- •English for the master’s programm
- •In finance Содержание
- •Unit 1 money and its functions
- •Match each of the word on the left with the correct
- •3. Which of the following are true or false?
- •4. Match the terms with their Russian equivalents:
- •5. Match the two parts of the sentences:
- •6. Translate the sentences into English:
- •7. Translate the text in writing: Careers in Finance
- •The function of financial markets
- •1. Answer the questions:
- •2. Match each of the words on the left with the correct explanation on the right:
- •3. Complete the text by inserting the following words in the gaps:
- •4. Translate the sentences into English:
- •Primary and Secondary Markets
- •Unit 3 regulation of the financial system
- •Internationalization of financial markets
- •Answer the questions:
- •Match each of the words on the left with the correct explanation on the right:
- •Speak on:
- •4. Make written translation of the text into Russian:
- •5. Translate the text into English:
- •How bonds and common stocks are valued
- •Match each of the words on the left with the correct explanation on the right:
- •3. Translate the text into English:
- •Voting rights of shareholders
- •Preferred Stock
- •Common stock
- •Answer the questions:
- •Complete sentences by inserting the following words in the gaps:
- •Complete the text by inserting the following words in the gaps:
- •Speak on:
- •5. Make written translation of the text into Russian:
- •6. Translate the text into English:
- •Forward exchange contract
- •Fixed and option contracts
- •Answer the questions:
- •2. Match each of the words on the left with the correct explanation on the right:
- •3. Complete the text using these words:
- •4. Speak on:
- •5. Make written translation of the text into Russian:
- •6. Translate the text into English:
- •Unit 7 banking
- •Match the words with the definitions:
- •2. Complete the sentences using the words from the box:
- •3. Which of the following sentences are true or false?
- •4. Match the terms with their Russian equivalents:
- •5. Match the two parts of the sentences:
- •6. Make written translation of the text into Russian:
- •Islamic Banking
- •Unit 8 commercial and central banks
- •1. Answer the following questions:
- •2. Match the terms with their Russian equivalents:
- •3. Fill in the gaps with the correct variants:
- •4. Complete the sentences by inserting the following words in the
- •5. Make the written translation of the text into Russian: micro credit
- •Insurance companies
- •Life Insurance Companies
- •Property and Casualty Insurance Companies
- •Answer the questions:
- •Match each of the words on the left with the correct explanation on the right:
- •Translate the sentences into English:
- •Unit 10 pension funds
- •Annuities
- •Answer the questions:
- •Complete the text by inserting the following words in the gaps:
- •3. Speak on:
- •4. Translate the text into English:
- •Unit 11
- •Investment Funds
- •Answer the questions:
- •2. Match each of the words on the left with the correct explanation on the right:
- •4. Make the written translation of the text into Russian:
- •5. Translate the text into English:
- •Unit 12 taxation
- •Match each of the words with the correct explanation on the right:
- •2. Complete the sentences by inserting the words in the gaps:
- •3. Which of the following sentences are true or false?
- •4. Match the terms with their Russian equivalents:
- •5. Translate the sentences into English:
- •6. Render the text: концепция платежеспособности
- •Unit 14 classification of taxes
- •1. Answer the following questions:
- •2. Match the terms with their Russian equivalents,
- •3. Fill in the gaps with the correct variants.
- •4. Complete the sentences by inserting the following words in the
- •5. Translate the sentences into Russian:
- •6. Render the text переложение налогового бремени
Forward exchange contract
A forward exchange contract is an immediately firm and binding contract between a bank and its customer for the purchase or sale of a specified quantity of a stated foreign currency at a rate of exchange fixed at the time the contract is made for performance (delivery of the currency and payment for it) at a future time which is agreed upon when making the contract. This future time will be either a specific date or at any time between two specified dates.
It is worth stressing the point that once entered into, a forward exchange contract is binding. The bank must insist on the customer honoring his forward exchange contract, because if he does not, it will leave the bank itself exposed in the currency. Even if the customer doesn’t have any foreign currency for the bank to buy or doesn’t any longer have a need for currency that he has contracted for the bank to sell to him, the bank will insist on going through with the contract. The terms of a forward exchange contract are therefore quite rigid, and if the customer cannot meet the terms, the bank will arrange either to «close out» or to «extend» the customer’s forward contract, and will not let the customer get away without meeting his obligations.
Fixed and option contracts
A forward exchange contract may be either fixed or option. Fixed means that performance of the contract will take place on a specified date in the future. For example, a two months forward fixed contract taken out on 1 September will require performance on l November, i.e. two months later. Option means that performance of the contract may take place, at the option of the customer, either at any date from the contract being made up to and including a specified final date for performance or at any date between two specified dates, both in the future.
Option contracts are forward exchange contracts where the customer has the option to call for performance of the contract either at any date from the contract being made up to a specified date in the future or at any date between two dates both in the future.
Option contracts are normally used to cover whole months straddling the likely payment date, where the customer is not sure of the exact date on which he will want to buy or sell currency. The purpose of an option contract is to avoid having to renew a forward exchange contract and extend it by a few days, because extending a forward contract can be rather expensive in terms of cost per day. By using option contracts, the customer is therefore able to cover his foreign exchange risk with certainty even when he is uncertain exactly about the date.
For example, suppose that now is 10 April, and a customer of your bank knows that he must make a payment of CHF 40,000 at some time before the end of May. He could take out an option on forward contract for the bank to sell him the CHF 40,000 at any time in the period, say, 10 April - 10 June, with the forward exchange contract therefore covering any time in the next 2 month period.
When a customer makes an option forward exchange contract with his bank, it is necessary to establish the buying or selling rate which the bank will quote. The bank will quote the rate which is most favorable to itself at any date within the option period. This makes sense, because the customer has the option to call for performance of the contract on any date within the period, and the bank should make sure that the customer does not obtain a favorable rate at the bank’s expense.
A forward exchange contract will provide cover against exchange risks for the period between making the contract and the date of performance of the contract. Forward cover is available for up to five years ahead, or even longer, but typically, selling and buying rates are quoted for one, two, three, six or twelve months.
The forward rates shown daily in the Financial Times (for both sterling and the US dollar) are the one month and three month forward rates. Contracts up to one month are also available but are less common. These are called short (value dates) contracts.