THE RISKS OF INTERNATIONAL INVESTING

International investing is a risky business. When the Communist economies of Eastern Europe were transformed into free-market economies, for example, their credit risks improved immeasurable, and those who invested first saw the value of some of their investments flourish. In other countries, however, investors were not sow lucky as political turmoil and economic chaos pushed many ventures to the brink of bankruptcy.

International investing carries many additional risks along with additional rewards. Global investors, including pension funds and university endowments, need to look very carefully at each country’s political and economic situation before lending money or otherwise investing abroad. By removing – or a least identifying – some of the risks involved, the wheel of fortune of the global markets can actually spin in the smart investor’s favor. Banks, for example, have made a science of weighing the risks in international investment. When lending money to international borrowers, they not only consider the traditional risks of credit, maturity, interest rates, etc., but they identify additional hazards such as exchange risk and political risk.

Changes in the value of foreign currencies can provide additional profits, or they could end up eating away the earnings from and otherwise lucrative international investment. A Scottish widows an orphans fund that invests its funds in Tokyo may see the value of its stocks and bonds rise handsomely on the markets in the Far East. But if the yen loses value against the pound in Edinburgh, those foreign earnings may end up being a loss for those who need the money at home.

Exchange risks can also work in an investor’s favor. For example, an American investing in Australian stocks stands to gain handsomely if the Australian dollar goes up against the U. S. dollar. The profit from an investment in a strong foreign currency can sometimes exceed the local profit in the investment itself.

Loans to governments and companies in foreign countries also carry an exchange risk if the borrower pays back the loan in a different currency. If exchange rates change, the investor may end up getting more or lees in return when the loan is exchanged back into the lender’s own currency. For this reason, many loans to Third World countries such as Brazil and Mexico were not made in the local currency. Western and Japanese banks usually preferred to have the loans denominated in dollars, yen, and marks in order to avoid exchange risks.

International investments also present a political risk if a government falls or if new laws are passed restricting international payments. If a democratically elected government is toppled, for example, the local markets may drop like a stone as foreign investment money flees the country.

After all the risks have been analyzed, international investments should provide a return that rewards the investor for the various risks taken. The use of rating agencies and political analysts helps the investor to calculate risk, but the decision on the return and amount of investments in any one venture must be made on an individual basis.

Note:

political turmoil – политическая нестабильность

COMPREHENSION CHECK

I. Give Russian equivalents to the following:

credit risks, additional reward, pension fund, wheel of fortune, smart investor, interest rate, foreign earnings, strong currency, lender’s currency, Third World country, removing risks, additional hazard, exchange rate , university endowment , the value of stocks raises handsomely , in the investor’s favor .

II. Complete sentences according to the information in the text.

1. International investing is … .

a) a nonprofitable business

b) a profitable business

c) a risky business

2. Political turmoil and economic chaos in a foreign country … .

a) make some ventures borrow additional money from banks

b) help some ventures to obtain considerable rewards

c) push some ventures to the brink of bankruptcy

3. Western and Japanese banks make loans denominated … .

a) in local currencies

b) in dollars

c) in any currencies

4. If a democratically elected government is toppled, the local market … .

a) may drop

b) never drops

c) must drop

5. The use of … helps the investors to calculate risks.

a) internet information

b) rating agencies and political analysts

c) information from the secret service

III. Which explanation of economic terms is correct?

1.

a) A free-market economy is a system of trade when prices are not controlled by the government.

b) A free-market economy is a system of trade when all prices are controlled by the government.

c) A free-market economy is a system when all prices are controlled by consumers.

2.

a) International investing is putting money into a business of your country.

b) International investing is providing money for your project by international organizations.

c) International investing is investing money into foreign companies.

3.

a) To lend money is to steal money.

b) To lend money is to let someone borrow it on condition to pay back with additional interest.

c) To lend money is to pay back your debt.

IV. Read and translate the definitions of the basic INVESTMENT AND SECURITIES terms:

1. Securities — stocks and bonds (which present a secured-asset based claim on the part of investors) that can be bought and sold.

2. Securities market — the millions of people and organizations that buy stocks and bonds and the securities intermediaries who bring buyers and sellers together.

3. Primary market — a market in which an investor purchases financial securities (via an investment bank or other representative) directly from the issuer of those securities.

4. Secondary market — a market for existing financial securities that are currently traded between investors.

5. Stock exchange — the marketplace for dealing in freely transferable stocks, shares, and securities of all types — government and others.

6. Investor — traditionally someone who buys securities with the expectation of getting an income or profit over several years.

7. Broker — an individual licensed to buy and sell securities for customers in the secondary market; may also provide other financial services.

8. Stockbroker — an individual who buys or sells securities for clients.

9. Investment banker — any financial institution engaged in purchasing and reselling new stocks and bonds.

10. Investment banking firm — an organization that assists corporations in raising funds, usually by helping sell new security issues.

11. Bull market — a stock market in which prices are rising and there is much optimism among speculators.

12. Bear market — a stock market in which prices are falling and there is much pessimism among speculators.

13. Bull — an investor who expects prices to go up.

14. Bear — an investor who expects prices to go down.

15. Institutional investors — organizations whose investments for themselves and their clients are so large that they can influence prices on securities markets.

V. Give Russian equivalents to the following:

Фондовый рынок; первичный рынок ценных бумаг; вторичный рынок ценных бумаг; ценные бумаги; рынок ценных бумаг; инвестор; брокер; инвестиционный банкир; биржевой маклер; инвестиционный банк; спекулянт, играющий на повышение; спекулянт, играющий на понижение; рынок без посредников; организации-инвесторы.

VI. Choose the necessary word and put it in the sentence:

Market

Bonds

Buyers

Safety

Economy

Interest

Repayment

Prices

Commercial

Government securities, which are usually _____ that pay a fixed amount of _____ each year, have, unlike most _____ securities, a guaranteed _____ factor concerning their ultimate _____. Nevertheless, these securities are traded in the _____, and their _____ fluctuate in value depending on trends and conditions in the _____ and according to the relative balance between _____ and sellers.

VII. Translate into English:

1. Инвестиции — долгосрочные вложения капитала с целью получения дохода.

2. Инвестиции приносят прибыль через значительный срок после вложения.

3. Само понятие инвестиции (от лат. investio – одеваю) означает вложения капитала в отрасли экономики внутри страны и за границей. По своей сути, инвестиции – это авансирование накопления капитала.

4. Различают финансовые (покупка ценных бумаг) и реальные инвестиции (вложения капитала в промышленность, сельское хозяйство, строительство, образование и др.).

5. Реальные инвестиции представляют собой вложения капитала в какую-либо отрасль экономики или предприятие, результатом чего является образование нового капитала или приращение наличного капитала (здания, оборудование, товаро-материальные запасы и т.д.).

6. Финансовые инвестиции это – вложение капитала (государственного или частного) в акции, облигации, иные ценные бумаги. Здесь прироста реального капитала не происходит, происходит лишь покупка, передача собственности.

7. Прибыльность – это важнейший критерий, определяющий приоритетность инвестиции.

8. Инвестиции являются неотъемлемой составной частью современной экономики.

9. Можно выделить три основные функции, которые выполняют инвестиции в экономической системе:

а) инвестиции обеспечивают рост и основного капитала (фондов), как на уровне отдельной фирмы, так и на уровне национальной экономики в целом;

б) инвестиции осуществляют прогрессивные структурные экономические сдвиги;

в) инвестиции выполнят также реализацию новейших достижений научно-технического прогресса и повышение на этой основе эффективности производства на микро- и макро- уровнях.

10. Объекты инвестиций:

· Материальные: чаще всего земля и недвижимость.

· Нематериальные: лицензии, патенты, знания.

· Финансовые: чаще всего акции и облигации.

Литература

Основная: 1, 2, 3.

Дополнительная: 2, 3, 4.

СПИСОК ИСПОЛЬЗОВАННОЙ ЛИТЕРАТУРЫ

Основная литература:

1. Агабекян И.П., Коваленко П.И. Английский язык для экономистов. Изд. 4-е.

Серия «Высшее образование». Ростов н/Д: «Феникс», 2004.

2. Воронцова И. И., Ильина А. К., Момджи Ю. В.. Английский язык для студентов экономических факультетов. Издательство: Приор-издат, 2004 г.

3. Доловова Н. Н., Степанова Н. Н. Fundamentals of Economics: учебное пособие / – Ульяновск: УлГТУ, 2006.

4. Е. Н. Малюга, Н. В. Ваванова, Г. Н. Куприянова, И. В. Пушнова. Английский язык для экономистов: Учебник для вузов — СПб.: Питер, 2005.

5. Маркушевская Л.П и другие. English for Economists (Part-Time Education) – СПб: СПб ГУ ИТМО, 2006.

6. Шевелева С. А. Английский для экономистов. Издательство: Издательство журнала "Юнити", ЮНИТИ-ДАНА, ИЗДАТЕЛЬСТВО, 2004 г.

Вспомогательная литература:

1. Богацкий И.С., Дюканова Н.М. Бизнес-курс английского языка: Словарь-справочник. – Киев: Логос; М.: Рольф: Айрис-пресс, 1999.

2. Искренко Э.В., Гайкова О.В., Торгашов В.И. Basic economic terminology: Учебно – методические рекомендации по курсу экономической терминологии на английском языке. — Волгоград : Изд-во ВолГУ, 2003.

3. Крупнов В.Н. Активная бизнес-лексика: краткий словарь-справочник англо-русских соответствий = Active Business Vocabulary. A Guide to Effective Words and Phrases in English and Russian. – М.: Астрель: АСТ: Транзиткнига, 2005.

4. Николаева О. Е. Толковый англо-русский словарь основных терминов управленческого и финансового учета. Изд. 2-е, испр. и дополн. — М.: Эдиториал УРСС, 2002.

5. Новицкая Т.М., Кучин Н.Д., Кускова Л.А., Разговорова Е.Н. Практическая грамматика английского языка. М., 1983.

6. Семенкин В.Я., Серая Л.Г. Краткий русско-английский словарь-разговорник для делового человека. – М.: Колизей, 1991.

7. Norman Susan. Financial English. – London, British Broadcasting Corporation, 1991.

8. Norman Susan. We’re in Business. English for commercial practice and international trade.

9. Student’s Book. England: Longman, 1990.

10. Stiglitz Joseph E. Principles of macroeconomics. – New York, Norton & Company, 1993.

11. Wood Frank. Business Accounting. –London, Longman Group UK Limited, 1989.

СОДЕРЖАНИЕ

Ó Татьяна Анатольевна Маркевич

МЕТОДИЧЕСКИЕ УКАЗАНИЯ

к практическим занятиям и самостоятельной работе

по теме: «Профессиональное общение»

для студентов 2 курса направления

6.030509 «Учет и аудит», 6.030504 «Экономика предприятия»

дневной формы обучения

Тираж_____экз. Подписано к печати_____________.

Заказ №________. Объем 5 п.л.

Изд-во “Керченский государственный морской технологический университет”

98309 г. Керчь, Орджоникидзе, 82.

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