Look through the following vocabulary notes which will help you understand the text and discuss the topic.

UNIT 5. OVERVIEW OF THE FINANCIAL SYSTEM

Getting started

Suppose that you want to start a business that manufactures a recently invented low-cost robot that cleans the house, mows the lawn, and washes the car, but you have no funds to put this wonderful invention into production. Walter has plenty of savings that he has inherited. If you and Walter could get together so that he could provide you with the funds, your company’s robot would see the light of the day, and you, Walter, and the economy would all be better off: Walter could earn a high return on his investment, you would get rich from producing the robot, and we would have cleaner houses, shiner cars, and more beautiful lawns.

Financial markets (bond and stock markets) and financial intermediaries (banks, insurance companies, pension funds) have the basic function of getting people such as you and Walter together by moving funds from those who have a surplus of funds (Walter) to those who have a shortage of funds (you). More realistically, when Apple invents a better iPod, it may need funds to bring it to market. Similarly, when a local government needs to build a road or a school, it may need more funds than local property taxes provide. Well-functioning financial markets and financial intermediaries are crucial to the economic health.

Discuss the following points.

1. Some economists suspect that one of the reasons that economies in developing countries grow so slowly is that they do not have well-developed financial markets. Does this argument make sense?

2. The US economy borrowed heavily from the British in the nineteenth century to build a railroad system. Why did this make both countries better off?

Look through the following vocabulary notes which will help you understand the text and discuss the topic.

1. a bond облигация
2. a capital market фондовый рынок
3. a claim требование, претензия
4. a commercial bank (a retail bank) коммерческий банк
5. a commodity exchange товарно-сырьевая биржа
6. a credit union кредитный союз
7. a fund фонд
8. a government retirement fund государственный пенсионный фонд
9. a liability обязательство, пассив
10. a maturity date срок погашения
11. a money market денежный рынок
12. a money market mutual fund паевой инвестиционный фонд по ставкам денежных рынков
13. a mortgage закладная
14. a mutual fund паевой инвестиционный фонд
15. a net income чистый доход
16. a pool пул, объединение
17. a primary (secondary) market первичный (вторичный) рынок
18. a principal основная сумма кредита
19. a savings and loan association кредитно-сберегательная ассоциация
20. a security ценная бумага
21. a shortage дефицит
22. a stake ставка, доля, интерес
23. a stock exchange фондовая биржа
24. a stock, a share, an equity акция
25. a surplus профицит, излишек
26. a thrift сберегательное учреждение
27. an asset актив
28. an exchange биржа
29. an intermediary посредник
30. an inventory полный перечень
31. an investment bank (a merchant bank) инвестиционный банк
32. an issuer эмитент
33. an over-the-counter market внебиржевой рынок
34. bank branching создание банковских филиалов
35. common stocks (ordinary shares) обыкновенные акции
36. contractual savings institutions договорные сберегательные учреждения
37. debt instruments долговые инструменты
38. depository institutions депозитарные учреждения
39. efficiency рентабельность
40. efficient эффективный, рентабельный
41. equity собственный капитал
42. excess излишек
43. funds средства
44. insider trading сделки с использованием служебной информации
45. interest payments выплаты процента
46. intermediation посредничество
47. preferred stocks привилегированные акции
48. principal payments выплата основной суммы кредита
49. return доход
50. risk exposure риск потенциальных убытков
51. stock капитал компании
52. to channel/ transfer/move funds перераспределять, переводить средства
53. to expose подвергать
54. to issue securities выпустить ценные бумаги
55. to raise funds привлекать средства, капитал
56. to time распределять по времени
57. transaction costs операционные издержки
58. welfare социальное обеспечение, благосостояние

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