tiếng anh chuyên ngành tài chính: THE FINANCIAL MARKETS

Financial markets perform the essential economic function of channelingfunds from households , firms , and government that have saved surplusfunds by spending less than their income to those that have a shortage offunds because they wish to spend more than their income . This function isshown schematically in Figure 1

UNIT15:

THE FINANCIAL MARKETS

New words Pronunciation Definition

Dividends /ˈdɪvɪˌdɛnd/ tiền lãi cổ phần; cổ

tức

Financial markets perform the essential economic function of channeling funds from households , firms , and government that have saved surplus funds by spending less than their income to those that have a shortage of funds because they wish to spend more than their income This function is

shown schematically in Figure 1

Functions Of Financial Markets

• Those who have saved and are lending funds , the lender-savers , are at the left , and those who must borrow funds to finance their spending ,

the borrower-spenders , are at the right The principal lender-saver

are househoulds , but business enterprises and the government

( particularly state and local government ) , as well as foreigners and their governments , sometimes also find themselves with escess funds

so they lend them out The most important borrower-spenders are

businesses and the government ( particularly the federal goverments), but households and foreigners also borrow to finance their purchases

of cars, furniture , and houses The arrows show that funds flow from lenders-savers to borrower-spender via two routes

Functions Of Financial Markets

• Financial markets perform the essential

economic function of channeling funds from

households , firms , and government that

have saved surplus funds by spending less

than their income to those that have a

shortage of funds because they wish to spend

more than their income This function is

shown schematically in Figure 1.

• Those who have saved and are lending funds

, the lender-savers , are at the left , and those

who must borrow funds to finance their

spending , the borrower-spenders , are at the

right The principal lender-saver are

househoulds , but business enterprises and

the government ( particularly state and

local government ) , as well as foreigners and

their governments , sometimes also find

themselves with escess funds so they lend

them out The most important

borrower-spenders are businesses and the government

( particularly the federal goverments), but

households and foreigners also borrow to

finance their purchases of cars, furniture ,

and houses The arrows show that funds

flow from lenders-savers to

borrower-spenders via two routes.

• Thị trường tài chính đóng vai trò quan trọng

như một kênh dẫn vốn từ các hộ gia đình , doanh nghiệp và chính phủ , từ những nơi

dư thừa vốn vì họ chi tiêu ít hơn thu nhập , đến những nơi thiếu vốn vì họ chi tiêu nhiều hơn thu nhập tạo ra Chức năng này được thể hiện dưới dạng biểu đồ trong hình 1

• Những đối tượng dư vốn cho vay ở phía tay trái , và đối tượng sử dụng vốn vay cho mục đích chi tiêu của mình ở bên phải Đối tượng cho vay chủ yếu là hộ gia đình , các hãng kinh doanh và chính phủ ( đặc biệt là chính quyền liên bang và chính quyền địa phương ) , người nước ngoài và chính phủ nước ngoài đôi khi cũng dư vốn và có nhu cầu cho vay Đối tượng vay chủ yếu là hang kinh doanh

và chính phủ ( đặc biệt là chính quyền liên bang ) , nhưng hộ gia đình và người nước ngoài cũng đi vay để mua xe hơi , thiết bị và nhà ở Mũi tên cho biết dòng chảy vốn từ bên cho vay sang bên đi vay thông qua 2 con đường.

1 What is the main function of financial markets ?

-> The main function of financial markets is channeling funds from households , firms , and government that have saved surplus funds by spending less than their income , to those that have a shortage of funds , because they wish to spend more than their income

STRUTURE OF FINANCIAL MARKETS

Now that we understand the basic function of financial market, let’s look at their structure The following descriptions of several categorizations of financial markets illustrate essential features of these markets

Debt and Equity Markets

A firm or an individual can obtain funds in a financial market in two ways The most common method is to issue a debt instrument, such as a bond

or a mortgage , which is a contractual agreement by the borrower to pay the holder of the instrument fixed dollar amounts at regular interval (interest and principal payments) until a specified date (the maturity date),when a final payment is made The maturity of a debt instrument is the number of years (term) until that instrument’s expiration date A debt instrument is short-term if its maturity is less than a year and l ong-term if its maturity is ten years or longer A debt instrument with a maturity between one and ten years are said to be intermediate-term.

• The second method of raising funds is issuing equities , such as common stock , which are claims to share in the net income (income after expenses and taxes) and the assets of a business If you own one share of common stock in a common in a company that has issued one million shares, you are entitled to 1 one-millionth of the firm’s net income and 1 one-millionth of the firm’s assets Equities often make periodic payments (dividends) to their holder and are considered long- term securities because they have no maturity date In addition , owning stock means that you own a portion

of the firm and thus have the right to vote on issues important to the firm and to elect its director

• The main disadvantage of owning a corporation’s equities rather than its debt is that an equity holder is a residual claimant; that is, the corporation must pay all its debt holders before it pays its equity holders The advantage of holding equities is that equity holders benefit directly from any increases in the corporation’s profitability or asset value because equities confer ownership rights on the equity holders Debt holders do not share in this benefit, because their dollar payments are fixed.

• The total value of equities in the United States has typically

fluctuated between $4 and $20 trillion since the early 1990s, depending on the prices of share Although the average person is more aware of the stock market than any other financial market, the size of the debt market is often larger than the size of the equities market: the value of debt instruments was $41 trillion at the end of 2005, while the value of equities was $81 trillion at the end of 2005.

1 What is the debt market?

 The debt market is any market situation where

the trading of debt instruments takes place

2 What is equity market?

 The equity market is the market in which shares

are issued and traded, either through exchanges

or over the counter markets.

3 What is debt instrument?

 Debt instrument is a contractual agreement by

the borrower to pay the holder of the instrument fixed dollar amounts at regular interval (interest and principal payments) until a specified date (the maturity date),when a final payment is made.

Debt and equity markets

• A firm or an individual can obtain

funds in a financial market in two

ways The most common method is to

issue a debt instrument, such as a

bond or a mortgage , which is a

contractual agreement by the

borrower to pay the holder of the

instrument fixed dollar amounts at

regular interval (interest and principal

payments) until a specified date (the

maturity date),when a final payment is

made The maturity of a debt

instrument is the number of years

(term) until that instrument’s

expiration date A debt instrument is

short-term if its maturity is less than a

year and l ong-term if its maturity is

ten years or longer A debt instrument

with a maturity between one and ten

years are said to be intermediate-term.

Thị trường nợ và thị trường vốn cổ phần

• Một hãng hay một cá nhân

có thể nhận được một số tiền nhất định trên thị trường tài chính bằng hai cách Cách phổ biến nhất là phát hành một công

cụ nợ như trái phiếu hay một món vay thế chấp (một dạng hợp đồng thỏa thuận giữa người cho vay và người phát hành công cụ

nợ về số tiền nhất định phải trả (cả gốc và lãi) trong một thời hạn nhất định trước ngày đáo hạn (kì hạn thanh toán) Thời hạn thanh toán nợ là khoảng thời gian cho đến khi món nợ đáo hạn công cụ nợ là ngắn hạn nếu thời hạn thanh toán dưới 1 năm và dài hạn nếu thời hạn thanh toán từ 10 năm trở lên, công cụ nợ với thời hạn thanh toán từ 1-10 năm là các công cụ trung hạn.

• The second method of raising

funds is issuing equities , such as

common stock , which are

claims to share in the net

income (income after expenses

and taxes) and the assets of a

business If you own one share

of common stock in a common

in a company that has issued

one million shares, you are

entitled to 1 one-millionth of the

firm’s net income and 1

one-millionth of the firm’s assets

Equities often make periodic

payments (dividends) to their

holder and are considered

long-term securities because they

have no maturity date In

addition , owning stock means

that you own a portion of the

firm and thus have the right to

vote on issues important to the

firm and to elect its director

• Cách thứ 2 là thu hút vốn bằng

cách phát hành cổ phiếu, ví dụ như cổ phiếu thường,loại cổ phiếu đại diện cho một quyền

sở hữu một phần lợi nhuận ròng( lợi nhuận sau chi phí và thuế) và tài sản của doanh nghiệp nếu bạn nắm trong tay

cổ phần của một công ty trong

số một triệu cổ phiếu phát hành,bạn sẽ nhận được quyền lợi của mình trong 1/1000000 của thu nhập và tài sản của công ty Cổ phiếu thường được thanh toán theo kì(cổ tức) cho các cổ đông và trở thành chứng khoán dài hạn bởi không tồn tại thời gian đáo hạn Hơn nữa, sở hữu cổ phần có nghĩa là bạn đang sở hữu một phần của DN,qua đó có quyền tham gia biểu quyết những vấn đề quan trọng trong công ty và bổ nhiệm giám đốc.

• The main disadvantage of

owning a corporation’s

equities rather than its debt is

that an equity holder is a

residual claimant; that is, the

corporation must pay all its

debt holders before it pays its

equity holders The advantage

of holding equities is that

equity holders benefit directly

from any increases in the

corporation’s profitability or

asset value because equities

confer ownership rights on

the equity holders Debt

holders do not share in this

benefit, because their dollar

payments are fixed.

• Bất lợi lớn nhất của việc

sở hữu chứng khoán là việc cổ đông trở thành đối tượng được chia lợi nhuận có nghĩa là DN phải trả hết nợ trước khi chia cổ tức Lợi ích của việc nắm giữ cổ phần là các cổ đông có thể được hưởng lợi tức từ LN tăng lên của DN hoặc giá trị tăng lên của tài sản bởi nó thể hiện quyền đồng sở hữu công ty của cổ đông Chủ nợ thì không được hưởng lợi ích này bởi món nợ cố định của mình.

• The total value of equities in

the United States has

typically fluctuated between

$4 and $20 trillion since the

early 1990s, depending on

the prices of share Although

the average person is more

aware of the stock market

than any other financial

market, the size of the debt

market is often larger than

the size of the equities

market: the value of debt

instruments was $41 trillion

at the end of 2005, while the

value of equities was $81

trillion at the end of 2005.

• Tổng giá trị chứng khoán

của Mỹ dao động trong khoảng 4000 đến 20000 tỉ đôlatừ những năm đầu của thập niên 1990 và phụ thuộc vào giá cổ phiếu mặc

dù người bình thường biết

rõ về thị trường CK nhất trong TTTC, quy mô mô thị trường nợ thường lớn hơn thị trường chứng khoán Tổng giá trị của các công cụ

nợ là 41 nghìn tỉ đôlacuối năm 2005 trong khi tổng giá trị chứng khoán là 18 nghìn tỉ vào cùng thời điểm

Primary and Secondary Markets

• A primary market is a finacial market

in which new issues of security , such as

a bond or stock, are sold to intial

buyers by the corporation or

government agency borrowing funds

A secondary market is a financial

market in which securities that have

been previously issued can be resold

• The primary market for securities are

not well know to the public because

the selling of securities to intial buyers

often take place behind closed doors

An important financial institution that

assists in the intial sale of securities in

the primary market is the investment

bank It does this by underwriting

securities: it guarantees a price for a

corporation’s securities and then sells

them to the public.

• Question:

7 In which type of financial markets are fresh shares issued and sold ?

-> The primary market.

8 Why are the primary markets for securities not well known to the

public ?

-Because the selling of securities to intial buyers often take place behind closed doors

Primary and Secondary Markets

The New York and American stock exchanges and NASDAQ ( National Association of Securities Dealer Automated Quotation System), in which previously issued stocks are traded , are the best – known examples of secondary markets, although the bond

market, in which previously issued bonds of major corporation and the U.S government are bought and sold, actually have a larger trading volume Other examples of

secondary markets are exchange markets , futures markets and option markets Brokers

are agents of investors who match buyers with sellers of securities; dealers link buyers and sellers by buying and selling securities at stated prices

When an individual buys a security in the secondary market, the person who has sold the security receives money in exchange for the security, but the corporation that

issued the security acquires no new funds A corporation acquires new funds only when

its securities are first sold in the primary market.

Primary and Secondary Markets

• Nonetheless, secondary markets serve two important functions First, they

make it easier and quicker to sell these financial instruments to raise cash ; that

is, they make the financial instruments more liquid The increased liquidity of these instruments then make them more desirable and thus easier for the

issuing firm to sell in the primary market Second, they determine the price of

securities in the primary will pay the issuing corporation no more than the

price they think the secondary market will set for this securities The higher the security’s price in the secondary market, the higher the price that the

issuing firm will receive for a new security in the primary market, and hence

the greater the amount of financial capital it can raise Conditions in the

secondary are therefore the most relevant to corporations issuing securities It

is for this reason that book like this one, which deal with financial markets, focus on the behavior of secondary markets rather than primary markets