10. Read and translate text b using a dictionary Text b

The foreign exchange markets are among the largest markets in the world, with trading each day in excess of $200 billion. It is essen­tially an over-the-counter market, with no central trading location and no set hours of trading. Prices and other terms of trade are de­termined by negotiation over the telephone or by wire, satellite, or telex. The foreign exchange market is informal in its operations; there are no special requirements for market participants, and trading conforms to an unwritten code of rules among active traders.

The largest money center banks headquartered in New York, London, Tokyo and other financial capitals of the world not only maintain large inventories of key foreign currencies, but trade cur­rencies with each other simply through an exchange of deposits. For example, if a major U.S. bank needs to acquire pounds sterling, it can contact its correspondent bank in London and ask that bank to deliver an additional amount of sterling to the U.S. bank's correspondent ac­count. In turn, the U.S. bank will increase the dollar denominated deposit held with it by the London bank. In this way money never really leaves the country of its origin; only deposits denominated in various currencies have their ownership transferred from one holder to the next.

The basic idea of foreign exchange dealing is making profit on selling and buying currencies. Dealers and brokers usually quote not one, but two exchange rates for each pair of currencies: a bid (buy) price and an asked (sell) price. The bid-asked spread constitutes the dealer's profit, though that spread is normally very small. Thus the spot bid and asked rates on pounds might be quoted as 52/56. It is assumed the customer is aware of current exchange rates and knows, therefore, that the bid price being quoted is $1.5052/£ and the asked price is $1.5056Y£. If there is a difference in price between two mar­kets (for example, of pounds in New York and in London) profes­sional traders will take advantage of this arbitrage opportunity. The force of arbitrage generally keeps foreign exchange rates from get­ting two far out of line in different markets.

11. Answer the following questions based on text b:

1. Where are the foreign exchange markets located?

2. Do foreign exchange traders take large amounts of cash from one place to another?

3. Are there special requirements for market participants?

4. How do financial capitals of the world trade cur­rencies with each other?

5. What is a basic idea of foreign exchange dealing? Describe it in detail.

12. Make up sentences of your own using the following expressions from text b.

To trade each day, to have no central trading location and no set hours of trading, an exchange of deposits, to quote two exchange rates, the bid price, the asked price, to take advantage of, the force of arbitrage, correspondent bank.

13. Say what is true and what is false. Correct the false sen­tences.

1. The foreign exchange market has a special trading place and set hours of trading.

2. There are special requirements which you should follow in case you wish to be an active trader of the foreign exchange market.

3. The largest money center banks trade currency with each other simply through an exchange of deposits.

4. The dealer’s profit is made up by the bid-asked spread.

5. If there is a difference in price between two markets professional traders will take advantages of arbitrage.