Учебное пособие: Oral conversational topics on business English language

THE INTERNATIONAL BOND MARKET

Bonds are an important means of financing for many companies. The most common kind of bond is a fixed-rate bond. The investor who purchases a fixed-rate bond receives a fixed set of cash payoffs. Each year until the bond matures, the investor gets an interest payment and then at maturity he gets back the face value of the bond.

International bonds are of two types: foreign bonds and Eurobonds.Foreign bonds are sold outside the borrower's country and are denominated in the currency of the country in which they are issued.

Eurobonds are normally underwritten by an international syndicate of banks and placed in countries other than the one in whose currency the bond is denominated For example, a bond may be issued by a German corporation, denominated in U.S dollars, and sold to investors outside the United States by an international syndicate of banks. Eurobonds are routinely issued by multinational corporations, large domestic corporations, sovereign governments, and international institutions, they are usually offered simultaneously in several national capital markets, but not in the capital market of the country, nor to residents of the country, in whose currency they are denominated. Eurobonds account for the lion's share of international bond issues.

QUESTIONS

1. How would you explain the currency fluctuations?

2. What is the necessary precondition for large-scale international trade and investment?

3. The foreign exchange market serves two main functions. What is their essence?

4. What is the difference between spot exchange rate and forward exchange rate?

5. What are the main participants of swap operations?

6. What is the difference between commercial and investment banks?

7. What types are international bonds divided into?

8. How would you characterise foreign bonds and Eurobonds?

9. What is the principle of the international capital market activity?

10. Who is each domestic equity market dominated by?

budget – an estimate or plan of the money available to smb. and how it will be spent over a period of timerevenue – income, esp. the total annual income of a state or an organisationto approximate – to estimate or calculate smth fairly, accuratelymanagement – the control and making of decision in a business or similar organisationassumption – thing that is thought to be true or certain to happen, but is not provedforecast – a statement that predicts smth with the help of informationflexible – easily changed to suit new conditionobjective – a thing aimed at or wished for, a purposeinventory – a detailed list esp. of goods, furniture or jobs to be doneto compile – to collect information and arrange it in a book, list, report, etc.

BUDGETING IN BUSINESS

A budget is a financial plan. Specifically, a budget sets forth management's expectationsfor revenues and, based on those financial expectations, allocates the use of specific resources throughout the firm. You may live under a carefully constructed budget of your own. A business operates in the same way. A budget becomes the primary basis and guide for financial operations in the firm.

Budgeting is the principle activity in the planning function that all managers of successful firms must do in order to meet desired results. Just as managers use forecasts to approximate income from sales, they must also forecast the future availability of major resources, including people, raw materials, energy, and money. Techniques for forecasting resources are the same as those employed to forecast sales: hunches, market surveys, time-series analysis, and econometric models. The only difference is that the manger is seeking to know the quantities and prices of goods that can be purchased rather than those to be sold. A very close relationship exists between budgeting as a planning technique and budgeting as a control technique. During the planning phase of management, firms forecast future allocations of resources for business activities. After the organization bas been engaged in activities for a time, actual results are compared with the budgeted (planned) results and may lead to corrective action. This is the management function of controlling.

The budgeting process is complex in nature, derived from the management's objectives for the organization to the final financial budgeted balance sheet formulated. Sales forecasts play a key role in the budgeting process. It consists of a forecast of quantities sold and forecast of dollar income expected. All other budgets are related to it either directly or indirectly. The production budget, for example, must specify the materials. labour, and other manufacturing expenses required to support the projected sales level. Similarly, the marketing expense budget details the costs associated with the level of sales activity projected for each product in each sales region. Administrative expenses also must be related to the predicted sales volume. The projected sales and expenses are combined in the financial budgets, which consist of pro forma financial statements,inventory budgets, and the capital additions budget.

Most firms compile yearly budgets from short-term and long-term financial forecasts. There are usually several budgets established in a firm:

· An operating budget

· A capital budget

· A cash budget

· A master budget

Forecast data are based on assumptions about the future. If these assumptions prove wrong, the budgets are inadequate. So the usefulness of financial budgets depends mainly on the degree to which they are flexible to changes in conditions. Two principle means exist to provide flexibility: variable budgeting and moving budgeting. Variable budgeting provides for the possibility that actual output changes from planned output. It recognizes that variable costs are related to output, while fixed costs are unrelated to output. Thus, if actual output is 20 percent less than planned output, it does not follow that actual profit will be 20 percent less than that planned. Rather, the actual profit varies, depending on the complex relationship between costs and output. Furthermore. moving budgeting is the preparation of a budget for a fixed period (say, one year), with periodic updating at fixed intervals (such as one month). For example, a budget is prepared in December for the next 12 months, January through December. At the end of January, the budget is revised and projected for the next 12 months, February through January. In this manner, the most recent information is included in the budgeting process. Premises and assumptions are constantly being revised as management learns from experience.

In addition, budgets can sometimes lead companies to overlook critical variables such as quality and customer service. Often, their decision-making process is based solely on numbers and dollars, and wrong moves can turn into lost profit. To combat this companies set up guidelines that include the necessity to plan first, budget later: budget for managers, not accountants: measure output, not input; and design budgets to protect against dispute between departments.

Budgets are an important activity crucial to a managers’ success in maintaining the bottom line of a company. Without them, it would be the equivalent to walking through a mine field without sight. Eventually, you're going to be blown out of the way by competing firms.

QUESTIONS