Exercise 7. Translate the following sentences into Russian

Exercise 6. Match the idioms and their explanations.

1. pay good money for something

2. put/pump/pour money into something

3. there's money (to be made) in something BBBF

4. I'm not made of money

5. have money to burn

6. get your money's worth

7. be in the money

8. money is no object

9. for my money

10. put (your) money on something

11. I'd put (my) money on something

12. my money's on somebody/something also the smart money's on somebody/something

13. money for old rope

14. put your money where your mouth is

15. money talks

16. be (right) on the money

17. marry (into) money

A. to give money to a company or business so that it will become successful and you will earn money from it in the future

B. to show by your actions that you really believe what you say (informal)

C. used to say that someone can spend as much money as they want to on something (informal)

D. to marry someone whose family is rich

E. to spend a lot of money on something (spoken)

F. to have a lot of money suddenly, or when you did not expect to (informal)

G. money that you earn very easily by doing a job that is not difficult (British English spoken)

H. used to say that you cannot afford something when someone asks you to pay for it (spoken)

I. used to say that people with money have power and can get what they want (spoken)

J. to have more money than you need, so that you spend it on unnecessary things

K. to be completely correct or right (American English spoken)

L. used when giving your opinion about something to emphasize that you believe it strongly (spoken)

M. used to say that you feel sure that something will happen (spoken)

N. used to say that you can earn a lot of money from doing a particular job or type of business (spoken)

O. to risk money on the result of a race or competition

P. to get something worth the price that you paid

Q. used to say that you feel sure someone will win a race or competition, or that something will happen (spoken)

1. Don't let the children jump around on the sofa. I paid good money for that.

2. No one's going to put money into the company while the market is so unstable.

3. There's a lot of money in sport these days.

4. Teaching can be very rewarding, but there's no money in it.

5. Unless you've got money to burn, these expensive guitars are probably not for you.

6. At that price, you want to make sure you get your money's worth.

7. For my money, he's one of the best TV comedians ever.

8. You were right on the money when you said that he would have to resign.

TEXT 5. THE ROLE OF BANKS IN THEORY

Banks are financial intermediaries, similar to credit unions, savings and loan associations, and other institutions selling financial services. The term financial intermediary simply means a busi­ness that interacts with two types of individuals or institutions in the economy: (1) deficit-spending individuals or institutions whose cur­rent expenditures for consumption and investment exceed their cur­rent receipts of income and who, therefore, need to raise funds exter­nally by negotiating loans with and issuing securities to other units; and (2) surplus-spending individuals or institutions, whose current receipts of income exceed their current expenditures on goods and services so they have surplus funds to save and invest. Banks per­form the indispensable task of intermediating between these two groups, offering convenient financial services to surplus-spending individuals and institutions in order to raise funds and then loaning those funds to deficit-spending individuals and institutions.

There is an ongoing debate in the theory of finance and econom­ics about why banks exist. What essential services do banks provide that other businesses and individuals couldn't provide for themselves?

This may at first appear to be an easy question, but it has proven to be extremely difficult to answer. Why? Because research evidence has accumulated over many years showing that our financial system and financial markets are extremely efficient. Funds and information flow readily to both lenders and borrowers, and the prices of loans and securities seem to be determined in highly competitive markets. In a perfectly effi­cient financial system, in which pertinent information is readily available to all at negligible cost, in which the cost of carrying out financial trans­actions is negligible, and all loans and securities are available in denom­inations anyone can afford, why are banks needed at all?

Most current theories explain the existence of banks by pointing to imperfections in our financial system. For example, all loans and securities are not perfectly divisible into small denominations that everyone can afford. To take one well-known example, U.S. Treasury bills — probably the most popular short-term marketable security in the world — have a minimum denomination of $10,000, which is clearly beyond the reach of most small savers. Banks provide a valuable serv­ice in dividing up such instruments into smaller securities, in the form of deposits, that are readily affordable for millions of people. In this instance a less-than-perfect financial system creates a role for banks in serving small savers and depositors.

Another contribution banks make is their willingness to accept risky loans from borrowers, while issuing low-risk securities to their depositors. In effect, banks engage in risky borrowing and lending activity across the financial markets by taking on risky financial claims from borrowers, while simultaneously issuing almost riskless claims to depositors.

Banks also satisfy the strong need of many customers for liquidi­ty. Financial instruments are liquid if they can be sold quickly in a ready market with little risk of loss to the seller. Many households and businesses, for example, demand large precautionary balances of liq­uid funds to cover expected future cash needs and to meet emergen­cies. Banks satisfy this need by offering high liquidity in the deposits they sell.

Still another reason banks have grown and prospered is their supe­rior ability to evaluate information. Pertinent data on financial invest­ments is both limited and costly. Some borrowers and lenders know more than others, and some individuals and institutions possess inside infor­mation that allows them to choose exceptionally profitable invest­ments while avoiding the poorest ones. Banks have the expertise and experience to evaluate financial instruments and choose those with the most desirable risk-return features.

Moreover, the ability of banks to gather and analyze financial infor­mation has given rise to another view of why banks exist in modern soci­ety—the delegated monitoring theory. Most borrowers and depositors prefer to keep their financial records confidential, shielded especially from competitors and neighbors. Banks are able to attract borrowing custom­ers, this theory suggests, because they pledge confidentiality. Even a bank's own depositors are not privileged to review the financial re­ports of its borrowing customers. Instead, the depositors hire a bank as delegated monitor to analyze the financial condition of prospective borrowers and to monitor those customers who do receive loans in order to ensure that the depositors will recover their funds. In return for bank monitoring services, depositors pay a fee that is probably less than the cost they would have incurred if they monitored the borrowers themselves.

By making a large volume of loans, banks as delegated monitors can diversify and reduce their risk exposure, resulting in increased deposit safety. Moreover, when a borrowing customer has received the bank's stamp of approval, it is easier and less costly for that customer to raise funds elsewhere. In addition, when a bank uses some of its owners' mon­ey as well as deposits to fund a loan, this signals the financial market­place that the borrower is trustworthy and has a reasonable chance to be successful and repay its loans.

EXERCISES

Exercise 1. In each paragraph, find the sentences supporting the main idea of the text. What paragraph contains the most important information?

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