A number of nouns with non-countable content are found in theplural form. Such examples are:

a) nouns which take the plural verb : alms, ashes, mortalremains, alms ; Alms are distributed

b) nouns that take the singular form: news, billiards, measles,mumps; News is very interesting.c) nouns which take the verb both in the singular and in the

plural: wages, Middle Ages, contentsd) names of sciences: Mathematics, Acoustics

Collectives :

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a) nouns having two numbers: family, crew. The family ishere. The family are here. The families are here.

b) nouns expressing a plural concept: 1) denoting animals:

poultry; cattle 2) denoting persons: police, cavalry

Gender:a) Masculine gender: father, son, boy

b) Feminine gender: mother, daughter, girlc) Neuter gender: chair, house

Masculine and Feminine forms of nouns denoting living beings:1) by adding ess to the Masculine form: poet poetess; exception

are widow/widower; bride/bridegroom2) feminine nouns are different from masculine ones: man woman;son daughter

3) combination with other words: he wolf- she wolf; landlord landlady; billy-goat nanny-goat

Case

Possessive case:s added to the singular form of thenoun

the boys car; Kates book added to the plural forms of the nouns:

the boys car(s)but s after irregular plural nouns : childrens toys

group possessive case: Toms and Marys books(each has books);Tom and Marys room (they share the same room)

of possessive : the book of Peter; the toys of the children

s / Genitive is used with names of human beings, but there aresome exceptions, such as:a) nouns indicating space and time, value and weight: threemiles walk; two days holiday; two dollars book; five pounds

boxb) names of seasons, months, days: a winters day

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c) nouns such as: country, city, town, wind, sun, moond) proper nouns, designation of tradesmen;

- institutions of various kinds colleges, schools, hospitals,

cinemas, churches: St. Pauls (Cathedral);- business or places of business: tailors, butchers- home, the domestic circle or the house, guests are received in:

You can have a drink at my mothers.

Exercises1. Turn the italicized nouns into the plural and make all the

other necessary changes in the sentences:

1. The birds were eaten by a fox.2. Have you observed the classifying criterion?3. That knife should be handed in immediately..4. Last night a hostel was robbed by a thief.5. The child in that family has bad manners.6. The farmer has a hen, a goose, and a sheep.7. My brother r-in-law is an acountant.8. My cat never catches a mouse.9. The businessman is considering the new taxes.10. She has lost the key to her office.11. The housewife and the middle-aged woman are the

principal buyers of this product.12.The inspector will speak to the witness who has seen

the accident.

2. Choose the right word from the brackets:I. The scissors (was, were) here a few minutes ago. 2. His

luggage (was, were) lost yesterday. 3. A (little, few) knowledge(is, are) a dangerous thing. 4. (much, many) people on the ship(was, were) getting seasick from the waves. 5. There (is, are)several means of accomplishing our aim. 6. Billiards (is, are) hisfavourite game. 7. The news printed in that paper (is, are) neverobjectively described . 8. We don't need to buy so (much, many)furniture, there (is, are) (much, many) chairs here. 9. How (much,many) information do you have about our new employee? 10. Youdidn't give me (much, many) ideas about the job, and very (little,few) advice.

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that ofdefinitenessindefiniteness

It has invariable forms: a/an : a book, an apple and

is placed in front of the noun/noun equivalents: a table, a redbookClassification of Articles:I Definite ArticleII Indefinite Article

Indefinite Article- its forms are : a/an : a book, a boy; an ice cream, an apple- it is used with nouns in the Singular only

- it indicates that the object denoted is one of the whole class,no specification of its individual features is given:

Give me a pencil! (any will do)- a noun determined by it may get a descriptive attribute: a woman with the black hair; an interesting book, etc.

Definite Article- its form is the both for the Sing. and Plural :the girl(s); theapple(s);- it pronounced differently /ti/ apple , / / book

- sometimes it takes the value of the demonstrative pronoun:Give me the book from the bed! (that one )

- with the uncountable nouns it marks a limited quantity:The water in the glass is cool.

Absence of the Article- articles may be omitted for the sake of conciseness in newspaperheadings, stage remarks, telegrams.Use of Articles with different Classes of NounsProper Names : NO Article is used :John, Smith, LondonBUT 1) names of persons accompanied by Indefinite Article,meaning a certain of, one of: He is a Forsyte3) both articles are used in front of names of persons when theyare usedas common nouns:

He has the humor of a Dickens.

3) names of persons in the Plural meaning the whole fam64


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4) names of persons used with Definite Article when preceded byan

attribute expressing state, mood, or a permanentcharacteristic:

NO Article when the attribute is expressed by one of theadjectives:young, old, little, poor, dear, honest pretty, lazy, silly : poorJohn,lazy Mary, dear Bob

5) names of persons used with Definite Article when theyaremodified by a limiting attribute even if they are preceded by oneof the abovementioned adjectives:

the poor Bob of his youth,the Mr. Smith whom I know

6)when a personal name is preceded by a noun denoting state,speciality, profession, occupation not used as title,the wholecombination is preceded by Definite Article

the girl Mary, the poet Byron, the composer MozartBUT most English titles and some foreign ones have NO

ArticleQueen Ann, King Richard, Captain Scott, Monsieur

Laporte

Geographical NamesNO Article with the following names:

1)names of countries: Romania, England, FranceBUT the USA, the United Kingdom of GreatBritain

the Netherlands, the West Indies, the Congo,the

Sudan, the Lebanon, the Transvaal2) names of towns: Bucharest, London, New York

BUT the Hague

3) names of towns having a geographical or historical65


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attribute: ancient Rome, southern Paris4) compound nouns of places, buildings, monuments,

the first part being a proper name:

Hyde Park, London Bridge, WestminsterAbbey

5) names of streets may/ may not get an article:Oxford Street, Chancery Lane

BUT the Strand,the High Street, the Mall6) names of months and days: May, June, July

Monday, Tuesdaywhen they get a descriptive attribute, they get an

Indefinite Article: I went there on a Wednesday.7) names of seasons when the nature / season is expressedBUT with Article when a certain period of the year is marked,mostly with the preposition in, during :

winter was coming, in (the) autumn, during (the) winter,in(the) autumn

WITH Definite Article

1) names of oceans, seas, lakes, rivers, straits, channels,

the Atlantic Ocean, the Black Sea, the Leman,the Thames, the English Channel, the Suez Canal

NO Article- when the words lake, loch, lough precede theproper names: Lake Leman, Loch Ness

- when the names of the river are part of a compound noun Stratford-on-Avon

2) name contains an of phrase:

the City of London, the Gulf of Mexico, theStraits of Dover, the Isle of Wight,

NO Article- when the Saxon Genitive is in the structure:

St. Helens Island, St. Michels Mount3) names of chains of mountains: the Alps, the

CarpathiansNO Article

- with single mountain peaks: Mont Blanc

BUT some exceptions: the Jungfrau, the St. Bernard,66


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the St. Gotthard4) names of groups of islands: the Hebrides, theCanaries

5) names of deserts : the Sahara, the Gobi6) names of provinces: the Ruhr, the Riviera, theTyrol7) names of capes : the North Cape,

the Cape of Good HopeNO Article - when the noun cape precedes the proper name:

Cape Horn, Cape Cod8) names of places, buildings, monuments which

do not contain proper names : the Tower, The City,the Channel

9) names of cardinal points: the North, the EastNO Article

- when used adverbially: to sail north10) proper name resulted from an adverbial phrase: the Argentina ( the Republic of Argentina)

the Tate (the Tate Gallery)Other Proper Names with Article:

1) names of ships, hotels, clubs, theatres:the Savoy (hotel), the Queen Mary(ship),the Globe theatre, the Iseeum (club)

2) names of newspapers, magazines= attribute +common name

the Daily Telegraph, the Daily WorkerBUT Punch (proper name), Life, Time (uncountable)

The Spectator, The Star (countable)

Common Nouns1) Countable nouns in the Sing. must be preceded byone of the

Articles if there is no determinative:a book, the book, my book, this book

2) countable nouns used in the Sing, generically(representing a

whole class) both articles can be used:A lion (any lion) is a ferocious animal.

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town life get NO Article : Im going up to town.It gets the two articles when it has the concretemeaning:

Arad is the town where I live. It is a nice town.8) nouns like:circumstances, conditions, events, matters, things

get NO Article : Conditions were abnormal. the rush of events,

The idea was a great success.9) Definite Article + adj. wrong, right+ countablenouns

I took the wrong bus.

He is the right man in the right place.10) as, kind of, sort of + Indefinite Article (wavers)

She was now engaged as (a) governess.What kind of (a) woman is Mary?

11) Indefinite Article may have a distributive value: Six lessons a day(per day)

12) countable nouns ( in the Sing.) are used withIndefinite

Article in exclamatory sentences and without article in

interrogative ones:What books are you reading ?What an interesting book!

13) NO Article is used with nouns

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