金融专业英语课件Part_Ⅱ (2)

– Commercial Paper (CP) (商業本票) (商業本票)
WellWell-known companies often issue their own short-term shortunsecured debt notes, CP, directly to the public, rather than borrowing from the banks (direct vs. indirect finance) CP maturities ranges up to 270 days CP is quite liquid and considered to be a fairly safe asset The yield on CP depends on its time to maturity and 2-7 credit rating
Money Market Instruments
– Repurchase Agreements (repos) (RPs) and Reverse RPs (附買回 (附賣回) 協定) (附買回 附賣回) 協定)
ShortShort-term sales of government securities with an agreement to repurchase the securities at a higher price Dealers in government securities use repos as a form of shortshort-term, usually overnight, borrowing, in which the government securities serve as collaterals for the loan In a reverse repo, the dealer buys government securities from an investor and promise to resell them at a specified higher price on the future date

Category of stock
• Common • Preferred/preferential
Preferred stock
• A hybrid
Features
• Priority to assets and earnings • Par value • Cumulative dividends • convertibility
An example
Options
• A right, not an obligation
• Exercise price • Cost (premium) • Spot market price
• European • American
Options
Options
• In the money • Out-of the money
Forwards
• A transaction in which a seller agrees to deliver a specific commodity to a buyer at some point in the future.
Futures
• Standardized forward contracts
• The benchmark lending rate will be lowered by 0.27 percentage point to 7.20 percent from Tuesday.
China cuts rates, lowers reserve ratio
• However, benchmark deposit rates remain unchanged with the one-year rate to be kept at 4.14 percent, a proof that the central bankers are keeping an eye on inflation.

2013-9-27 Chen Jianhui 20
M2 is the most often used reference to money supply. M3 is the most often used reference to M2 is an even broader definition of the money supply, as it includes all money supply. M2是衡量货币供应量最 常用的参考值。 of the components of M1 and M2 plus a number金融资产 of financial assets and financial assets instruments generally employed by financial instruments n. 金融票据 large (jumbo) certificates of deposit.
2013-9-27
Chen Jianhui
8
Strictly enforced government regulations control how many of the deposited dollars must be held in fractional reserve loans. reserve to support deposit money expansion activities 部分准备金存 Loans made against this fractional 款扩张业务 reserve are a key factor in banking and current fractional reserve deposit money expansion activities. a

Either of a payment order, mail advice or debit advice must be authenticated with tested key or the authorized signatures of the remitting bank. It instructs the paying bank to pay a certain sum of money to the beneficiary. Upon receipt of the payment order, the paying bank verifies the tested key or the authorized signature, notifies the beneficiary, pays to him and claims reimbursement from the remitting bank. In practice, the remitting bank credits the account for the paying bank in the remitting bank. 3. Demand Draft(D/D) Draft demand is often used when the customer wants to transfer the funds to his beneficiary by himself. The remitter will make a written request of issuance to the remitting bank. Then the remitting bank debits the remitter‟s account, issues a bank draft and forwards it to the remitter who may send or carry it abroad to the payee. Upon receipt of the draft, the payee can either present it for payment to the drawee‟s bank or sell it to his own bank crediting his account. The drawee‟s bank verifies the signature, pays the draft and claims back the amount paid in accordance with its agency arrangement with the remitting bank.

• But the record also shows a number of officials arguing that the Fed should nevertheless get ready to act again if the jobs market and inflation numbers were in line with expectations or stronger than forecast. • After lifting rates twice in two years, Janet Yellen, Fed chair, and her fellow ratesetters are contemplating stepping up the pace of increases as economic growth accelerates and prospects rise of tax cuts by the Republican-controlled Congress.
1. Central Bank and Its Functions The brief history of central bank Bank of Sweden (1656) was the first central bank, followed by the Bank of England (1694) and the Bank of France (1800). Bank of Japan was established in 1888, and the US Federal Reserve System in 1913. The People’s Bank of China was founded in 1948 and authorized to exercise the functions of the Central Bank of China in 1983.

Financial English 2014
Structure
I. Introduction II. Quota system; III. Gold holding IV. Lending capacity; V. Borrowing arrangement; VI. Concession lending and debt relief.
Quota and voting power
Financial English 2014
◄ ►●
China and the IMF
China has enjoyed a close working relationship with the IMF ever since it resumed its membership in the IMF in 1980. Over the past years, (the IMF has, by providing loans, consulting annually, aiding technologically and training personnel), provided valuable policy advice to the Chinese government on a variety of challenging situations we confronted in the course of developing a socialist market economy in China. Financial relations Since 1981, due to temporary economic difficulties, China has twice used IMF credits -- in 1981 and in 1986. The credits under these arrangements have been fully repaid by the end of 1991.

An example
Options
• A right, not an obligation
• Exercise price • Cost (premium) • Spot market price
• European • American
Options
Options
• In the money • Out-of the money
• Financial assets whose values depend on the values of other assets, such as stocks or bonds. (underlying assets)
Derivatives
• Forward • Futures • Options • And swaps
• voting right --- CS • get paid a guaranteed dividend at a pre-
determined interest rate ---PS • priority distribution of the company's assets
Derivatives
disadvantages of issuing C.S
• Dilution of ownership • More new shareholders share profit • More costly • Dividends are not tax deductible
Comparison of PS and CS
China cuts rates, lowers reserve
ratio
• The 1 percentage point cut from the reserve requirement ratio of 17.5 percent does not apply to the five biggest banks (the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, the China Construction Bank, the Bank of Communications) and the Postal Savings Bank, the People's Bank of China (PBOC) said on its website.

6-14
Yield to Maturity…cont
• This relationship should make sense. • If you pay $95 for a $100 face value bond, you will
receive both the interest payments and the increase in value from $95 to $100. • This rise in value is referred to as a capital gain and is part of the return on your investment. • When the price of a bond is higher than face value, the bondholder incurs a capital loss.
• We can compute the interest rate from the price using the present value formula. The price of a one-year T-bill is $95. i = ($100/$95) - 1 = 0.0526 = 5.26%
• Amortized loans - the borrower pays off part of the principal along with the interest for the life of the loan.
• Value of a Fixed Payment Loan =
FixedPayment (1 i)
• Virtually any financial arrangement involving the current transfer of resources from a lender to a borrower, with a transfer back in the future, is a form of a bond.

where the federal funds rate briefly hit 6 per cent - three times the target rate of 2
per cent - as financial institutions scrambled to raise cash. The Fed injected a total of $70bn in liquidity, before the fed
Stocks sink amid Wall St
crisis
• The unprecedented changes on Wall Street - which was also gripped by rising fears about the health of AIG,
the giant insurer - left investors more concerned with preserving returns.
funds rate finally fell back later.
Agenda today
• Stock (common v.s preferred) • Derivatives • Financial instruments in international
markets
Stock
• A share (also referred to as equity shares) of stock represents a share of ownership in a corporation
Forwards
• A transaction in which a seller agrees to deliver a specific commodity to a buyer at some point in the future.