C) Explain the differences between macroeconomics and microeconomics

B) Sum up the text in 5-7 sentences and present your summary in class.

Ex. 11. a) Fill each gap with a suitable word from the box.

B) Describe the development of financial management.

Eх. 10. a) Put the verbs in brackets in the correct form.

Prior to the 1930s the field of financial management basically (to confine) to descriptive discussions of the various financial markets and the securities traded in those markets and fund raising.

With years this field of finance (to undergo) a number of significant changes and (to become) involved with legal matters of bankruptcy, reorganization, and government regulation.

During the 1950s, for example, financial management (to expand) to include uses of a firm's funds; application of discounted cash flow techniques was perfected; significant breakthroughs in developing techniques for measuring the cost of capital and valuing financial assets (to make); capital budgeting (to make) progress. Later, financial researchers (to focus) on the allocation of current assets, i.e. cash accounts receivable and inventories, and fixed assets.

During the 1960s mathematical models using statistical and optimization techniques (to apply) in financial management. The financial management field witnessed an exciting period of change and growth during the 1970s when there (to be) an increasing emphasis on applying computer technology to assist in financial decision making.

The 1980s (to witness) an explosion of new financial instruments, such as options and futures contracts, that can be used to manage risk. Techniques (to change) but the objective of financial management (to remain) – to maximize the shareholder's wealth.

So the financial manager's job is to arrange for the firm to get the funds needed on favourable terms and to make sure they are used effectively.

The job must be done not only in businesses, but also in not-for-profit firms and units of government.

In a world that is increasingly affected by international trade and cooperation, financial management (to acquire) very important new dimensions.

Words you may need:

discounted cash flow будущие поступления наличными, приведенные в оценке настоящего времени

optimization technique метод оптимизации

operation policy familiar businesses says demand notions lead affects whole operates success microeconomics

Contemporary financial managers should be familiar with two areas of economics – macroeconomics and...

Macroeconomics is concerned with the over-all institutional environment in which the firm________. It looks, in other words, at the economy as a________. Macroeconomics is concerned with the institutional structure of the banking system, money and capital markets, financial intermediaries, monetary, credit and fiscal ________ and economic policies dealing with and controlling the level of activity within an economy. Since business firms operate in the macroeconomic environment, it is important for financial managers to understand the broad economic________. Specifically, they should recognise and understand how monetary policy ________the cost and the availability of funds; be versed in fiscal policy and how it affects the economy; be aware of the various financial institutions and their modes of operations to evaluate the potential investment/financing outlets; and understand the consequences of various levels of economic activity and changes in economic policy for their decision environment and so on.

Microeconomics deals with the economic decisions of_______ and organisations. It concerns itself with the determination of optimal operating strategies. In other words, the theories of microeconomics provide for effective________of business firms. They are concerned with defining actions that will permit the firms to achieve_______.

The concepts and theories of microeconomics relevant to financial management are, for instance, those involving supply and_______ relationship and profit maximization strategies, issues related to the mix of productive factors, "optimal" sales level and product pricing strategies, risk and the determination of value and the rationale for depreciating assets. In addition, the primary principle that applies in financial management is marginal analysis which ________ that financial decisions should be made on the basis of comparison of marginal revenue and marginal cost. Such decisions will________to an increase in profits of the firm. Thus, financial managers must be ________with the basic microeconomics.

Words you may need:

to be versed (in) разбираться (в чём-л.)

outlets n pl (зд.) возможности

rationale n основная причина, логическое обоснование

marginal analysis анализ по предельным показателям

marginal revenue предельный доход

marginal costs предельные издержки

Дата добавления: 2014-11-29