Open the brackets using the verbs in the Present Tenses.

1. The firm (to compete) for the securities with two foreign companies now. It (to compete) with them for two hours.

2. What they (to do) now? – They (to discuss) a deal. The chief stockbroker (to talk) for already half an hour.

3. Where these securities (to issue)? – They (to issue) in Wales. We (to buy) them for two years.

4. Where you (to live)? – I (to live) in Moscow. I (to live) there since 1990.

5. Our Stock exchange (to sell) bonds, shares and other securities. We (to sell) them to individuals, banks, insurance companies and investment funds.

6. What you (to do) here? – I (to wait) for a new client. I (to wait) for already an hour.

7. In spite of high prices government securities and bonds persistently (to buy).

8. This Stock Exchange (to be) rather large. I (not to visit) such a building before.

9. The company (to decrease) the price and people (to prefer) their shares now.

10.These two firms (to offer) similar services to their customers.

11. Market floor conditions usually (to influence) the number of participants.

12. In spite of a high rate of inflation the price of an issue (not to change).

18. Answer the questions on the text. Use the following expressions to begin your answer:

Ø The text tells the readers …

Ø I suppose …

Ø I think …

Ø I am certain that …

Ø If I got it right …

Ø It seems to me …

Ø In my opinion …

1. What is a stock market?

2. What function does a stock market perform?

3. What reform of the London Stock Exchange was implemented in 1986?

4. What are the types of security markets?

5. Who sells and buys securities on the Stock Exchange?

6. Who can be a client of a stock exchange?

7. What is the difference between bulls and bears?

19. Agree or disagree. Correct wrong statements.

1. Stock markets have developed to make the buying and selling of goods easier.

2. The main function of a stock market is to provide services and market for investors.

3. There are many types of security markets.

4. Stock market business exists only in large European countries.

5. The London Stock Exchange is one of the oldest in the world.

6. The London Stock Exchange has changed greatly recently.

7. Every person can buy and sell securities at the stock exchange himself.

8. Usually everybody buy securities when prices are going to fall.

20. Complete the following sentences according to the text.

1. Stock Exchange have developed to make …

2. The main function of a stock exchange is …

3. There are two types of security markets: …

4. Stock market business is …

5. As a result of reforms in 1986 the London Stock Exchange …

6. Now stockbrockers deal in securities …

7. Every transaction on the stock exchange begins when …

8. Stockbrockers act on …

9. Buyers at the stock exchange are called …

10. Bears make profit when …

21. Arrange sentences according to the text.

1. Buyers at the stock exchange who make profit when prices are going to fall are called bears.

2. Now stockbrockers deal in securities through telephones and computers which have linked the major international financial centres.

3. The main function of a stock exchange is to provide services and market for investors who want to buy different securities.

4. Stockbrockers act on clients’ orders.

5. Stock Exchange have developed to make the buying and selling of securities easier.

6. Stock market business is worldwide and almost in every country there are several exchanges.

7. Buyers at the stock exchange are called bulls and bears according to their behavior.

8. There are two types of security markets: primary and secondary.

9. Every transaction on the stock exchange begins when a private person, a bank or any other client decides to buy or sell securities.

10. As a results of reforms in 1986 the London Stock Exchange moved away from the traditional market to screen-based trading.

22. Make up a plan of the text.

23. Speak on the stock markets.

LESSON 10. FOREIGN EXCHANGE

Grammar Revision: Существительное в функции определения. Сложное дополнение. Сложное подлежащее.

FOREIGN EXCHANGE

Relations between economies of different states are performed by trade and financial operations. Money is an intermediary in such operations. As a result there exist currency relations in the world economy. These relations are regulated by currency systems. Currency system is a body of relations which shows currency functioning in an open economy.

The most essential element of such system is currency. The term currency may be used in two senses. In the first it is a unit of account of a country, in the second it is banknotes of foreign countries and their ability to serve as a medium of payment and credit.

All the countries of the world use national currency as a legal medium of exchange. To pay for import of goods and services it is necessary to exchange national currency for a foreign one. Such exchanges are carried out at foreign exchange markets. The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. It is by far the largest financial market in the world, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. The average daily trade in the global forex markets currently exceeds US$1.9 trillion. Retail traders (individuals) are a small fraction of this market and may only participate indirectly through brokers or banks.

The price of currency is called exchange rate and is expressed in monetary units of the other country. A market based exchange rate will change whenever the values of either of the two component currencies change. A currency will tend to become more valuable whenever demand for it is greater than the available supply. It will become less valuable whenever demand is less than available supply (this does not mean people no longer want money, it just means they prefer holding their wealth in some other form, possibly another currency).

Increased demand for a currency is due to either an increased transaction demand for money, or an increased speculative demand for money. The transaction demand for money is highly correlated to the country's level of business activity, gross domestic product (GDP), and employment levels. The more people there are out of work, the less the public as a whole will spend on goods and services. Central banks typically have little difficulty adjusting the available money supply to accommodate changes in the demand for money due to business transactions.

The speculative demand for money is much harder for a central bank to accommodate but they try to do this by adjusting interest rates. An investor may choose to buy a currency if the return (that is the interest rate) is high enough. The higher a country's interest rates, the greater the demand for that currency. It has been argued that currency speculation can undermine real economic growth, in particular since large currency speculators may deliberately create downward pressure on a currency in order to force that central bank to sell their currency to keep it stable (once this happens, the speculator can buy the currency back from the bank at a lower price, close out their position, and thereby take a profit).

In choosing what type of asset to hold, people are also concerned that the asset will retain its value in the future. Most people will not be interested in a currency if they think it will devalue. A currency will tend to lose value, relative to other currencies, if the country's level of inflation is relatively higher, if the country's level of output is expected to decline, or if a country is troubled by political uncertainty. For example, when Russian President V, ladimir Putin dismissed his Government on February 24, 2004, the price of the ruble dropped. When China announced plans for its first manned space mission, synthetic futures on Chinese yuan jumped (since China's currency is officially pegged, synthetic markets have emerged that can behave as if the yuan were floating).

Vocabulary on the text

banknote, n – банкнота

be equal to – равняться ч-л

be in circulation – быть в обращении

body, n – совокупность

coin, n – монета

currency rate – курс валюты

denomination, n – достоинство

feature, v, – изображать

foreign exchange market – рынок иностранной валюты

mint, v, – чеканить

portray, v, – рисовать портрет, изображать

Phonetic and lexical exercises