金融英语名词解释

Chapter 1

The international money market trades short-term claims with an original maturity of one year or less.

The international capital market trades capital market instruments with an original maturity greater than one year.

The foreign exchange market is the one where foreign currencies are bought and sold in the course of trading goods, services, and financial claims among countries.

Chapter 2

1. Money：Economists define money (also referred to as the money supply) as anything that is generally accepted in payment for goods or services or in the repayment of debts.

2. Currency：One type of money：dollar bills and coins

3. Medium of Exchange：In almost all market transactions in an economy, money in the form of currency or checks is a medium of exchange; it is used to pay for goods and services.

4. Transaction Cost：The time spent trying to exchange goods and services is called a transaction cost.

5. Store of Value：Money also functions as a store of value; it is a repository of purchasing power over time. A store of value is used to save purchasing power from the time income is received until the time it is spent.

6. Liquidity：Liquidity is a measure of the ease with which an asset can be turned into a means of payment, namely money.

7. Inflation：Inflation is a sustained rise in the general price level—that is, the price of everything goes up more or less at the same time.

8. Money aggregates: We have drawn the line in a number of different places and computed several measures of money, called the money aggregates: M1, M2, and M3.

M1=currency

currency and various deposit accounts on which people can write checks

+Traveler’s checks

+Demand deposits

+Other checkable deposits

M2=M1

M2 equals all of M1 plus assets that cannot be used directly as a means of payment and are difficult to turn into currency quickly

+Small-denomination time deposits

+Savings deposits and money market deposit accounts

+Money market mutual fund shares (non-institutional)

M3=M2

M3 adds to M2 a number of other assets that are important to large institutions but not to individuals.

+Large-denomination time deposits

+Money market mutual fund shares (institutional)

+Repurchase agreements

+Eurodollars

Chapter 3

1. Depository institutions：Depository institutions are financial institutions that accept deposits from savers and make loans to borrowers .We use the term

“banks” as an alternative.

2. bank：A bank is a financial institution where you can deposit your money.

3. Commercial Banks：A commercial bank is an institution that accepts deposits and uses the proceeds to make consumer, commercial, and mortgage loans. Originally established to meet the needs of businesses, many of these banks now serve individual customers as well

4. holding company：A holding company is a corporation that owns a group of other firms.

5. Community Banks：Small banks—those with assets of less than $1 billion—that concentrate on serving consumers and small businesses.

These are the banks that take deposits from people in the local area and lend them back to local businesses and consumers.

6. Regional and Super-Regional Banks：larger than community banks and much less local. Besides consumer and residential loans, these banks also make commercial and industrial loans.

7. Money Center Banks：do not rely primarily on deposit financing. These banks rely instead on borrowing for their funding

8. Savings Institutions：Savings institutions, which are sometimes referred to as

“thrift institutions” or “thrifts”, are financial intermediaries that were established to serve households and individuals.

9. Credit Union：Credit unions (CUs) are nonprofit organizations

They are composed of members with a common bond, such as an affiliation with a particular labor union, church, university, or even residential area.

Chapter 4

Insurance Companies: Insurance companies are intermediaries whose primary function is to allow households and businesses to shed specific risks by buying contracts called insurance policies that pay cash compensation if certain specified events occur.

1. Insurance: Insurance is a financial arrangement that redistributes the costs of unexpected losses.

2. Insurance System: An insurance system accomplishes the redistribution of the cost of losses by collecting a premium payment from every participant in the system.

Marine Insurance —The large majority of ship owners resort to marine insurance for the protection of their ships, freight and other interests against marine perils.

Life Insurance —Life insurance pays a stated amount of money on the death of the insured individual

Fire Insurance —Fire insurance covers losses due to fire

Property Insurance —property insurance covers damage to the properties of the assured subject to an agreed limit.

Motor Insurance —a legally required insurance covering the driver of a car for potential damages to other road users or their vehicles from accidents caused through their fault.

Accident Insurance —this type of insurance provides compensation in the event of an accident causing death or injury.

Liability Insurance —this type of insurance is to protect the policyholder who is sued for damages arising from negligence.

Property and casualty insurance--- Policies that cover accidents, theft, or fire are called property and casualty insurance.

Health and disability insurance--- Policies that cover sickness or the inability to work are called health and disability insurance

Life insurance---Policies that cover death are called life insurance

3. Premiums: Payments made to insurance companies for the insurance they provide are called premiums.

4. Reinsurance: Insurance companies commonly obtain reinsurance, which effectively allocates a portion of their return and risk to other insurance companies.

（1）Pension Funds: Like an insurance company, a pension fund offers people the ability to make premium payments today in exchange for promised payments under certain future circumstances.

（2）Pension plan: A pension plan is an asset pool that accumulates over an individual’s working years and is paid out during the nonworking years.

5. Installment Loans: Consumer finance firms provide small installment loans to individual consumers.

This kind of consumer credit allows people without sufficient savings to purchase appliances such as television sets, washing machines, and microwave ovens

6. Mutual Funds: A mutual fund is a portfolio of stocks, bonds, or other assets purchased in the name of a group of investors and managed by a professional investment company or other financial institution.

7. Open-end mutual funds: Open-end mutual funds are willing to repurchase the shares they sell from investors at any time.

8. Closed end: Closed-end mutual funds do not repurchase the shares they sell.

9. Investment Bank: It is a financial institution that helps corporations raise funds.

10. Securities Brokers: Securities brokers and dealers conduct trading in secondary markets.

11. Brokers: Brokers are pure intermediaries who act as agents for investors in the purchase or sale of securities.

12. Securities Dealers: Security dealers link buyers and sellers by standing ready to buy and sell securities at given prices.

13. Organized Exchange: An organized exchange actually functions as a hybrid of an auction market (in which buyers and seller trade with each other in a central location

14. dealer market: A dealer market (in which dealers make the market by buying and selling securities at given prices)

Chapter 5

1. Interest rate：The willingness to postpone purchases into the future is a function of the reward.

2. Future Values: future value is the value on some future date of an investment made today.

3. Present Value: Present value is the value in the present of a payment that is promised to be made in the future.

4. Nominal Interest Rates: interest rate that is adjusted for expected changes in the price level so that it more accurately reflects the true cost of borrowing.

补：The interest rate before taking inflation into account. The nominal interest rate is the rate quoted in loan and deposit agreements. The equation that links nominal and real interest rates is:

(1 + nominal rate) = (1 + real interest rate) (1 + inflation rate).

It can be approximated as nominal rate = real interest rate + inflation rate.

5. Real Interest Rates: （补）An interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower, and the real yield to the lender. The real interest rate of an investment is calculated as the amount by which the nominal interest rate is higher than the inflation rate.

Real Interest Rate = Nominal Interest Rate - Inflation (Expected or Actual)

Chapter 6

Money Market： Money market is the market for short-term credit

Money market provides short term debt financing and investment.

1. Treasury Bills： A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million and commonly have maturities of one month (four weeks), three months (13 weeks) or six months (26 weeks).

2. Negotiable Certificates of Deposit (CDs)： The term CD stands for Certificate of Deposit. A CD is simply a short- to medium-length investment. Most CDs have a maturity of 1-12 months.

3. Commercial Paper：Commercial paper securities are unsecured promissory notes, issued by corporations that mature in no more than 270 days.

4. Banker’s Acceptance： Banker’s acceptances are money market instruments created in the course of financing international trade.

An acceptance is a financial instrument designed to shift the risk of international trade to a third party willing to take on that risk for a known cost.

5. Repurchase Agreements：Repurchase agreements (repos) are short-term

agreements in which the seller sells a government security to a buyer and simultaneously agrees to buy the government security back on a later date at a higher price.

6. Money Market Mutual Funds： MMMFs are funds that aggregate money from a group of small investors and invest it in money market instruments.

7. open-ended fund： An open-ended fund is one that invests in securities and sells direct claims on the securities to investors.

Chapter 7

1. Central Bank： The central bank is the financial institution designed to regulate and control the money supply of a nation, with the goal of fostering economic growth without inflation.

2. expansionary policy：lower interest rates, raises both growth and inflation over the short run

3. restrictive policy：Higher interest rates, reduces both growth and inflation.

4. Dollar hegemony: dollar hegemony means that managing the US dollar therefore not only affects the US economy but all economies.

Chapter 8

1. Monetary policy： Defined as the use of various tools by the central bank to control the availability of loanable funds in an effort to achieve national economic goals, such as full employment and reasonable price stability.

2. Reserve Requirements: Reserve requirements are a percentage of depository institutions' demand deposit liabilities that must be kept on deposit at the central bank as a requirement of banking regulations.

3. Discount Rate：Discount rate is the interest rate charged by a central bank on loans to commercial banks.

4. Open Market Operations：Open market operations, the central bank’s purchase or sale of bonds in the open market

Open market purchases：Open market purchases expand reserves and the monetary base, thereby raising the money supply and lowering short-term interest rates.

Open market sales：Open market sales shrink reserves and the monetary base, lowering the money supply and raising short-term interest rates.

Chapter 9

Capital Market：The capital market is the market in which long-term debt (generally those with original maturity of one year or greater) and equity

instruments are traded.

1. The primary market：The primary market is where new issues of stocks and bonds are introduced. Investment funds, corporations, and individual investors can purchase all securities offered in the primary market.

2. Organized Securities Exchanges：Exchange rules govern trading to ensure the efficient and legal operation of the exchange, and the exchange’s board constantly reviews these rules to ensure that they result in competitive trading.

3. Over-the-Counter Markets：Securities that are not listed on one of the exchanges trade in the over-the-counter market. This market is not organized in the sense of having a building where trading takes place.

4. NSADAQ：shows bid and asked prices for thousands of OTC-traded securities on video screens hooked up to a central computer system.

5. Bonds：Bonds are securities that represent a debt owed by the issuer to the investor

Municipal bonds：These are issued by state and local governments or their agencies to pay for public improvements, reducing debt, or other purposes

Corporate bonds：These are issued by corporations that want to raise money for their business venture, ranging from balancing their cash flow to buying new

equipment, building new facilities, or spending on new research.

Government bonds：Issued by the Federal government or one of the its agencies.

6. Treasuries: Treasuries bills, notes and bonds are collectively called “Treasuries”.

Treasury Bills (T-bills): These are short-term securities that mature in a year or less. You buy them at a discount price and at the end of the term, you are repaid the full price.

Treasury Notes: Theses are issued for the intermediate term, such as 2 years up to 10 years. Expect to earn a little higher interest rate than what you could get from a T-bill. Interest is paid every 6 months.

Treasury Bonds: Theses are issued for the long term, generally from 10 years to 30 years. Expect to earn a higher interest rate than what you could get from a T-note. Interest is paid every 6 months.

Savings Bonds: They are government bonds designed especially for individual investors. As such, they can generally only be redeemed by their original owner, except in limited circumstances.

7. Primary market: bonds sold for the first time.

Secondary market: the resale of bonds some time after their initial offering.

8. Face Value: The face value, or par value, of a bond is the value of the bond at maturity, the date when the loan is paid off. A common face value is $1,000 per bond.

9. Coupon Rate: A bond’s coupon rate refers to the amount of interest that will be paid based on the face value of the bond.

10. Yield: The yield is the discount rate or interest rate that an investor wants from investing in a bond.

11. Stocks: A share of stock in a firm represents ownership

Common stock: makes up the majority of stocks. As a common stock holder, you have a right to claim dividends and get to have one vote per share when electing board of directors.

Preferred stock: does not usually include voting rights and pays a specified dividend, because of which the stock price does not rise and fall along with the company profits.

Bull Market: indicates the constant upward movement of the stock market.

Bear Market: indicates the continuous downward movement of the stock market.

12. Mortgages: Mortgages are loans to households or firms to purchase housing, land, or other real structure, where the structure or land itself serves as collateral for the loans.

13. Discount points: Discount points are interest payments made at the beginning of a loan

Chapter 10

Financial derivatives: Financial derivatives are financial contracts, or financial instruments, whose values are derived from the value of something else ( known as the underlying).

1. Exchange-traded derivatives (ETD): are those derivatives products that are traded via specialized derivatives exchanges or other exchanges.

Over-the counter (OTC) derivatives: They are contracts that are traded ( and privately negotiated) directly between two parties, without going through an exchange or other intermediary.

2. Forward: A forward, or forward contract, is an agreement between a buyer and a seller to exchange a commodity or financial instrument for a specified amount of cash on a prearranged future date.

3. Future: a future, or futures contract, is a forward contract that has been

standardized and sold through an organized exchange.

Hedger: tries to minimize risk by buying or selling now in an effort to avoid risking or declining futures prices

Speculator: try to profit from the risks by buying or selling now in anticipation of rising or declining future prices

4. Initial margin: represents a good faith deposit that serves to cover losses if prices move against the trader.

5. Options: Options are contracts that give the purchaser the right to buy or sell the underlying financial instrument at a specified price within a specific period of time

(1)There are two basic options: puts and calls:

A call gives the holder the right to buy an asset at a certain price within a specific period of time

A put option gives the holder the right to sell an asset at a certain price within a specific period of time.

(2)There are two types of option contracts:

American options can be exercised at any time up to the expiration date of the

contract,

European options can be exercised only on the expiration date

(3)How to Read An Option Table

Column 1: Strike price: This is the stated price per share for which an underlying stock may be purchased (for a call) or sold ( for a put) upon the exercise of the option contract. Option strike prices typically move by increments of $2.50 or $5 (even though in the above example it moves in $2. increments).

Column 2: Expiry date: This shows the termination date of an option contract. Remember that US listed options expire on the third Friday of the expiry month.

Column 3: Call or Put: This column refers to whether the option is a call or put. Column 4: Volume: This indicates the total number of options contracts traded for the day. This volume of all contracts is listed at the bottom of each table.

Column 5: Bid: This indicates the price someone is willing to pay for the options contract.

Column 6: Ask: This indicates the price at which someone is willing to sell an options contract.

Column 7: Open Interest: Open interest is the number of options contracts

that are open; these are contracts that have neither expired nor been exercised.

6. Swaps: A swap is an agreement between two parties to exchange sequences of cash flows for a set period of time.

Interest Rate Swap: Interest rate swaps involve the exchange of one set of interest payments for another set of interest payments, all denominated in the same currency.

Currency Swap: It involves exchanging principal and fixed interest payments on a loan in one currency for principal and fixed interest payments on a similar loan in another currency.

Chapter 11

foreign exchange rates：The prices of foreign currencies expressed in terms of other currencies are called foreign exchange rates.

1． Spot Transaction：A spot transaction is a straightforward (or “outright”) exchange of one currency for another. (This trade represents a “direct exchange” between two currencies and has the shortest time frame

2． Outright Forwards：An outright forward transaction, like a spot transaction, is a straightforward single purchase/sale of one currency for another

3． FX Swaps：

A swap is an agreement between two parties to exchange payments based on identical notional principle. In a swap, two parties exchange currencies for a certain length of time and agree to reverse the transaction at a later date

In the FX swap market, one currency is swapped for another for a period of time, and then swapped back, creating an exchange and re-exchange.

short-dated swap：both dates are less than one month from the deal date

forward swap： one or both dates are one month or more from the deal date

5. Currency Swaps：In a typical currency swap, counterparties will

(1)exchange equal initial principal amounts of two currencies at the spot exchange rate,

(2)exchange a stream of fixed or floating interest rate payments in their swapped currencies for the agreed period of the swap, and then

(3)re-exchange the principal amount at maturity at the initial spot exchange rate.

6. Over-the-Counter Currency Options: A foreign exchange or currency option contract gives the buyer the right, but not the obligation, to buy (or sell) a specified amount of one currency for another

at a specified price on (in some cases, on or before) a specified date.

6. Exchange-Traded Futures

In the U.S. exchanges, a foreign exchange futures contract is an agreement between two parties to buy/sell a particular (non-U.S. dollar) currency at a particular price on a particular future date, as specified in a standardized contract common to all participants in that currency futures exchange.

7. Exchange-Traded Currency Options Exchange-traded currency options, like exchange-traded futures, utilize standardized contracts—with respect to the amount of the underlying currency, the exercise price, and the expiration date.

The option buyer—who has no further financial obligation after he has paid the premium—is not required to make margin payments.

The option writer—who has all of the financial risk—is required to put up initial margin and to make additional (maintenance) margin payments if the market price moves adversely to his position.

Chapter 12

Balance of Payments：A country’s balance of payments is commonly defined as the record of transactions between its residents and foreign residents over a

specified period.

A debit entry records a transaction that results in a domestic resident making a payment abroad. A debit entry has a negative value in the balance-of-payments account.

A credit entry records a transaction that results in a domestic resident receiving a payment from abroad. A credit entry has a positive value in the balance-of-payment account.

1. The Current Account：The current account measures the flow of goods, services, and income across national borders.

（1）Goods：The goods category includes imports and exports of tangible goods such as cars, computers, clothes, televisions, etc.

If a country’s imports more than it exports in this category, then it is said to have a trade deficit.

If a country’s exports more than imports it in this category, then it is said to have a trade surplus. （2）Services：The services category includes flows of payment in exchange for services countries provide to each other: transportation, insurance, banking, tourism, etc.

（3）income: The income category measures cross-border compensation of employees.

（4）Transfer Payments： Transfer payments include unilateral gifts or payments from private citizens and government of a country to people living abroad or vice versa.

3． The Capital and Financial Account：The capital and financial account includes a variety of sub-accounts all dealing with purchases and sales of financial assets or real estate (stocks, bonds, land, buildings, businesses, etc.).

4． The Official Settlements Balance：The official settlements balance measures the transactions of financial assets and deposits by official government agencies.

5. Deficits and Surpluses in the Balance of Payments：The so-called balance-of-payments deficit or surplus is something other than the overall balance of payments.

A balance-of-payments deficit refers to a situation in which the official settlements balance is positive.

A balance-of-payments surplus：A situation where the sum of the debits and credits in the current and the capital and financial account is positive means that private payments received from foreigners exceed private payments made to foreigners. In this case, the official settlements balance is negative, and there is a

balance-of-payments surplus.

A balance-of-payments equilibrium refers to a situation where the sum of the debits and credits in the current account and capital and financial account is zero, and thus the official settlements balance is zero.

Chapter 13

1. Letters of Credit A letter of credit is an international bank’s future promise to pay for goods stored overseas or for goods shipped between two countries