III. Speech practice exercises

1. Discuss the following questions:

1. Imagine you are a chief financial officer of a large firm. Your company

has just acquired $ 10,000,000 as a long-term loan from a bank. You

want to use this money to secure the company’s financial future. How

would you invest the money?

2. Do you think it is a good business practice for a company to pay its

bills late?

3 “People with overdrafts ( задолженность) are bad financial

managers.” Do you agree?

4.What do you think the following sayings mean? Do you agree with

them?

a) Time is money.

b) Money is the root of all evil.

c) A fool and his money are soon parted.

d) Money can’t buy you love.

e) Love does much; but money does more.

f) Neither a borrower nor a lender be.

5. In your opinion, which of the following give the best return on your

money?

Which are very risky? Which are less risky?

*gold * currencies * a high-interest deposit

* precious stones * property * antiques and paintings

*stocks and shares * land/real estate * a new business venture

2. How do you say each of these numbers?

1) 67% 2) 3/4

a) sixty-seven percent a) three over four

b) sixty-seven percents b) three quarters

c) sixty-seven percentages c) three of four

3) 3.45 ( time ) 4) $765

a) forty-five after three a) seven hundred and sixty-five

dollars

b) three forty-five b) dollars seven hundred and sixty-five

c) fifteen before four c) seven hundred sixty-five dollars

5) 5.8 m 6) 4 March

a) five dot eight metres a) the fourth of March

b) five and eight metres b) four of March

c) five point eight metres c) fourth March

7) 1989 ( year )

a) one thousand nine hundred and eighty nine

b) nineteen hundred and eighty nine

c) nineteen eighty -nine

3. Translate the following sentences into English:

1. Основной задачей финансового менеджмента является эффективное приобретение и использование денежных средств.

2. Деньги, необходимые для того, чтобы основать дело, называются начальным капиталом.

3. Компании нуждаются в фондах для различных повседневных операций, таких как выплата окладов, зарплат, пенсий и гонораров, предоставление кредита покупателям, реклама, страхование и многих других.

4. Чтобы успешно конкурировать на рынке, предприятию нужно вкладывать деньги в развитие нового ассортимента изделий и новых технологий производства. Капитал необходим также для роста и расширения компании.

5. Все предприятия нуждаются в финансовой поддержке. Долевое финансирование ( продажа акций ) и финансирование путём получения займов ( продажа облигаций ) играют важную роль в приобретении компаниями капитала.

6. Обычно, при краткосрочном финансировании долги предприятия должны быть погашены менее чем за один год, в то время как долгосрочные долги могут оплачиваться в течение более длительного периода времени.

7. Компания Foxton & Sons была доведена до банкротства, так как не смогла выполнить обязательства по займам и облигациям в срок платежа.

8. При составлении финансового плана финансовые менеджеры должны учитывать такой важный фактор, как стоимость капитала.

9. Нам удалось снизить стоимость капитала благодаря способности руководства избрать правильные механизмы финансирования.

10. Наша фирма смогла пережить трудные времена, распродав ненужное имущество и устаревшее оборудование.

11. Работа финансового менеджера чрезвычайно сложна. Помимо финансового планирования и контроля, его обязанности включают взаимодействие с банками и рынками капитала.

12. Управление финансовыми ресурсами и бухгалтерский учёт тесно связаны между собой. В небольших компаниях бухгалтеры часто выполняют функции финансовых менеджеров.

4. Match the responses on the right with the questions on the left to

compile a dialogue:

1. So what exactly are bonds? a. Because of changes in interest rates.

For example, no-one will pay the full

price for 6% bond if new bonds are

paying 10%.

2. And how do they work? b. Exactly. And the opposite, a bond

whose market value is higher than its

face value, is above par.

3. So you have to keep c. I knew you’d finish by saying that!

them for a long time?

4. Why should that d. No, not at all. Bonds are very liquid.

happen? They can be sold on the secondary

market until they mature. But of

course the price might have

changed.

5. Oh, I see. Is that what e. No, not unless it’s a floating rate bond.

they mean by below par? The coupon, the amount of interest a

bond pays, remains the same. But

the yield will change.

6. But the bond’s interest f. No, these are short-term (three-month)

rate doesn’t change? instruments which the government

sells to and buys from the commercial

banks to regulate the money supply.

7. How’s that? g. That’s the name they use in Britain for

long-term government bonds – gilts or

gilt-edged securities. In the States they

call them Treasury Bonds.

8. And people talk about h. They’re securities issued by

AAA and AAB bonds, companies, governments and financial

and things like that. institutions when they need to borrow

money

9. And what about gilts? i. Well, a bond’s yield is its coupon

payment expressed as a percentage of

its price on the secondary market, so

the yield changes if you buy or sell

above or below par.

10. Not Treasury Bills? j. Well, they usually pay a fixed rate of

interest and are repaid after a fixed

period, known as their maturity, for

example five, seven, or ten years.

11. And James Bond? k. Yes. Bond-issuing companies are

given an investment grade by private

ratings companies such as Standard

& Poors, according to their financial

situation and performance.

Vocabulary Notes

fixed rate of interest - твёрдый постоянный процент, фиксированная

норма процента

secondary market- вторичный рынок ( на котором обращаются ценные

бумаги, ранее выпущенные в обращение)

below par - ниже паритета, ниже номинала

above par - выше паритета, выше номинала

face value - номинальная стоимость, номинал

floating rate bond - облигация с плавающей процентной ставкой

coupon - купон, свидетельство на уплату процентов

yield - доход по ценным бумагам, процентный доход по

облигациям

AAA - ценные бумаги первого класса

AAB - ценные бумаги второго класса

investment grade - класс инвестиций в ценные бумаги

rating companies - компании, определяющие рейтинг ценных бумаг

gilts =

gilt-edged securities – первоклассные гарантированные ценные бумаги

treasury bonds -- долгосрочные казначейские обязательства

treasury bills - краткосрочные казначейские векселя

5. Read the dialogue and reproduce it. Make up your own dialogue

concerning finance.

Cindy - Look, Phil! This music bores me to death. May I switch off the recorder?

Philip - Sure, honey. What’s it about?

C - You could tell me something about your job, Phil. We are going to get married in a month and I know nothing about your business except you are a financial manager at Nordstrom.

Ph - Good Grief! You see darling, finance is such a complicated and specific field of business that I think…

C - I know what you think! I’m so stupid and empty-headed that I won’t be able to understand anything!

Ph - Never in my life! I only mean it might be uninteresting to you.

C - On the contrary! If it concerns my future husband I’m always interested.

Ph - Okay, Cindy. Let’s talk about my job. You may ask any questions you like.

C - First, Phil I want to know why you chose the job of a financial manager. After graduation from Yale with an honors degree in economics you had various opportunities for a business career. You could have worked in banking business for instance, or in some governmental agency. Why did you prefer the finance department of a private company?

Ph - Choosing a career is a decision you need to make on your own, Cindy.

Of course, I could have got a job in a bank or in some governmental structure if I wanted, but I hope I’ve made the right choice. The department I work at manages the financial resources of the whole company. It means that the financial strength of such a giant as Nordstrom depends on its financial management. I’m gratified to know that my work makes a real contribution to the company’s success.

C - What does it mean – to manage the financial resources of the company? I always thought that everything connected with money was the responsibility of accountants.

Ph - That’s not quite true, Cindy. Accountants prepare financial statements,

analyze financial information, and deal with preparing budgets and providing tax services. Financial managers, on the other hand, find the ways of obtaining the money a company needs and investing it to best advantage. Though in smaller companies accountants may perform the functions of financial managers.

C - What are your direct responsibilities?

Ph - Interacting with banks and capital markets for credit extension. They say money makes the world go round. But it isn’t money. It’s credit. For when the corporations of the world buy, they buy on credit. And if your credit is good, no one asks to see the colour of your money.

C - But credit implies that the money borrowed must be repaid. Moreover, it must be repaid on time. What might happen if a company is experiencing serious cashflow difficulties and cannot meet its debts?

Ph - If worst comes to worst, a company might go down the tubes. But in reality companies often pay their bills late, keeping creditors waiting a month and more past the agreed deadline for the bills to be paid.

С - I wonder why creditors agree to wait! What makes them be so patient with their debtors?

Ph - Creditors have to take into account a combination of circumstances. Well Cindy, imagine you’re a creditor. Some company, let’s say GalacticTours, owes you $210,000 and is three months late in settling its bill. They explained that it was the result of the temporary cashflow difficulties caused by their recent expansion. You have been doing business with Galactic Tours for over 15 years. They were, in fact, your first major client and are currently your second biggest customer. Galactic Tours probably have the funds to pay you if you press them, but it may seriously damage their business. Would you risk damaging customer relations?

C - I guess I wouldn’t.

Ph - Or some other company, Holliday Pineapples for instance, is four months late with the $190, 000 it owes you. Holliday Pineapples are relatively new customer. Financially, the company is in extremely good shape with its share price more than doubling in the last two years. You believe that late payment is simply regarded as a money-saving policy in their finance department. And apparently they used to enjoy a fairly flexible arrangement with their previous creditors from whom you won their business. Would you risk losing their business in the future?

C - I think I could be patient with them, Phil. It’s better to accept a modest loss in order to prevent a huge one. You’ve convinced me that bad debt does not necessarily mean bad business.

Ph - That’s true. Have you ever heard about the legendary Tokushichi Nomura? Ninety years ago he was racing round the streets of Osaka in a rickshaw to escape angry creditors. They are not angry now, for today Nomura is the biggest securities company in Japan. Nomura knew what all good financial managers know: that what distinguishes the effectively managed commercial operation from the poorly managed one is the way it manages its money.

C - May I learn the secret of successful money management?

Ph - This secret is the skill with which a company can stall its creditors and at the same time put pressure on its debtors. Well, darling, so much for finance today.

C - Oh, Phil, you are a pleasure to talk with! I’ve learnt lots of interesting things. I hope we’ll have time to talk about finance again, won’t we?

Ph - Sure, sweetheart! When we get married we'll be able to discuss financial matters rather often. I mean you might take on the responsibilities of being our family financial manager.

C - Why, it would be just to share the responsibilities equally! You will obtain the money and I will use it to my best advantage…