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V. Answer the following questions:

  1. What is the purpose of financial markets?

  2. What is the function of financial intermediaries?

  3. What is a financial intermediary?

  4. What does each share of corporate stock represent?

  5. What do people buy and sell on the stock exchanges?

  6. What is the largest type of enterprise?

  7. What are the motivations for buying and holding stocks?

  8. What does the stock price depend upon?

  9. What is the difference between the stock market and the bond market?

10. When is a bond issued? 1 1. What is the futures market?

VI. Define the terms:

capital yield

financial intermediary «$tart-up» funds

saving dividend

corporate stock corporation bond futures market

VII. Translate into English:

1. y 1988 pou,i KOMnanin «yonT f\wcneyi» nonana nepeTBO-piOBaTM 5000 aKpia 3eMJii no6nn3y riapuwta, mo 6yna niA uy-PObmm 6ypjwoM, Ha BennHe3HHM napx BiflnonnHKy (park and resort). 2. JXnx roro mo6 onnaTMTM 6yp,iBHnu,Tao HOBoro nap-«y, KOMnanifl Morna 6 BKKopwcTaTW Bnacm cjJOHflw, no3MKy a6o BwnycTMTM hobhh nawer aKuin. 3. KoMnaHin 8MKopncTana bc! TpM Mexam3MM cЈiHaHcyBaHna. 4. 3acHyB3HHfl cboHAOBo'f* 6ip>Ki b Hbto-klopKy siAfiynocn b cepeAHHi XVIII cro/iiiTa, Konn MaK-nepi, npoflaBu,i ia noKynuj nonann 36npaTMCfi b KaB'apHFix wa yonn-crpMT. 5. TopryBann nepeBawHO 3epHOM i pa6aMn. HanpMKiHu,i XVIII ci-onir™ TopriBnfo 6yno 3BefleHo ao one-pauiii 3 ypaflOBUMH o6nirau,iftMM. 6. AneKC TaMinbTOH 36aram H3 npMfl6aHHl TOfli me fleujeBMX o6nirau,iM i cTaB Haw6araTwoio nioAHHOto. 7. y 6epe3Hi 1792 poKy 24 MaKnepM 3 ceMM <p'\pr* o6pa/iM npaBJiiHHH i smihujih Ha3By 6ip«i. Kas'sipHH flwoHa-TaHa CTana tboHAOBoio 6ip>Keio. MaKnepM BCTaHOBMnw npa-BMna TopriBni, po3Mip KOMictMHHx. y 6epe3ni 1830 pony 3a ohmh AeHb 6yno npOAaHO 31 aKUjio. flnn nopiBHHHHH." cbOroAHi Ha cf>OHAOBiM Sipwi luoahh npOAaeTbcn 6i/ibiue hjjk 200 Minb-

MOHiB 3KI4JM.

186

VIII. Read and dramatize the following dialogue:

A.: Hello, old chap! Haven't seen you for ages. How are you getting on? You look tired.

B.: I've got a problem to solve. I invented a laser scanner that could detect all mechanical, structural or electrical defects in airplanes.

A.: Clearly, this idea has great potential to save lives and reduce the anxieties of travellers.

B.: Yes, and it also might make me a millionaire.

A.: But, to produce Air Scanners you need a manufacturing plant, workers and materials. You will also have to obtain a patent to protect your invention from would-be com­petitors.

B.: Besides, I shall need a research and development lab for continuous testing and improvement as well as a marketing department to demonstrate and sell the scanners.

A.: I see, from a broader economic perspective, what you have here is a resource allocation problem. At present, all

;,-.. of society's land, labor and capital are devoted to the production of other goods and services. Your immediate problem is defined in far simpler terms — hard cash. To acquire real resources — the land, labor and capital that can produce air scanners, you must have some means of payment.

B.: That is the problem of raising start-up funds. I could ask my relatives and friends for a loan, or even go door-to-door in the neighborhood.

A.: This method of raising funds is not likely to achieve your goals. Fortunately for you and other budding entrepreneurs most households save some fraction of their income. This flow of saving creates an enormous pool of loanable funds. Your problem is how to tap that pool to get enough funds to start building Air Scanners.

B.: I know that financial intermediaries make the job of acquiring start-up funds.

A.; A true «start-up» company like Air Scanners has nothing more than a good idea, a couple of dedicated employees and Big Plans.

8.: I cannot but mention that to fund these plans, the company can sell shares of itself. The individuals who buy the newly issued stock are putting their savings directly into the corporation's accounts. When our corporation is formed, I shall inform you. You may buy corporation's shares and

. ,: become an owner.

187

A.: And I shall stand to profit from the corporation's business

or fake my lumps if the company fails. B.: I must say because the company is incorporated, you are

at a risk only for however much money you pay for your

shares.

A.: You've got a point there. I have to go. And let's hope for the best.

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