Key to  the Exercises 

教学课件：习题解析

II Define briefly the following terms and concepts.

1. Money markets exist to transfer funds from individuals, corporations, and government units with short-term excess funds(supplies of funds) to economic agents who have short-term needs for funds( users of funds). Specifically, in money markets, short-term debt instruments (those with an original maturity of one year or less) are issued by economic units that require short-term funds and are purchased by economic units that have excess short-term funds.

2. A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year. Stock and bond markets are two major capital markets.

3. A forward contract is a particular simple derivative. Forward contracts are agreements by two parties to engage in a financial transaction at a future point in time. Forward contracts are personalized between parties (i.e., delivery time and amount are determined between seller and customer).

4. Future contract can be defined as a standardized future contract, traded in futures exchange, stipulating the parties to buy or sell a certain underlying item at a certain date and a set price in the future. The future date is called the delivery date or final settlement day. The price of underlying items on the delivery date is called the settlement price.

5. 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. The seller of the option is obligated to buy or sell the financial instrument to the purchaser if the owner of the option exercises the right to sell or buy.

6. The basic idea in a swap contract is that the counter parties agree to swap two different types of payments. Each payment is calculated by applying a specific interest rate, index, exchange rate, or the price of an underlying commodity or asset to a notional principal. The principal is considered notional because the swap generally does not require the transfer or exchange of principal(except for some foreign currency swap).

III Translate the following sentences into Chinese.

1. 在直接融资中，借方在金融市场上向贷方出售证券（也称作金融工具）直接向贷方借取资金，这些证券形成对借方未来收入或资产的要求权。

2. 金融工具是双方或多方签订的具有法律约束力的协议，协议中标明交易金额、到期时间和金融交易的价格。

3. 金融市场是资金盈余者向资金短缺者转移资金的市场。在金融市场上一方通过购买另一方之前持有的金融资产转移资金。

4. 投资者从股票投资中获取收益的方式有两种：股票随时间而上涨或是公司向股东发放红利，通常投资者同时以这两种方式获取收益。

5. 金融市场的“衍生”术语是指其价值是从其它基础性资产、工具或合约中演化而来的工    具或合约。最近发展最快的衍生产品包括金融远期、期货、期权和互换。

IV  Translate the following sentences into English.

1.Financial market is the market in which funds are transferred from people who have an excess of available funds to people who have a shortage.

2.Well-functioning financial markets also directly improve the well-being of consumers by allowing them to time their purchases better.

3.Secondary markets can be organized in two ways. One is to organize exchanges, the other method of organizing a secondary market is to have an over-the-counter market.

4.The money market is a financial market which only short-term debt instruments are traded; the capital market is the market in which longer-term debt and equity instruments are traded.

5.An important financial institution that assists in the initial sale of securities in the primary market is the investment bank, it does this by underwriting securities.