Discussion

1. Comment on the following: “A banker is a man who lends you umbrella when the weather is fair, and takes it away from you when it rains”

2. Is your attitude towards money and banking different from that of your parents? How? Why?

3. What are the keys areas or functions of banks that are subject to regulation? Do you think all of these facets of banking should be regulated? Defend your answer.

4. What are the goals of international banking regulations?

5. What do you know of activities of the Central Bank of the Republic of Belarus?

6. Find the information about the development of banking industries in the USA, Great Britain, Canada, the Republic of Belarus and prepare a report.

7. If you possess a large sum of money, what are the pros and cons of the following: -putting it into a sock; -buying a lottery ticket; -putting it into a bank; -buying gold; -buying a picture by Van Gogh; -investing in property; -buying shares?

8. What financial barriers might confront people who live in different societies with different monetary systems and who wish to trade with one another? Would it be advantageous if the entire world used a common currency?

Unit V finance and credit Warming up

1. Have you ever borrowed money from anyone?

2. Have you ever lent money to anyone?

3. Are you in debt in the moment?

4. Does anyone owe you any money?

5. Do you save money?

6. Have you bought anything this week? What? How much did it cost? Was it worth it? Did you get a receipt?

7. Are you for buying on credit?

8. Have your parents or relatives bought anything on credit?

9. What are the advantages and disadvantages of buying on credit?

10. Can you explain what credit is?

11. What banks exist in Minsk today? Do all of them extend credits?

12. What other financial institutions do you know?

13. Your friend wants to start up a new business but he hasn’t got enough capital. Where should he apply for the financial support?

Topical Vocabulary

capital - капитал, фонды

financial capital финансовый капитал ( фактор производства, обычно представляемый деньгами)

fixed capital основные средства(капитал, вложенный в основные фонды предприятия, т.е. землю и здания, машины и оборудование)

physical capital физический капитал( фактор производства, обычно представленный машинами, оборудованием и производственными зданиями)

venture capital капитал-риск(кредит, направленный на развитие новых, недостаточно изученных направлений науки и техники)

asset - часто pl. активы; фонды; средство; капитал, имущество;

assets and liabilities актив и пассив

cash assets денежные активы

fixed assets основные активы

current assets оборотные средства; текущие (легкореализуемые, ликвидные) активы

bond - облигация, закладная, долговое обязательство

long bond долгосрочная облигация

bond issue выпуск облигаций

obligation - обязательство

long-term obligation –

to meet obligations – покрывать обязательства

liability - обязательство, долг; pl пассив, долги, задолженность

to meet one’s liability покрывать свою задолженность

long-term liability долгосрочное обязательство

limited (liability) company – общество, компания с ограниченной ответственностью

expenses – затраты, расходы, издержки

day -to-day expenses – повседневные расходы

syn. Expenditures

to cover expenses – покрыть расходы

to cover operating costs – покрыть текущие расходы

operation – деятельность, работа, функционирование, действие

mortgage - ипотека, залог, закладная

household mortgage – жилищная ипотека

collateral – гарантия, обеспечение, имущественный залог, поручительство

security - гарантия, залог, ценная бумага, обеспечение

tangible security – материальное обеспечение

amount - сумма, количество

outstanding amount – неоплаченная, неуплаченная сумма

installments – частичный взнос, платеж

by installments – в рассрочку

to pay by installments –

final installment -

ownership - собственность, владение, имущество

property - имущество, собственность, право собственности

loan - заём, ссуда

to call a loan - требовать возврата займа

to make a loan - давать ссуду

syn. to grant a loan

to repay a loan - возвращать ссуду

debt - долг, задолженность

debtor – должник

instruments - документы

negotiable instruments – оборотные документы

deadline - предельный, конечный срок

fund - фонд; капитал

stock fund - акционерный фонд

funds - денежные средства, деньги

share - акция, пай, доля участия

syn. equity

stock - капитал, фонд; акции, ценные бумаги; склад, запасы

stock exchange - биржа

shareholder - акционер, пайщик

syn. Stockholder

proprietor - собственник, владелец

Syn. owner

bankruptcy - банкротство

profit - прибыль, доход

retained profit – нераспределенная прибыль

grant – грант, дотация, субсидия, стипендия

subsidy - субсидия, дотация

bill of exchange – вексель (наиболее распространённый вид долговых обязательств)

draft - проект, тратта, переводной вексель, платежное поручение

overdraft - овердрафт ( банковский кредит, проводимый через текущий счёт клиента)

hire-purchase - купля-продажа в рассрочку

term – срок, длительность, условие, термин, семестр

on certain terms –

on hire-purchase terms -

money order – денежный перевод

transaction – сделка

credit transactions -

willingness – готовность

to show willingness -

bargain – соглашение, сделка; выгодная покупка, дешево купленная вещь

to buy at a bargain – покупать по дешевке

to utilize – использовать, расходовать, употреблять

utilize capital –

to affect - воздействовать, влиять, сказываться на

to affect consumer expenditures -

to grant - предоставлять, предоставлять дотацию, субсидию

to extend - предоставлять (кредит), тянуться, длиться

to extend credit

to recover - взыскивать, получать обратно

to recover the money due – взыскивать деньги, подлежащие выплате

to plough back - превращать в капитал

to plough back the profit -

to acquire – приобретать

to acquire equipment -

acquisition – приобретение

to last – хватать, быть достаточным, сохраняться, выдерживать

to last short period of time -

to expand – расширять(ся), увеличивать(ся), развивать(ся)

to expand production -

expansion -

to secure – получать, приобретать, гарантировать, обеспечивать

to secure funds –

to transfer – передавать, переводить (деньги), перечислять(суммы)

to handle - обращаться с чем-либо, управлять, обрабатывать

handling of public funds – использование общественных средств

handling of money -

to pledge – отдавать в залог, закладывать

to be in pledge – быть в залоге

to assume - принимать, брать на себя; допускать, предполагать

to assume obligations – принимать обязательства

to assume risk – принимать на себя риск

to enable – давать возможность, делать возможным

to enable to make purchases -

to charge - назначать цену, взыскивать

charge – плата, цена, налог, долговое обязательство

no charge – бесплатно

aggregate – собранный вместе, общий, весь, совокупный

aggregate level -

outstanding - неуплаченный

outstanding debt -

tangible – материальный

ant. intangible

tangible property -

sound - надёжный, платёжеспособный, устойчивый, стабильный

sound financial plan -

internal – внутренний

ant. external

internal financing -

repayable – подлежащий (выплате)уплате, возвращению

repayable loans -

long-standing – давний, долголетний

long-standing relationship

worthy (of) – достойный, заслуживающий чего-л.

Worthy of a bank’s help –

overall – общий, полный, суммарный

overall success -

Word Study

Ex.1 Write down the roots of the following words:

Well-established, establishment –

Financier, financial, financially –

Payee, payer, payment, repayment, payable, repayable

Property, proprietor, properly –

Short-term, long-term –

Changeable, exchangeable –

Trader, trading –

Leasee, leaser, leasing

Drawer, drawee, to overdraw

Ex.2 Make nouns from the following verbs.

To purchase

To finance

To invest

To consider

To manage

To classify

To grant

To use

To provide

To involve

Ex.3 Make verbs from the following nouns.

investment installment acquisition security expansion

operation utilization production allowance definition

Ex.4 Match the expressions on the left with their best equivalents on the right.

1) installment a) primary

2) well-established b) to get

3) to acquire c) documents

4) loan d) credit

5) instruments e) reliable

6) to meet f) proprietor

7) owner g) general

8) to grant h) readiness

9) initial i) one of regular payments

10) to allow j) stable

11) to plough back k) to develop

12) sound l) to turn into capital

13) to expand m) to undertake

14) liability n) to get back

15) to recover o) debt

16) overall p) to give

17) to secure q) to utilize

18) to use r) to provide

19) to assume s) to let

20) willingness t) to satisfy

Ex.5 Match the words on the left with their definitions on the left.

1) interest rate a)a bank account with minus money in it

2) mortgage b) a signed document ordering someone to pay someone else a particular amount of money

3) an overdrawn account c) money given by the government for education, welfare, ect.

4) saving account d) an account that is used mainly for keeping money

5) current account e) the amount of debt that must be paid

6) bill of exchange f) an account that cheques are drawn on for day-to-day use

7) liability g) a moral or legal duty to do smth.

8) collateral h) one of series of regular payments that you make until you have paid all the money you owe

9) grant i) a loan to purchase property

10) obligation j) property or other goods that you promise to give if you cannot pay back the money they lent you

11) installment k) amount charged by a bank when you borrow money or paid to you by a bank when you keep money in an account there

Ex.6 Match each word on the left with its opposite on the right hand side.

1. increase a. assets

2. expenditures b. save

3. profit c. public

4. private d. borrow

5. debit e. decrease

6. spend f. revenues

7. lend g. purchase

8. liabilities h. loss

9. sell i. indirect

10. direct j. retain

11. initial k. intangible

12. tangible l. final

13. well-established m. external

14. outstanding n. unreliable

15. internal o. paid

16. pay out p. credit

Ex.7 Choose from the words in the box to complete the definitions.

profit, shares, interest, current, debtor, creditor, capital, dividend, company, net

1. A legal organization, formally registered is one of three ways, and having a life independent of its members, is a … .

2. A person or organization that owes money is a … .

3. A person or organization to whom money is owed is a … .

4. The assets, including cash, debtors and stock used in a company’s trading, available at the present moment, are its … assets.

5. The equal part into which the ownership of a company is divided are its … .

6. The money paid to shareholders out of a company’s profits is the … .

7. A company’s turnover, less its cost of sales, is its gross … .

8. A company’s turnover after the cost of sales, tax, rent and other liabilities are deducted is its … profit.

9. The sum of money paid by a borrower to a lender for the use of the lender’s money is the … on the loan.

10. The shareholders’ investment in a company is the share … .

Ex.8 Form all possible word combinations using the words of both columns and translate them into Russian.

Fixed Current Essential Different Retained Owner’s Short-term Well-established Limited liability Outstanding Long-standing Financial Overall Hire-purchase Negotiable Intangible

savings property instruments terms management success relationship amount company firm financing capital expenses assets sources profit

Text 1

The field of finance is broad and dynamic. It directly affects the lives of every person and every organization, financial or non-financial, private or public, large or small, profit-seeking or non-profit.

Finance can be defined as the art and science of managing money. All individuals and organizations earn or raise money and spend or invest it. Finance is concerned with the process, institutions, markets, the instruments involved in the transfer of money among and between individuals, businesses and governments.

Finance can be defined at both the aggregate or macro level and the firm or micro level. Finance at the macro level is the study of financial institutions and financial markets and how they operate within the financial systems. Finance at the micro level is the study of financial planning, asset management, and fund raising for business firms and financial institutions.

One of the primary considerations when going into business is money. Without sufficient funds a company cannot begin operations. The money needed to start and continue operating a business is known as capital.

How a new company obtains and uses money will determine its success. The process of managing this acquired capital is known as financial management. In general finance is securing and utilizing capital to start up, operate, and expand a company.

To start up a business a company needs funds to purchase essential assets, support research and development, and buy materials for production. Capital is also needed for salaries, advertising, insurance, and many other day-to-day expenses. In addition, financing is essential for growth and expansion of a company, because of competition in the market, capital needs to be invested in developing new product lines and production techniques and in acquiring assets for future expansion.

As there are so many different sources of finance, it is common to classify them into different groups. The most common way of doing this is to define whether the finance is:

• internal or external

• short-term or long-term.

Internal finance is money which is obtained from within the business itself. The most common examples of internal finance are retained profit, sale of existing assets, owners’ savings.

External finance is money obtained from individuals or institutions outside of the business. The most common forms of external finance are issues of shares (only possible for limited companies), bank loans, grants and subsidies from outside agencies, for example the government.

In financing business operations and expansion, a business uses both short-term and long-term capital. A company, like an individual, uses short-term capital to pay for items that last relatively short period of time. An individual uses credit cards for buying such things as clothing or food, while a company uses short-term financing for salaries and office expenses. On the other hand, an individual uses long-term capital such as bank loan to pay for a home or car – goods that will last a long time. Similarly, a company seeks a long-term financing to pay for new assets that are expected to last many years.

For the well-established firm, the most obvious source of finance is its own profits. Instead of paying out all its profits to its shareholders, the firm can retain some within the business. Using retained profits in the business is described as “ploughing back the profits”. It is an important source of finance for large firms.

In the case of a very small firm, the necessary money can be provided by the proprietor and his family and friends, with, perhaps, a loan from the local bank.

When a company obtains capital from external sources the financing can be either short-term or long-term. Generally, short-term financing must be repaid in less than one year, while long-term can be repaid over a longer period of time.

Short -term financing can be as follows:

• overdrafts

• bills of exchange

• trade credits

• hire purchases

• leasing.

A bank overdraft is the most widely used type of short-term finance. The bank allows the company to overdraw its account by some agreed amount. Interest is charged by the bank only on the amount overdrawn. It is one of the cheapest forms of borrowing.

Bills of exchange enable the company to obtain short- term finance from a bank or discount house where they send bills of exchange for discounting.

Trade credits are quite normal in business. They are often granted by the sellers allowing the buyers to pay in some time, say in three months.

A firm may acquire some equipment such as lorries, cars, office equipment on hire-purchase terms. It makes a deposit and pays the outstanding amount by installments over two or three years. Ownership passes to the buyer when the final installment is paid.

In case of leasing the firm will also pay the outstanding amount by installment over two or three years. When the final installment is paid ownership does not pass to the buyer.

Most corporations get their long-term loans from a commercial bank, usually one with which the firm has developed a long-standing relationship. But credit companies, insurance companies, and pension funds also grant long-term business loans.

Finance involves the securing of funds for all phases of business operations. In obtaining and using this capital, the decisions made by managers affect the overall financial success of a company.