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14. Find the definitions to the next terms: currency, spot market, foreign exchange rate, future or forward market, swap, option.

  1. It is a market where commodities have to be delivered immediately.

  2. It is a market where commodities have to be delivered on a specified future date, at a price agreed in the present.

  3. It is a contract giving the right to buy and sell securities at an agreed price within a particular period of time.

  4. It is the possibility of exchange one investment for another.

  5. It is the money of a particular country.

  6. It is a price at which one currency exchange for another.

15. Divide the text into logical group and give them titles.

16. Single out the main points of the text. Use the following opening phrases.

The text looks at (the problem of…)

The text deals with the issue of..

It is clear from the text that…

Among other things the text raises the issue of…

The problem of…is of great importance

One of the main points to be singled out is

Great importance is also attached to…

In this connection, I’d like to say…

It further says that…

I find the question of…very important because…

We shouldn’t forget that…

I think that…should be mentioned here as a very important…mechanism of… .

17. Prepare a short talk on the following:

  1. Instruments and transactions made in the currency markets (spot trading, futures and forward contracts, swaps, options).

  2. Explain the global character of the exchange market.

  3. What is the rate of exchange determined by?

Grammar Exercises

1.

  1. Supply the prepositions where necessary with, of, by, to, in, over, for .

  2. Write down 3-5 questions about the text.

  3. Describe the components of Eurocurrency market.

THE EUROCURRENCY MARKET

This market began …Eurodollars — US dollars lent outside the United States — and has developed into a powerful market in currencies lent outside their domestic marketplace. There are, for example, Euromarks and Euroyen in London, Eurosterling etc in Bonn, Tokyo and New York. Lon­don and Tokyo are the main world capitals for eurocurrency dealings. Deal­ing centres around Euroloans, involving commercial banks, and Eurobonds which involve investing institutions and banks.

Eumhans consist …large tranches of short-term money (usually repay­able in three to six months) lent… syndicates of banks and linked … the LIBORrate.

Eurobonds are bearer bonds, requiring no register of holders, issued … currencies other than that of the issuing country and operating over a longer period, usually between 5 and 20 years. Their issue is managed by a bank with the aid of underwriters and is placed … investors. Market participants include multinational corporations, non-bank financial institutions, govern­ments and the international banking community.

The Euromarket, as it has become known, has a single SRO ( Self-regulating organizations) the Interna­tional Securities Market Association (ISMA). During 1993, some $23,167 trillion was traded …the eurobond market, an increase of almost 60 per cent … the 1992 total, which was itself a record year. UK members of ISMA accounted .. a considerable amount …this total. This huge increase … turnover was marked .. continued growth in cross-border trading in domes­tic instruments. As a global market emerges institutional funds will switch relatively smoothly from «domestic» to «international» and vice versa. This trend can be expected to continue.