Financial English 《金融英语》内容结构.doc

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1、Chapter 1(1) Commodity Money: is money whose value comes from a commodity out of which it is made. (2)Representative Money :representative full bodied money refers to paper money fully backed by a precious metal. Types (3) Credit Money: is issued is based on the credit of its issuer and credit proce

2、ss.(4)Electronic Money :refers to depository money that is stored and processed through computer system or electronic payment system. (1)Medium of exchange: eliminates and overcomes the difficulty of barter system.(2)Unit of account :providing a common numerical measure of the value of goods and ser

3、vices exchanged.Functions (3)Store value :have some functions :save purchasing power, depreciates with inflation, more liquid, standard of deferred payment (1)Simple interest: refers to interest earned only on the principal of the initial investment. Formula: I = P R n S = P + I = P(1+Rn) I得到的利息 P本金

4、 R每年利息率 n付息频率 S:本息和 (2) Compound interest: Interest for previous periods is added to principal for the calculation of interest.Formula: s = P (1+r) n I=S-PMoney Interest and Interest Rate is generally accepted in the payment for goods and services or in the repayment of debt. Interest is a fee paid

5、on borrowed assets.Interest Rate Interest Rate refers to the ratio of the interest formed during the period of borrowing and lending to the principal of the granted loan. (3)Nominal and real interest rates. Real interest rates is approximately the nominal interest rate minus the inflation rate.(4)Of

6、ficial and market interest rates. The former is set by the central banks or monetary authorities.Market interest rate is wholly determined by the demand and supply of funds. (1)Narrow measure of money :M0 and M1 Include currency and demand deposit used for everyday expenditures.Money Supplyrefers to

7、 the collection of money in an economy including the volume of currency in circulation and the volume of deposits at any point of time.(2) Broad measure of money :M2 and M3 Narrow measure of money adds time deposits and savings account and certain other financial assets 1. Renminbi is the legal tend

8、er and had no relation to gold,nor any foreign currencies.2. Renminbi is the sole legal money in China.3. The issuance of Renminbi is highly concentrated and the Peoples Bank of China holds the right of issuance of Renminbi.China s Monetary SystemChapter 2The spot exchange rate: refers to the curren

9、t exchange rateThe forward exchange rate: refers to an exchange rate that is quoted and traded Definition:It is the value of a foreign nations currency in terms of the home nations currency.Foreign exchange rateTypesDirect quotation: 1 foreign currency unit =X home currency unitsQuotation Indirect q

10、uotation: 1 home currency unit=X foreign currency unitDefinition: are purchases and sales of foreign exchanges with a purpose to meet the needs of a certain economic activity.Spot transaction:purchase and sale of FX with delivery and payment to take place no more than two working days after the date

11、 of deal.Foreign Exchange Forward transaction: is the FX transaction that is settled on any pre-agreed date three or more business days after the deal date.foreign exchange transactionsDefinition :In the first place, it means the system utilized financing international payment. In the second place,

12、it means the media used to discharge international obligations. The third, means the rates at which foreign exchange is quoted.Swap transaction: is the simultaneous purchase and sales of a given of FX for two different value date. Foreign exchange futures contract: is an agreement between two partie

13、s to buy/sell a particular currency at a particular price on a particular future date, as specified in a standardized contract common to all participants in that currency futures exchange. Which is rarely buying or selling anything 。TypesForeign exchange option contract: gives the buyer the right, b

14、ut not the obligation, to buy (or sell) a specified amount of one currency for another at a specified price on a specified date.Chapter 3 The first is about the distinction between domestic resident and foreigners .The distinction is on the basic of normal location of resident.The General Principle

15、of BOPUnrequited Transfersdirect investment and portfolio investment (different from investor whether intends to take an active role.)Non-financial ServicesInvestment Income The Trade BalanceCurrent AccountIs the basic part of the BOP account ,which shows all transactions involving manufactured good

16、s or rendered services.other capitalCapital and Financial AccountMonetary goldSpecial drawing rights The reserve position in the FundForeign exchangechange in reservesCounterpart ItemsDouble -entry system,in which each transaction gives rise to both a credit entry and a debit entry.Net Errors and Om

17、issions The components of balance of payment statement:1. trade equilibrium, which means exports equal imports.2. currents equilibrium3. the overall balance of payment statement.Equilibrium of BOPBalance of Payment(BOP)Definition : is the record of the economic and financial flows that take place ov

18、er a specified time period between residents and non-residents of a given country.Chapter 4Features:1）a member country is free to choose its own exchange rate system 2) gold cannot be used for international transactions 3) SDR as the principal reserve asset in the international monetary system.Perio

19、d:1976-nowThe Jamaica systemBretton woods systemFinancial systemsDemerit:Triffin paradoxMerits:facilitated international businessFeature: 1)World Bank,and the International Monetary Fund 2) US dollar based gold standard 3) US dollar serving as the funds 4) Its currency in terms of gold and the US do

20、llar and to keep fluctuations of the dollar exchange rate. 5) using an adjustable peg. 6) the doller became the most widely used currency in the international trade.Period :1944-1976Period:1870-1914The gold standardDisadvantage :its inherent lack of liquidityAdvantage: its stabilizing influencefeatu

21、res: 1) Currencies are defined in terms of their gold content. 2) Payment imbalances between countries are settled in gold. 3) Gold coins circulated in most of the world. 4) Paper money. 5) Under the system ,gold was the only standard of value.The mechanism of adjustment to payments deficits and sur

22、plusesThe types of assets used for financing or settling payments imbalances among countriesThe key featuresThe way the foreign exchange market is organizedInternational Monetary SystemMerit: has unfettered flexibility.Demerit: lacked a unified stable monetary.Chapter 5Functions 3)a channel through

23、which a national government carries out its macro-economic policies.2)Optimize the reallocation and the efficient use of resources by promoting reasonable flow of funds.1)Facilitates the lending of funds from savers to those who wish to undertake investments. Definition:financial market exist as a w

24、hole of the places and activities of the financial and transactions of financial instruments.financial marketThe money market and Capital marketThe primary market and secondary marketTypes The spot market and forward marketDefinition :are money market in which short term funds transferred between fi

25、nancial institutions, usually for a period of one day, that is ,they are usually overnight investment.Functions: it can reflect the demand for and supply of funds in money markets and almost all other financial markets acutely and timely. As the wind vane of the market rate. Inter-bank MarketTypical

26、 Rate: LIBOR, SHIBOR and HIBOR.Definition :is a market where bills are transferred.Types: discount, on-discount, re-discount.Discount Market Eurodollar Market:denominated deposits at banks outside of the united states. Advantage: is relatively free of regulation.circumventing regulatory costsMoney m

27、arket1) most marketable. 2) 2)are issued by the government.3) 3)T-bills are short term securitiesFeaturesMargin: is the difference between the purchase price and poor value of the security and what you get at maturity.Market for Treasury BillsAdvantage: 1. virtually free of default risk. 2. Changes

28、in inflation in also low because of the short term to maturity.Definition:is a bank-issued security that documents a deposit and specifies the interest rate and the maturity date.Features1) is a term security.2) is a bear instrument.3) can be bought and sold until maturity.4) in large denominations.

29、5) individuals to be indirect investors in NCDs.Market for Negotiable Certificates of Deposit( NCDs or CDs)is short repurchase agreement.Market for ReposVariations:1) reverse repo 2) term repoMarket for Commercial PapersDefinition:is an unsecured, short-term loan issued by a corporation ,typically f

30、or financing accounts receivables and inventories.Interest rate: a discount rate, higher than the deposit rate.Maturities:1)on longer than a months. 2)the average is 1-2months.Listing and OTC dealing:OTC,over-the-counter market is a decentralized market mainly for unlisted stocks and park of listed

31、stocks of small firms.Public offering is through underwriting. Private placemen is offered in a private placement.Public offering and private placementSecondary market:is a financial market in which securities that have been previously issued can be resold.Intermediary: US is investment banks. U k i

32、s merchant banks. China is securities companies.Functions: 1)underwrite by an investment. 2)Underwriting. 3)best effort agreement.Definition :is that part of the capital market that deals with the issue of new securities.The primary marketFeatures: 1)Long maturity from one year to several decades 2)

33、Higher yields, higher risks and lower liquidity 3)Involving huge amounts of fundsDefinition :Capital markets deal in long-term debts with a maturity longer than one year ,including long -and medium-term government securities ,corporate stocks and bonds,and long-and medium-term bank loans.capital mar

34、ketTypes Preferred stock is a special equity security that has properties of both an equity and a debt instrument and senior to common stock ,but subordinate to bonds.preferred stock usually carries no voting rights,but carries a dividend and has priority over common stock in the payment of dividend

35、 and upon liquidation.Common stock is a form of corporate equity ownership,stock investors receive their funds after preferred stockholders,bondholders,creditors,etc.Types of stocksDefinition :the capital stock of a business entity represents the original capital paid into or invested in the busines

36、s by its founders.Stock Securities List OTCEurosecuritiesTrading of securitiesNon-certificated and registeredDebt securities and equity securities1 debt securities is a contractual agreement by the borrower to pay the holder of the instrument fixed amounts at regular intervals until a specified date

37、.2 equity securities usually provide steady income as dividends but may fluctuate significantly in their market value with the ups and downs in the economic cycle and the fortunes of the issuing firm.Types The different of being a stockholder and a bondholder:1 bondholders receive periodical interes

38、t payments and receive the face value when the bond matures.2stockholders receive dividends and/or return from the appreciation of stock price.Definition :The term negotiable securities is applicable in a general sense to many forms of negotiable instruments but usually employed for the share -capit

39、al of corporations and for the bonds of such corporations and of local and state government.Chapter 6Types Convertible preferred stockCallable preferred stock Cumulative preferred stock and non-cumulative preferred stockParticipating preferred stock and non-participating preferred stockRisk of Stock

40、 Investment:systematic risk:such as GDP , interest rate, inflation. unsystematic risk:unique risk , specific rick diversifiable riskTR= 1 many companies(but not all)pay cash dividends to their shareholders2 the value of the stock may rise Return Definition:a bond is a long-term debt security ,the au

41、thorized issued owes the holders a debt and,promises to make payments of interest and principal,on specific date,to the holder of the bond. 1 nominal , principal ,face amount , par value.2 Issue price.3 Maturity date. Short term (bills): maturities between one and five years. Medium term (notes): ma

42、turities between six and twelve years. Long term (bonds): maturities greater than twelve years.4 coupon interest. coupon rate the interest rate.5 coupon date. Terminology of bondTreasury bond:are issued by the united states government ,which are generally regarded as being the safest of all bonds in

43、 terms of default risk ,although all bonds have market risk if they are sold prior to maturity. Features: taxable at the federal level, but they are state exempt.Bond Zero coupon bond :are zero coupon bonds issued by the united states government. Features: 1 do not pay interest. 2 are bought at a di

44、scount.Types Corporate bondsMunicipal bondsOther categories.interest rate risk.credit risk.purchasing power risk.liquidity risk.The total return on a bond :TR=C/Pb +Pe-Pb/Pb C/Pb = the current yield. Pe-Pb/Pb = the capital gains yield.Risk Chapter 7 1 short-term loans and long-term loans.2 secured l

45、oans.3 corporate and institutional loans and personal loans.4 commercial loans and industrial loans.5 bilateral loans and syndicated loans.Loan Definition : is a sum of money advanced to a borrower ,to be repaid at a later date, usually with interest. legally, a loan is a contract between a buyer and a seller