TÀI LIỆU ôn tập TIẾNG ANH CHUYÊN NGÀNH 1 (2)

TÀI LIỆU ÔN TẬP : TIẾNG ANH CHUYÊN NGÀNH 1
LÊ AN | CQ54/01.02
Cấu trúc đề thi : 3 phần

UNIT 1 : ECONOMICS

Phần 1 : Read an article ( để kiểm tra phát âm )
Phần 2 : Summarize ( tóm tắt ) 1 unit

I. SUMMARY

Lưu ý : Yêu cầu sử dụng thành thục các từ nối để tạo thành 1 bài nói hoàn chỉnh. Vì đây là phần tóm tắt nên cố
- Unit
1 talks/tells
Economics
It includes
/ has
main
/ points
in
gắng
nói ngắn
gọn nhưngus
đầyabout
đủ ý . Tốt
nhất nêu 1. vài
ý quan trọng
trong4từng
phầnideas
chứ không
nêu hết.

this unit
Phần 3 : Answer some questions.
HOẶC There are four main points in this unit
Phần này có một số câu hỏi giám khảo sẽ đưa ra.
- The first point is definition of Economics
Economics is the study of how people choose to use resources to improve their well-beings.
HOẶC Economics is the study of production and consumption of goods or services , the transfer of
wealth to produce and obtain goods or services

- Next / Secondly , it talks about two types / branches of Economics. They are
Microeconomics and Macroeconomics
Microeconomics studies economic activities of inviduals or household and industries
Macroeconomics studies economic activities of a country or international marketplace.

- Thirdly / The third one tells us about 3 economics theories by Adam Smith ,
Karl Marx and Keynian School

Adam Smith : an economist known as the father of economics
He belived that people with their self-interest could create wealth that benefit all of society
Market can regulate itself so government shouldn’t interfere
Karl Marx :
capitalism will eventually fail because of social unrest and class conflict
laborers should own and control means of production
Keynian School
The role of government in capitalistic economy is significant
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Government regulates economy through economic policies

- The last point / Finally , it mentions the importance of studying Economics.
Studying Economics helps people to understand human behavior or thought , and through Economics ,
countries and people could become wealthy

II. QUESTIONS
1. What do resources include ?
Resource is anything that people use/combine to produce/make/create goods or services , with their
knowledge and experience. For example : labor, natural resources, capital, machines/equipments,
technology.
2. What can be considered as important choices ?
Important choices involve how much time to devote to work, to school, and to leisure; how many
dollars to spend and how many to save , how to combine resources to produce goods and services;
and how to vote and shape the level of taxes and the role of government.
3. What does the term “ well-being “ means ?
Well-being is the satisfaction from using goods or services
Hoặc : Well-being is the satisfaction people gain from the goods or services they choose to consume,
from the time they spent in leisure and family and community as well as in jobs, and the security and
services provided by effective governments.
4. What does Microeconomics / Macroeconomics study ?
Microeconomics studies economic activities of inviduals or household and industries
Macroeconomics studies economic activities of a country or international marketplace.
5. What can you learn from the economic theory of Adam Smith ?
Market can regulate itself by the law of demand and supply so the government shouldn’t interfere
6. In general, how can people benefit from studying Economics ?
Studying economics can help us understand human thought and behavior. And also people and
countries could become wealthy through studying Economics.
7. What is one conflict of economics ?
Resources are limited but people’s wants / needs are unlimited.
8. What are means of production / factors of production ?
Anything that people use for producing goods and services . For example : tools, equipments, machines,..

9. What are market forces ?
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They are demand and supply
10. What are some examples of economic relations ?
Buyers – sellers
Lenders – borrowers
Employers – employees
11. Who is an economist ?
They are people who study about Economics

UNIT 2 : ECONOMIC SYSTEMS
Unit 2 không có phần summary
II. QUESTIONS
1. What is a free market economy ?
A free market economy is an economic system in which the market is regulated by the law of supply
and demand. Companies compete freely and government influences the economy through its fiscal
and budgetary policies.
2. What is a planned economy ?
A planned economy is an economic system in which government controls the economy directly and
make all decisions about economy : how much to produce , how to distribute,..
3.What is a mixed economy ?
A mixed economy is an economic system in which some goods and services are produced by the
government and some by private enterprise.
4. What are the disadvantages of planned economy ?
The company are not allowed to compete freely and depend on because the government make all the
decisions .

UNIT 3 : MICROECONOMICS

I. SUMMARY
Unit 3 talks about microeconomics. There are 3 main ideas.

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Firstly, the author mentions the definition of microeconomics.
Microeconomics is the study of how to make the most of limited resources of individuals , households,
firms.

Secondly, it talks about the allocation of scarce resources in different
economic systems
In planned economy, the government makes all decisions on allocation of resources
In free market economy, allocation of resources is made by consumers , firms,..

Finally, it talks about 3 major themes of microeconomics
- Theme 1 is the idea of making optimal trade-offs:
It is about the consumer theory and theory of firms which points out the trade-offs made by consumers,
workers and firms.
- Theme 2 is the role of prices :
Trade-offs are partly based on the price
- Theme 3 is the role of market :
Market is the place where buyer and seller / consumers and firms interact. Price is set in the market in free
market economy

II.QUESTIONS
1. What does the term “trade-off” mean ?
Trade-off is an exchange that occurs as a compromise
/ˈkämprəˌmīz/
2. What can you learn from the consumer theory ?

Consumer theory describes how consumers, based on their preferences, maximize their well-being by
trading off the purchase of more of some goods with the purchase of less of others.
3. Give some examples explaining the trade-offs made by consumers ?
Consumer have limited income, so they have to trade off buying more of some goods with buying less of
others / trade off spending now with saving.
4. Give some examples explaining the trade-offs made by workers ?
Workers have limited time, skills, health, education and experience,
so they have to trade off working now with studying / work with leisure / working in good enviroment
with less opportunity of advancement with working in worse enviroment with more opporturnity of
advancement
5. Give some examples explaining the trade-offs made by firms ?
Firms have limited technology, they choose the kind of products to produce
Firms have limited capital , production capacity , they choose the number of goods to produce / they
choose to hire workers or to build more factories
6. What does the theory of the firm indicate?
It describes how trade-offs can be best made.
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7. What are three important themes of microeconomics?
They are how to make optimal trade-offs, the role of prices and the role of market.

UNIT 4 : MACROECONOMICS
I. SUMMARY
Unit 4 talks about Macroeconomics. There are 3 main points :

First, it talks about goal of macroeconomics
The goal of macroeconomics is to look at overall economic trends of a country such as : Economic
growth, Employment level, inflation , balance of payments, GDP, GNP,.. and so on

Second, it mentions about 2 major macroeconomics policies.
They are Fiscal policy and Monetary policy. The basic objectives of these 2 main macroeconomic
policies are High economics growth, Keeping inflation under control, High employment, Balance of
payment.

Make decisions
To control
Objectives of
policy

Fiscal policy
Ministry of Finance
Government’s revenue and spending
Promote economic growth
Keep inflation under control

Monetary policy
Central Bank
Money supply
Promote economic growth
Keep inflation under control

The last point is the relationship between microeconomics &
macroeconomics
There are differences between microeconomics and macroeconomics but they are interdependent and
complement one another
Definition
Issues

Microeconomics

Macroeconomics

The study of economic activities of
individuals and firms.

The study of economic activities of a country
or international market.

Price, demand & supply, competition
between firms

Inflation, economic growth, GDP,
balance of payments

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Approach

Bottom-up approach

Top-down approach

II. QUESTIONS
1. What are two major macroeconomics policies ?
They are fiscal policy and monetary policy
2. What are the main objectives of these two policies ?
The main objectives of these two policies are promoting economic growth and keeping inflation under
control.

3. What is the difference between microeconomics and macroeconomics ?
Macroeconomics
- The study of economic activities of individuals
and firms.
- Look at overall economic trends: employment
levels, economic growth, inflation,..
- Top-down approach.

Microeconomics
The study of economic activities of a country or
international market.
- Study how to allocate of limited resources
- Bottom-up approach

4. Why is it said that microeconomics and macroeconomics are interdependent and complement one
another ?
Because there are many overlapping issues between the two fields.
( in this situation, overlapping means “ influence each other “ )
5. What is inflation ?
Inflation is the rate at which the general level of prices for goods and services is rising
6. What is GDP ?
GDP ( or Gross Domestic Products ) is the total value of goods and services produces in a country in a
year

UNIT 5 : DEMAND AND SUPPLY
I. SUMMARY
Unit 5 tells us about Demand & Supply. It includes 3 main points :
6

First, it talks about demand & demand curve
Demand is the quantity of goods & services that buyer are able and willing to buy at various prices.
Quantity demanded is the quantity of goods & services that buyer are able and willing to buy at certain
prices.
A change in the Qd causes a movement along the demand curve
A change in a shift factor causes the entire demand curve to shift to the left or to the right
Other factors are constant

Second, it talks about supply & supply curve
Supply is the quantity of goods & services that seller are able and willing to sell at various prices.
Quantity supplied is the quantity of goods & services that seller are able and willing to sell at certain
prices.
A change in the Qs causes a movement along the supply curve
A change in a shift factor causes the entire supply curve to shift to the left or to the right
Other factors are constant

Finally, it talks about relationship between demand curve and supply
curve
It mentions equillibrium , which occurs when quantity demanded is equal to quantity supplied.

II. QUESTIONS
1. What is demand ?
Demand is the quantity of goods & services that buyer are able and willing to buy at various prices
2. What is supply ?
Supply is the quantity of goods & services that seller are able and willing to sell at various prices
3. What is the difference between “demand” and “quantity demanded” ?
Definition

• Quantity demanded is the

quantity of goods and services
buyers are able and willing to
buy at a certain price.

• Demand is the quantity of
goods and services buyers are
able and willing to buy at
various prices.

Factor

price factors

shift factors

Change in demand curve

the movement along the
demand curve

the entire demand curve to
shift to the left/right

Other factors are constant
4. What is difference between “supply” and “quantity supplied” ?

7


Definition

• Quantity supplied is the

Factor

quantity of goods and services
sellers are able and willing to
sell at a certain price
price factors

• Supply is the quantity of
goods and services sellers are
able and willing to sell at
various prices.
shift factors

the movement along the
supply curve

the entire supply curve to shift
to the left/right

Change in supply curve

Other factors are constant
5. How do prices of a good influnce its demand / supply ?
A change in the price of a good causes a change in quantity demanded. Other factors are constant.
If the price of a good increases, quantity demanded will decrease
decreases,

increase

A change in the price of a good causes a change in quantity supplied. Other factors are constant.
If the price of a good increases, quantity supplied will increase
decreases,

decrease

6. When is a market in equillibrium ?
A market is in equillibrium when there is no tendency for the price to change. Quantity demanded is
equal to quantity supplied.
7. What is excess demand ? What is excess supply ?
It occurs when quantity demanded is more than quantity supplied | when quantity supplied is more than
quantity demanded

UNIT 6 : PUBLIC FINANCE
I. SUMMARY
Unit 6 talks about Public Finance. It includes 2 main points :

First, it talks about Government’s revenue from tax
Public finance is concerned with how the government raises and spends money.
Government can raise money from different types of tax : individual income tax, corporate income tax,
payroll tax, excise tax, customs duties,..
Once they are paid into the Treasury , individual income tax and corporate income tax are the sources of
Federal Fund , while payroll tax become Trust Fund
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Second, it talks about Government’s revenue from borrowing.
Government can borrow money by issuing and selling bonds and pays prefixed interest rate.

Bonds are sold in different channels : Treasury, website, brokers, banks ,…
The government debt includes debt held by the public and debt held by federal accounts
Debt held by the public is the amount of money borrowed from public
Debt held by the federal accounts is the amount of money borrowed from itself/ Treasury.

II. QUESTIONS
1. What is public finance concerned with ?
Public finance is concerned with how the government raises and spends money.

2. What is Federal fund ? Trust fund ?
Trust fund is from Payroll tax. It is used for specific programs such as security and social medicare.
Programs are the same from year to year.
Federal fund is from individual income tax and corporate tax. It is used for general programs.
Programs can be different from year to year basing on annual appropriation process.

3. What is Individual income tax ? Corporate tax ? Payroll tax ? Excise tax ? Customs duties ?
Individual income tax is the tax imposed on income of individuals, paid by employers
Corporate tax is the tax imposed on profit of a company
Payroll tax is the tax imposed on employee’s salary, paid by both employers and employees
Excise tax is the tax imposed on specific goods to limit consumption
Customs duties is the tax imposed on imports, exports
4. Debt held by the public and debt held by federal accounts ?
Amount of money borrowed
from public
Investor can be any
individuals or organizations in
the country ( domestic
investors ) or from foreign
countries

Amount of money that the
government can borrow from
itself/ Treasury
Trust fund runs a surplus

5. How does the government borrow money ?
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Government can borrow money by issuing and selling bonds and pays prefixed interest rate.

UNIT 7 : FISCAL POLICY
I. SUMMARY
Unit 7 talks about Fiscal Policy. It includes 3 main points :

First, it talks about Deficit & Deficit spending
When the government spends more than it receives, it runs Deficit
Deficit spending is spending money/funds from borrowing or printing instead of taxtation.
It can be useful/helpful or harmful to the economy

Second, it talks about two kinds of fiscal policy.
Fiscal policy is a government policy.
It has 2 tools : tax and public spending ( government spending ).
Tax and government spending directly affect the performance of the economy.
Fiscal policy can be either expansionary or contractionary.

Finally, it mentions about factors to determine fiscal policy.
- Inside factors include:
+ Future unemployment level.
+ Inflation rate

+ Economy growth
+ Decision whether to run deficit spending or not
+ Political consideration.

- Outside factors include:
+ Fiscal policy of other country.
+ Requirements of the International Monetary Fund.

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II. QUESTIONS
1. What is deficit?
Deficit: the government spends more than it receives.
2. What is deficit spending? Is it harmful or helpful? Why ?
- Deficit spending: Spending money from borrowing or printing instead of taxation.
- It’s helpful when unemployment rate is high, economy grows slowly because government borrows
money to undertake projects, it can create jobs for idle workers.
- It’s harmful when unemployment rate is low, economy overheats because it can increase inflation
when the government increase money supply
3. What are the Government major economic policies mentioned above ? What are they aimed at ?
They are fiscal policy and monetary policy. They are aimed at maintaining economic growth, high
employment and low inflation.
4. Under what circumstances can fiscal policy be expansionary? Why ?
Government should use expansionary fiscal policy when economic grows slowly and unemployment rate
is high.
Because government can increase money supply throughout reducing taxation and increasing public
spending
5. Under what circumstances can fiscal policy be contractionary ? Why ?
Government should use contractionary fiscal policy when overheating economy and high inflation.

Because government can restrict spending throughout increasing taxation and reducing public spending
6. What are some factors to be considered when making fiscal policy?
Inside factors: Future employment level, economic growth, borrowing or printing money, political
consideration .
Outside factors: Fiscal policy of other countries, requirement of IMF.
7. Why should the government consider the fiscal policies of other countries ?
Because the government want to give generous tax programs or the government want to control
benefits to attract foreign investments.

UNIT 8 : TAXTATION
I. SUMMARY
Unit 8 talks about Taxtion. It includes 5 main points :

Firstly, it talks about Function of Taxtation
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Raise government revenue
Redistribute society income
Regulate the economy
Limit consumptions
Protect domestic goods

Second, it talks about advantages and disadvantages of Tax systems.
Progressive tax is a tax charging at higher rates on higher incomes.
Regressive tax is a tax charging at lower rates on higher sales.
Progressive

Regressive

Higher income, higher tax rate
E.g : Income tax

Higher percentage of lower income and
smaller percentage of higher income
E.g : Sale tax
Can not redistribute wealth in society

Redistribute wealth in society
Discourage working or investment

Third, it mentions about tax evasion.
Tax evasion: making false declarations to the tax authorities to reduce tax.
Undeclare part-time jobs or black (underground) economy are some ways of tax evasion.

Then, it is about avoiding tax on salaries
There are many ways of avoiding tax on salaries by using loopholes in tax law.
- Reducing income tax by giving employees perks instead of taxable money
- Life insurance policies, pension plans and other investments -> tax shelter
- Charities donation -> tax deductible

Final, it mentions about Avoiding tax on profits
Companies have a lot of ways to avoid tax on profits :

- Making a tax loss : convert profit into cost e.g: bring out capital expenditure
- Set up head office in tax havens ( a country has low tax rate )

- Some criminal organizations launder money.
II. QUESTIONS
1. What is progressive tax ? Regressive tax ?

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Progressive tax is a tax charging at higher rates on higher incomes.
Regressive tax is a tax charging at lower rates on higher sales.
2. What is direct and indirect taxes ?
Direct tax is a tax levied on taxable person such as income tax.
Indirect tax is a tax levied on goods and services such as payroll tax, excise tax and custom duties,…
3. What is payroll tax ? Corporate income tax ? Custom duties ? Excise duties ? Capital gain tax ?
Capital transfer tax ?
Payroll tax is the tax imposed on employee’s salary, paid by both employers and employees
Corporate income tax is the tax imposed on profit of a company
Customs duties is the tax imposed on imports, exports
Excise duties is the tax imposed on specific goods to limit consumption
Capital gain tax is a tax levied on capital gains, which are profits from the sale of specific types of assets,
including stocks, bonds
VAT ( value added tax ) is a tax collected at each stage of production

4. What is tax avoidance ? Tax evasion ?
Tax evasion: making false declarations to the tax authorities to reduce tax.
Tax avoidance: reducing the tax money to the legal minimum.

5. What are some ways to for an individual, a company to avoid tax ?
Avoiding tax on salaries: Using loopholes in tax law, tax shelter, tax deductible.
Avoiding tax on company’s profits: make a tax loss, set up head office in tax heavens, launder money.
6. What is tax shelter ? Tax deductible ? Tax heaven ? Laundering money ?
Tax shelter: postpone paying tax
Tax deductible: subtract money from taxable money.
Tax heaven: a country has low tax rate.
Laundering money: put taxable money into different companies to disguise the origin of money.

7. What do criminal organizations do to disguise the origin of money ?
Laundering money

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8. What are some functions of taxation ?
Raise government revenue
Redistribute society income
Regulate the economy
Limit consumptions
Protect domestic goods
9. What is marginal rate ?
The marginal rate : the tax people pay on any additional income.

UNIT 10 : INSURANCE
I. SUMMARY
Unit 10 talks about Insurance. It includes 3 main points :

Firstly, it talks about the definition of Insurance
In financial definition, Insurance is a financial arrangement that redistributes the costs of unexpected
losses.

Secondly, it talks about the operation of insurance system
Insurer collects insurance premium from every participants in the system.
If loss occurs , Insurer gives compensation to Insured
Insured pays insurance premium to Insurer
If loss occurs , Insured gets compensation from insurance company
If not, insured has no anxiety about a loss.

Finally, it talks about the difference between gambling and insurance.
Gambling contract will not enforce but insurance policy will enforce
Contracts of insurance is a special class of contract in that the law requires the insured and the insurer, to
exercise the utmost good faith towards each other.

II. QUESTIONS
1. What is insurance in financial definition?
Insurance is the financial arrangement that redistributes the cost of unexpected losses.
2. What is insurance premium? Compensation? Insurance policy?

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- Insurance premium: the amount of money insurer collects from insured and promise to compensate in
case of losses.
- Compensation: the amount of money insurer pays to insured in case of losses.
- Insurance policy: financial agreement between insured and insurer.
3. How can an insurance system accomplish the redistribution of costs of unexpected losses?
Insurer collects premium from every participants but very few participants suffer from unexpected losses
4. Why are people willing to pay an insurance premium ?
If loss occurs , Insured gets compensation from insurance company
If not, insured has no anxiety about a loss.

UNIT 11 : MONEY AND ITS
FUNCTIONS
I. SUMMARY
Unit 11 talks about Money and its functions. It includes 3 main points :

Firstly, it talks about concept of money
Money is a commodity as a medium of economic exchange.

Express prices and values of goods.
Measure of wealth.
Circulates from person to person and country to country to facilitate trade

Secondly, it talks about function of money
Medium of exchange. (The most important function of money)
Measure of value.
Store of value.
Standard of deferred payments.

Finally, it mentions about different kinds of money
They are commodity money and token money
Commodity money
The value in use of commodity
money is about equal to the value of

Token money
The value in use of token money is
higher than its cost of production.
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material contained in it.
Example: gold, copper...

Example: paper note...

II. QUESTIONS
1. What is the concept of money ?
A commodity as a medium of economic exchange.

Express prices and values of goods.
Measure of wealth.
Circulates from person to person and country to country to facilitate trade

2. What are 4 functions of money ? What is the most important function in your opinion ?
Medium of exchange. (The most important function of money)
Measure of value.
Store of value.
Standard of deferred payments.
3. What is unit of account? Medium of exchange ?
Unit of account is the unit in which the price is quoted and account is kept.
Medium of exchange is anything used for payments for goods and services and in settlement of debts.

4. How is money functioned as a standard of medium of exchange ? Measure of value ? Standard of
deferred payments ? Store of value ?
Medium of exchange: Money is used to pay for goods and services and settle debts
Measure of value: Money is used to measure value in its unit of account
Standard of deferred payments: Money is used to pay after you buy something.
Store of value: Money is used to make purchases in the future. This function can suffer from inflation.
5. What are 2 kinds of money and differences between them?
They are Commodity money and Token money.
Commodity money
The value in use of commodity
money is about equal to the value of
material contained in it.

Token money
The value in use of token money is
higher than its cost of production.

Example: gold, copper...

Example: paper note...

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UNIT 12 : MONETARY POLICY
I. SUMMARY
Unit 12 talks about Monetary Policy. It includes 2 main points :

First, it talks about 3 tools of monetary policy
They are Reserve Requirement, Discount Rate and Open Marketing Operation
Reserve Requirement is the percentage of customers’ deposit that commercial banks must keep in
Central Bank.
Discount Rate is the interest rate commercial banks pays to Central Bank when commercial banks
borrow from Central Bank / ( Fed charges to banks when they lend to commercial banks. )
Open Marketing Operation is the government’s buying and selling government securities. It takes
shorter time to change money supply with OMO.

Second, it talks about 2 types of monetary policy
They are Expansionary monetary policy and Restrictive monetary poilcy.
Expansionary monetary policy is applied when economy grows slowly
Restrictive monetary policy is applied when economy overheats

II. QUESTIONS
1. What are 3 major tools of monetary policy? What is the most popular tool ?
They are
- Reserve Requirement
- Discount Rate

- Open Market Operation (OMO)
OMO is the major and most common tool because it is faster for central bank to change money supply on
OMO than changing reserve requirement or discount rate.
2. Expansionary monetary policy ?
Central bank uses expansionary monetary policy when the economy is growing slowly. In this case,
central bank decreases reserve requirement, decreases discount rate or buy more bonds. This can
increase money supply, increase aggregate demand.
3. Restrictive monetary policy ?

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Central banks uses restrictive monetary policy when the economy is overheating. In this case, central
bank increases reserve requirement, increases discount rate or sell more bonds. This will reduce
lending capacity, so reduce money supply in the market.

UNIT 14 : FOREIGN EXCHANGE
MARKET
( Forex )
I. SUMMARY
Unit 14 talks about the foreign exchange market. It includes 3 main points :

First, it talks about Foreign exchange market definition and features
Forex is the market in which national currencies are exchanged
Features :
- no physical meeting place
- no fixed trading hours
- communication instruments : telephone or computers
Examples : London is the biggest foreign exchange market

Second, it talks about 2 types of transaction
Spot transaction: sale of currency on the actual exchange date ( delivery date ) is 2 business days after
the value date.
Forward transaction: the actual exchange date is specified date in the future, more than 2 days after the
value date.

Finally, it talks about participants in the foreign exchange market.
Customers
Regular people ( traveller,
companies, banks,..)
Buy or sell national currencies

Market makers / dealer

Brokers

Banks

Specialist companies

Quote exchange currencies
rate to buy or sell national

Inform the buying / selling
rate of nation currencies of
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Have foreign currencies for
business or travelling

currencies

banks around the world

Make profit from difference
between buying and selling
rate of national currencies

Get a commission

II. QUESTIONS
1. What are some services of banks and how banks make profit ?
Services of banks: lending, saving, exchange currency, payment, insurance, transfer money, ...
Make profit from difference between interest rate of lending and saving, selling and buying rate, fee for
services.

2. What is foreign exchange market ?
Foreign exchange market is the market in which national currencies are exchanged.

3. What is OTC market ?
A market which has :
No fixed trading hours, trading 24 hours a day.
No physical meeting place.
Communication instruments: telephone or computer.

4. What are 2 types of transactions in foreign exchange market ? A forward transaction ? Spot
transaction ?
2 types of foreign exchange transactions: Spot transaction and Forward transaction.
Spot transaction: the actual exchange date is 2 business days after the value date.

Forward transaction: the actual exchange date is specified date in the future, more than 2 days after the
value date.
5. What is bid rate and offer rate ?
Bid rate : The highest exchange rate at which a buyer is willing to buy a currency.
Offer rate : The lowest exchange rate at which a seller is willing to sell a currency.
6. What are 3 types of participants in the foreign exchange market ?
Customers
Market makers
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Brokers

UNIT 15 : FINANCIAL MARKETS
II. QUESTIONS
1. What is the main function of financial markets ?
Transfer funds from lenders/savers to borrowers/spenders

2. What is securities market?
Securities market is the market in which bonds and stocks are exchanged.

3. What is debt market ? Equity market ?
Debt market

Equity market

Debt instruments are exchanged

Equities are exchanged.

3 kinds of debt: short, intermediate and
long term.

long-term.

Borrower pays the lenders fixed interest
rate at regular intervals until the maturity
date.

Lenders share net income and assets
of the borrowers basing on the
percentage of shares.

Lenders don’t interfere in the company’s
operation.

Lenders have a say in the company’s
operation.

4. What is a primary market ? Secondary market ?
Primary market

Secondary market
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New issues of a security are sold to initial
buyers

Securities previously issued are resold.

Not well known to public

Well known to public

Companies get new funds

Companies get no new funds

5. What is a debt instrument ? Short-term and long-term debt instrument ?
Debt instrument is a contractual agreement by the borrower to pay the holder of the instrument fixed
dollar amounts at regular intervals until a specified date, when a final payment is made.
> A debt instrument is short-term if its maturity is less than a year and long-term if its maturity is ten
years or longer.
6. What is a money market ? Capital market ?
Money market

Capital market

Short-term debts are exchanged

Intermediate and long-term debts
and equities are exchanged.

High liquid

Less liquid

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