Capital and Money Markets

As we have seen, businesses have to look to external sources for their funds. Financial intermediaries are the institutions responsible for matching the needs of savers, who want to loan funds, with those of investors, who need funds. These groups do not naturally communicate with each other. Intermediaries provide the link between them. A number of financial institutions hold funds for savers, paying them interest. In addition, they make funds available to investors who, in turn, are charged interest. Some deal in capital, i.e. long and medium term finance; others in money, i.e. short term loans and bills of exchange. They offer a variety of commercial and financially related services.

The stock market. The capital market is dominated by the London Stock Exchange, which deals in second hand shares. The main function of a stock exchange is to provide a market where the owners of shares can sell them. If this market did not exist, selling shares would be difficult because buyers and sellers could not easily communicate with each other. Savers would be less inclined to buy shares and so companies would find it more difficult to raise finance by the issue of shares. A stock exchange enables mergers and takeovers to take place smoothly. If the price of a company’s shares begins to fall due to poor profitability, a predator may enter the market and begin to build up a stake in that company. Once the stake is large enough a predator can exert control over the company.

A stock exchange also provides a means of protection for savers. Companies which have a stock exchange listing have to obey a number of Stock Exchange rules and regulations, which are designed to safeguard savers from fraud. Finally, it is also argued that the general movement in share prices reflects the health of the economy. However, there are times when share price movements could be very misleading, e.g. if they rise when the economy is in a recession as they did in the second half of 1992. Insurance companies, pension funds investment trusts, unit trusts and issuing houses (merchant banks) are some of the institutions which trade in shares.

Banks and other financial institutions. The money market is dominated by the major commercial banks, such as the National Westminster Bank or the Midland Bank. They allow payments to be made through the check system and deal in short term loans. Savings banks and financial corporations also deal in short term funds. Discount houses and acceptance houses deal in bills of exchange and have very close links with the commercial banks. Building societies also provide a source of finance. They tend to specialize in long term loans for the purchase of land and property.

At the heart of this highly complex market system is the Bank of England. This is the government’s bank and tends to play a role in controlling the amount of money loaned, and to some extent, interest rates.

In recent years many of the above institutions have changed in nature. Due to competition and a change in legislation there has been a great deal of diversification. In particular, there is now little real difference between the role of a building society and that of a bank.

Задание 3. Переведите деловое письмо с русского языка на английский язык, незнакомые слова запишите в тетрадь и выучите:

Letter 1

Уважаемые господа!

Благодарим Вас за письмо от 1 ноября. К сожалению, мы не можем отгрузить Ваш товар вовремя. Мы хотели бы объяснить, почему была задержка в отгрузке товара.

Наш товар пользуется большим спросом на мировом рынке, поэтому у нас очень много заказов.

Мы не сможем завершить отгрузку товара к назначенному сроку и были бы признательны, если бы Вы согласились продлить срок отгрузки. Просим отметить, что первая партия была отгружена вовремя. Что касается остатка товара, то мы надеемся отгрузить его в течение 5 месяцев.

Пожалуйста, сообщите нам Ваше решение как можно скорее.

С уважением,…

Задание 4. Прочитайте и переведите текст по специальности со словарем, составьте письменно вопросы к тексту, незнакомые слова и выражения выучите:

Banks make their profit by lending the money which the customers deposit with them to others who need it for personal or business reasons. Most people need more money than they have currently available at some time in their lives.

To be a borrower you must be a customer of the bank because the money will be lent to you through a bank account. There are two ways in which you may borrow. The first, and easy, is to spend more money than you have in your current account – to overdraw. The second, and the normal way of borrowing larger amounts or for a long period of time is the loan.

If a manager permits an overdraft on current account he is likely to set a limit to the size of the overdraft and may stipulate a date by which the account is back in credit. Businesses whose payments and receipts are often irregular will frequently need to use overdraft facilities and they are often granted to private customers as well particularly when the manager knows that regular payments are made directly into the account.

If a loan is granted it will be a fixed sum immediately available for a fixed period of time. The principal and the interest on it may all become due for payment at the end of that period but for personal loans it is common to arrange that the loan and the interest are repaid in equal regular installments over the period of the loan. A separate account is opened to record the repayments as they are made.

Whether you are seeking money for business or personal reasons there are a number of things that the manager will want to know before he is prepared to grant your request. The obvious facts will be the amount that you seek and the arrangements for repayment that you are able to suggest. You need to tell him something about the purpose of the loan, a business loan is likely to help you make profits out of which the loan can be repaid with interest and he will wish to judge for himself whether or not this is likely.

Задание 5. Прочитайте специальный текст и перескажите его содержание на английском языке: