Unit 9 Unit 9 Financial MarketsFinancial Markets

After studying this text, you are required to: After studying this text, you are required to: understand the meaning of finance;understand the meaning of finance; name some famous financial markets;name some famous financial markets; learn the definition of foreign exchange and forelearn the definition of foreign exchange and fore

ign exchange market ign exchange market understand some inportant words and expressiunderstand some inportant words and expressi

ons ons

Text A:Text A:

Financial Markets Financial Markets

in Generalin General

Discuss some information about the worlDiscuss some information about the world’s financial markets. d’s financial markets.

1. Can you name some typical financial 1. Can you name some typical financial markets? markets?

2. Do you know the characteristics of mo2. Do you know the characteristics of money. ney.

3. What is finance and financial market?3. What is finance and financial market?

Read Text A and answer the following questRead Text A and answer the following questions: ions:

1. Is allocation of money in equilibrium 1. Is allocation of money in equilibrium at all times?at all times?

2. Under what condition is credit condu2. Under what condition is credit conducted?cted?

3. What are finance and financial marke3. What are finance and financial markets?ts?

4. What distinguishes money market an4. What distinguishes money market and capital market?d capital market?

5. What methods can be used to preven5. What methods can be used to prevent financial crisis?t financial crisis?

Check the exercises:Check the exercises: 1. Is allocation of money in equilibrium at all 1. Is allocation of money in equilibrium at all

times?times? No, the allocation of money is lopsided in variouNo, the allocation of money is lopsided in variou

s areas at different date. Therefore, the quantity s areas at different date. Therefore, the quantity of currency is more or less.of currency is more or less.

2. Under what condition is credit conducted?2. Under what condition is credit conducted? Credit is conducted on the condition that the priCredit is conducted on the condition that the pri

ncipal and the interest should be paid back later.ncipal and the interest should be paid back later.

3. What are finance and financial markets?3. What are finance and financial markets? Finance is usually defined as financing of moneFinance is usually defined as financing of mone

y by penetration of payment, borrowing and leny by penetration of payment, borrowing and lending of money. Financial markets are the markeding of money. Financial markets are the markets for financing funds. There are two types of fints for financing funds. There are two types of financial market: money market and capital markeancial market: money market and capital market.t.

4. What distinguishes money market and ca4. What distinguishes money market and capital market?pital market?

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

5. What methods can be used to prevent fi5. What methods can be used to prevent financial crisis?nancial crisis?

We can take measures such as strengthening We can take measures such as strengthening macroeconomic control, improving foreign tramacroeconomic control, improving foreign trade structure, watching the financial markets clde structure, watching the financial markets closely, and if necessary, we can apply for the osely, and if necessary, we can apply for the help of those international organizationshelp of those international organizations

Read the text again and finish the following exercise.Read the text again and finish the following exercise. Fill in the blanks with corresponding words in the Fill in the blanks with corresponding words in the

box.box. In this rapidly changing economy, (1)_______ arIn this rapidly changing economy, (1)_______ ar

e linked in a wide network of individuals, enterprises, ge linked in a wide network of individuals, enterprises, government agencies, news agencies, commercial banovernment agencies, news agencies, commercial banks, the central bank, securities firm, investment compaks, the central bank, securities firm, investment companies, insurance companies, and various funds. These nies, insurance companies, and various funds. These participants have different (2) ________ when they opparticipants have different (2) ________ when they operate in financial markets. They use the financial markerate in financial markets. They use the financial markets to (3) _________ the funds for short periods of timets to (3) _________ the funds for short periods of time or to finance long-term investment. Commercial bane or to finance long-term investment. Commercial banks, for example, tend to lend in the money markets to ks, for example, tend to lend in the money markets to (4) ________ their short-term liabilities. Insurance co(4) ________ their short-term liabilities. Insurance companies and pension funds tend to lend in the (5) ___mpanies and pension funds tend to lend in the (5) _____ to counterbalance their long-term liabilities.__ to counterbalance their long-term liabilities.

Vocabulary Vocabulary 1. tangible 1. tangible adj adj 有形的有形的 e.g. The buildings and machinery are the compe.g. The buildings and machinery are the comp

any’s tangible assets. any’s tangible assets. 建筑物和机器是公司的有形资产。建筑物和机器是公司的有形资产。

intangible intangible adjadj 无形的无形的 e.g. The reputation is the company’s intangible e.g. The reputation is the company’s intangible

assets. assets. 声誉是公司的无形资产。 声誉是公司的无形资产。

2. exchange 2. exchange n n 交易，交换交易，交换 e.g. Is five apples for five eggs a fair exchange?e.g. Is five apples for five eggs a fair exchange?

3. lopsided 3. lopsided adj adj 不均衡的不均衡的 e.g. There is a lopsided ratio of men to women. e.g. There is a lopsided ratio of men to women.

男女比例存在失衡男女比例存在失衡 4. inextricable 4. inextricable adjadj 分不开的分不开的 e.g. Taiwan is an inextricable part of China.e.g. Taiwan is an inextricable part of China.

5. integrate 5. integrate ~+into/with ~+into/with 融入，（使）成为一体融入，（使）成为一体 She has completely integrated into the school lifShe has completely integrated into the school lif

e. e. 她已完全融入学校生活。她已完全融入学校生活。 ~sth with sth ~sth with sth 结合结合 The school integrates maths lessons with compThe school integrates maths lessons with comp

uter lessons uter lessons 学校把数学课和计算机课结合起来。学校把数学课和计算机课结合起来。

6. speculative 6. speculative 投机的投机的 e.g. He made a speculative investment in the e.g. He made a speculative investment in the

stock market.stock market. 他在股市作了投机性的一笔投资。他在股市作了投机性的一笔投资。

7. float 7. float vv ( ( 货币货币 )) 浮动浮动 Russia floated the ruble on the foreign exchRussia floated the ruble on the foreign exch

ange market. ange market. 俄罗斯让卢布在外汇市场上自由浮动。俄罗斯让卢布在外汇市场上自由浮动。

Difficult sentences.Difficult sentences. 1. As we have noted, there are two types of bas1. As we have noted, there are two types of bas

ic currency activities: payment of currency as wic currency activities: payment of currency as well as borrowing and lending of currency. ell as borrowing and lending of currency.

我们知道我们知道 ,, 有两种基本的货币活动有两种基本的货币活动 :: 货币支付和货币支付和货币借贷货币借贷 . .

2. The way to raise funds in financial markets c2. The way to raise funds in financial markets can be categorized into the intermediated and than be categorized into the intermediated and the non-intermediated.e non-intermediated.

在金融市场筹集资金的方式可分为直接筹资和在金融市场筹集资金的方式可分为直接筹资和间接筹资间接筹资 ..

3. International financial markets are markets f3. International financial markets are markets for financial assets traded by residents and non-or financial assets traded by residents and non-residents outside the internal markets.residents outside the internal markets.

国际金融市场是本国居民与外国居民交易金融国际金融市场是本国居民与外国居民交易金融资产的场所资产的场所 ..

4. The crisis came under speculative attack by 4. The crisis came under speculative attack by the quantum fund of Soros.the quantum fund of Soros.

该危机由索罗斯量子基金的投机性袭击直接所该危机由索罗斯量子基金的投机性袭击直接所致。 致。

Text B:Text B: What is the Foreign ExchaWhat is the Foreign Excha

nge Market?nge Market?

Have a discussion on the following questionHave a discussion on the following questions: s:

1. What are the currencies for the United States 1. What are the currencies for the United States and Japan respectively? and Japan respectively?

2. Can you name more currencies of different c2. Can you name more currencies of different countries? ountries?

3. What are soft currency? 3. What are soft currency? 4. Is US dollar a soft currency? 4. Is US dollar a soft currency?

Read the following sentences and decide whether theRead the following sentences and decide whether they are true (T)or false (F).y are true (T)or false (F).

(1) The existence of the foreign exchange markets is s(1) The existence of the foreign exchange markets is simply because nations have to keep their sovereign rigimply because nations have to keep their sovereign right to have and control their own currency.ht to have and control their own currency.

（（ 22 ）（））（） The foreign exchange market can be dividThe foreign exchange market can be divided into spot and forward markets if the element of time ed into spot and forward markets if the element of time is taken into account.is taken into account.

（（ 33 ）（））（） The forward market is for foreign exchangThe forward market is for foreign exchange to be delivered within two business days.e to be delivered within two business days.

（（ 4)4) （）（） When a United States company exports to a When a United States company exports to a foreign countryforeign country ，， foreign exchange is required.foreign exchange is required.

（（ 55 ）（））（） It happens sometimes that transactions arIt happens sometimes that transactions are settled in third currency.e settled in third currency.

Analysis of the text Analysis of the text 1 foreign exchange1 foreign exchange (1) the currency of a country other than one's (1) the currency of a country other than one's

ownown 外汇—非自己本国的某国货币外汇—非自己本国的某国货币 (2) the exchanging of the currency of one cou(2) the exchanging of the currency of one cou

ntry for that of anotherntry for that of another 国际汇兑—用某国货币换国际汇兑—用某国货币换成另一国货币成另一国货币

(3) the practice of buying and selling the mone(3) the practice of buying and selling the money of other countriesy of other countries 外汇买卖—买卖其他国家货外汇买卖—买卖其他国家货币的做法币的做法

2 foreign exchange market2 foreign exchange market ：： a group of exchaa group of exchange dealersnge dealers ，， mostly representing the commermostly representing the commercial bankscial banks ，， and the exchange brokers. The mand the exchange brokers. The market has two main divisionsarket has two main divisions ，， the spot market, the spot market, in which deliveries are made and paid for on the in which deliveries are made and paid for on the spotspot （（ immediately)immediately) ，， and the forward marketand the forward market ，，in which deals are arranged for future deliveries,in which deals are arranged for future deliveries, to be paid for on agreed dates or after delivery. to be paid for on agreed dates or after delivery.

外汇市场：指一群主要代表商业银行及外汇经纪外汇市场：指一群主要代表商业银行及外汇经纪人的外汇交易商。该市场有两个主要部分：现货人的外汇交易商。该市场有两个主要部分：现货市场，（当场）立即交货付款，远期市场，为将市场，（当场）立即交货付款，远期市场，为将来交货达成交易，在交货时或交货后的协定日期来交货达成交易，在交货时或交货后的协定日期付款。付款。

3. purchasing power3. purchasing power ：： the amount of goods and services that money cthe amount of goods and services that money c

an buy at a given time. This power varies in the an buy at a given time. This power varies in the level of prices,‘e. when prices rise, the purchasilevel of prices,‘e. when prices rise, the purchasing power of money falls.ng power of money falls.

货币的购买力：货币的购买力： 在一个特定时间货币所能够买到的商品与劳务的在一个特定时间货币所能够买到的商品与劳务的

数量。购买力同物价水平变动呈逆向变化．即当数量。购买力同物价水平变动呈逆向变化．即当物价上涨，货币购买力就下降。物价上涨，货币购买力就下降。

4 secondary market4 secondary market ：： that part of the money mthat part of the money market in which investors and brokers buy and searket in which investors and brokers buy and sell between them- selves without the original issull between them- selves without the original issuer being concerned.er being concerned.

二级市场：货币市场的一部分，在其中投资者和二级市场：货币市场的一部分，在其中投资者和经纪人之间进行买卖，无须牵涉原发行者。经纪人之间进行买卖，无须牵涉原发行者。

5 the value date; the date on which foreign exc5 the value date; the date on which foreign exchange is due to be deliveredhange is due to be delivered

交付日：外汇应交付日期交付日：外汇应交付日期

6 invoice vt.6 invoice vt. 开发票开发票 to invoice sb. for stll to invoice sb. for stll 给（某人）开（某物的）给（某人）开（某物的）

发票发票

7 offset: 7 offset: vtvt. balance, compensate for. balance, compensate for 抵消，弥抵消，弥补补

He has to offset his small salary by living econHe has to offset his small salary by living economically.omically.

他薪水微薄，不得不节俭度日。他薪水微薄，不得不节俭度日。

8 soft currency: 8 soft currency: that of a country which has a weak balance of pthat of a country which has a weak balance of p

ayment and therefore a currency for which therayment and therefore a currency for which there is relatively little demand. It can usu. be bouge is relatively little demand. It can usu. be bought cheaply, esp. in exchange for hard currency.ht cheaply, esp. in exchange for hard currency.

软通货，软币：软通货，软币： 一个国际收支能力薄弱的国家发行的，因此对其一个国际收支能力薄弱的国家发行的，因此对其

需求童较小的货币。这种货币一般用低价就可获需求童较小的货币。这种货币一般用低价就可获得．特别是在兑换硬通货时。得．特别是在兑换硬通货时。

hard currency: hard currency: that of a country which has a strong balance of that of a country which has a strong balance of

payments and a currency that is unlikely to fall ipayments and a currency that is unlikely to fall in value. It is, thereforen value. It is, therefore ，， much in demand. Its pmuch in demand. Its price is high, esp. in exchange for soft currency.rice is high, esp. in exchange for soft currency.

软通货，软币：软通货，软币： 国际收支地位较强的国家所发行的，币值不大可国际收支地位较强的国家所发行的，币值不大可

能贬值的货币。因此这种通货十分抢手，其价格能贬值的货币。因此这种通货十分抢手，其价格（特别是兑换成软通货时）很高。（特别是兑换成软通货时）很高。

Conclusion Conclusion Have a discussion on the following questions:Have a discussion on the following questions: 1. Why is it necessary for us to establish the for1. Why is it necessary for us to establish the for

eign exchange market? eign exchange market? 2. How can we benefit from the transactions in t2. How can we benefit from the transactions in t

he foreign market? Can you gibe some examplhe foreign market? Can you gibe some examples to show how you understand it? es to show how you understand it?

Assignment: Assignment: Finish the exercises Finish the exercises Preview Unit 10 Preview Unit 10