Financial English Course Unit Three
Derivatives Үүсмэл үнэт цаасны хэрэгсэл(дериватив)
Exercise Derivatives term
Match these derivatives terms with definition below
over-the-counter market A forward transaction foreign currency option hedgers stock index premium speculators option derivative contract option premium exercise price bid/ask spread
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A 1………………….. is a contractual agreement to execute an exchange at some future date. A stock index futures derives its value from an underlying 2……………, a 3…………………..derives its value from an underlying exchange rate, and so on. 4………………, on the other hand, is an agreement to an exchange that will take place in the future (i.e., at some time “forward”). No money changes hands today.
The total number of short contracts can also be broken down into two groups—5………………who trade to lock in the price at which the asset can be sold (i.e., short hedgers) and 6……………..who trade to benefit from an anticipated price drop.
The amount that the option buyer pays the seller for the right is called the 7………………...
Like a forward, an 8……………is an agreement to exchange an underlying asset at a fixed price
(called the option’s exercise price or striking price) on some future date. The difference between the two prices is called the quoted 9………………..and represents the revenue the market maker earns for providing immediate exchange. The 10………………….or option price is the cost of the option, usually paid in advance by the buyer to the seller. In the 11……………………(option offered by banks), premiums are quoted as a percentage of the transaction amount. Another important feature of option trading is the standardized 12……………(strike price). This is the price the contract specifies for a buy or sells.
Answers
1. Derivative contract – үнэт цаасны үүсмэл хэрэгслийн гэрээ
2. Stock index – хувьцааны индекс
3. Foreign currency – гадаад валют
4. Forward transaction – форвард хэлцэл
5. Hedgers – хеджер, хедже хийж буй этгээд
6. Speculators – аз туршин дамлагч
7. exercise price – нэмэлт төлбөр, зардал
8. Option – опшин, сонголттой хэлцэл
9. bid/ask spread - нэрлэсэн/санал болгосон үнийн зөрүү
10. Option premium – опшиний худалдан авах үнэ
11. Over-the counter market – биржээс гадуурх зах зээл
12. Exercise price – опшиний худалдах үнэ
Listening
Derivatives Tape script 4 By Brealey Mayers and Marcus
Business is follows risks. Some managers feel like their leading companies high waver act. Well others act speed up exervation risks. Opportunity is to manage risks is reserved by in many businesses. Still financial managers are well bearing known telling risk lover for investment portfolio. Derivatives are investment tools for financial engineering that used to lower risks or to invest leverage game. A derivative is a financial asset that represents a claim to another financial asset. So derivatives assets derive value from that course funding underlying assets. There are sometime side by side underlying assets such as stock or commodity. Options, futures, forward and swaps are all derivatives. There are many uses for derivatives. Primary applications are hedging, investing, asset allocation and indexing. Strategy which involves matching major market in decades. Other application is international access for US markets, market timing, tax minimization and management of cash flows for portfolios. One major hub for derivative trading is Chicago Board of Options Exchanges or CBOE. It was founded in 1973. Today it is world largest options market within average daily trading value more than $20 million.
Translating
Hedging with interest rate futures
1. A corporate treasurer is awaiting a new debt issue that will occur in 60 days. The underwriters are still putting the final details together. The great fear is that interest rate will rise between now and then. The treasurer could hedge his or her position in the futures market by selling a Treasury bond or other similar security short. If interest rate go up, the price to buy back the interest rate futures will be lower, and a profit will be made on the short position. This will partially or fully offset the higher interest cost on the new debt issue.
2. A corporate treasurer is continually reissuing commercial paper at new interest rates or borrowing under a floating prime agreement at the bank. He or she fears that interest rate will go up and make a big dent in projected profits. By selling interest rate futures, the corporate treasurer can make enough profit on interest rate futures if interest rates go up to compensate for the higher costs of money.
3. A mortgage banker has made a forward commitment to provide a loan at a set interest rate one month in future. If interest rates go up, the resale value of the mortgage in the secondary market will go down. He can hedge the position by selling or going short on an interest rate futures contract.
4. Pension fund manager has been receiving a steady return of 6 percent on his short-term portfolio in 90-day Treasury bills. He is afraid interest rates will go down and he will have to adjust to receiving lower returns on the managed funds. His strategy might be to buy (go long on) a Treasury bill futures contract. If interest rates go down, he will make a profit on his futures contract that will partially or fully offset his decline in interest income for one period.
5. A commercial banker has most of her loans on a floating prime basis, meaning the rate she charges will change with the cost of funds. However, some of the loans have a fixed rate associated with them. If the cost of funds goes up, the fixed-rate loans will become unprofitable. Similarly, a banker may make a commitment to pay a set amount of interest on certificates of deposit for the next six months.
Vocabulary
Corporate treasurer – компанийн санхүүч
Underwriter – андеррайтер, андеррайтингийн компани
Hedge – хедж хийх, даатгал хийх, хамгаалалт хийх
Treasury bond - засгийн газрын бонд
Security short – үнэт цаас худалдах
Offset – тэнцвэржүүлэх
Commercial paper – арилжааны бичиг
Floating prime agreement – хөвөгч, хамгийн бага хүүтэй гэрээ
Compensate – нөхөн төлөх
Mortgage banker – орон сууцны банкны ажилтан, орон сууцны банк
Commitment –андеррайтингийн гэрээ
Pension fund – тэтгэвэрийн сан
Steady return – тогтмол өгөөж
Treasury bills – түргэн борлоглох үнэт цаас
Managed funds – тусгай сан
Fixed rate – тогтмол хүү
Certificates of deposit – хадгаламжийн сертификат
Grammar
1. A corporate treasurer is awaiting a new debt issue that will occur in 60 days.
(A corporate treasurer is awaiting a new debt issue)2 (that will occur in 60 days)1.
Нэгэн компанийн санхүүгийн ажилтанаас 60 хоногын дараагаар гаргах бондын тооцоо хийж байна.
2. The underwriters are still putting the final details together.
The underwriters are still putting the final details together.
Андеррайтингийн компаниас эцсийн байдлаар бэлэн болгоод байна.
3. The great fear is that interest rate will rise between now and then.
The great fear is that (interest rate will rise between now and then)1.
3-р өгүүлбэрт that - холбоос нь гэсэн хэмээн орчуулна.
4. The treasurer could hedge his or her position in the futures market by selling a Treasury bond or other similar security short.
(The treasurer could hedge his or her position in the futures market)2 (by selling a Treasury bond or other similar security short)1.
4-р өгүүлбэрийг санхүүгийн ажилтанаас гэж эхлээд худалдах замаар гэсэн эхний өгүүлбэрээс холбож орчуулна.
Уг санхүүгийн ажилтанаас засгийн газрын урт хугацаат бонд буюу бусад ижил төстэй худалдах үнэт цаасыг худалдан авах замаар фьючерсийн зах зээлд үнэт цаасанд хеджинг хийнэ.
5. If interest rate go up, the price to buy back the interest rate futures will be lower, and a profit will be made on the short position.
(If interest rate go up), (the price to buy back the interest rate futures will be lower), and a profit will be made on the short position.
the ….. lower – доогуур байх тусам
will be made on - олно
price to buy back - буцаж худалдах авах үнэ
Хэрвээ хүүгийн түвшин өсвөл буцаж худалдаж авах хүүгийн фьючерсийн үнэ доогуур байх тусам худалдах позицоос ашиг олно.
6. This will partially or fully offset the higher interest cost on the new debt issue.
This will partially or fully offset the higher interest cost on the new debt issue.
Энэ нь шинээр бонд гаргахад хүүгийн өндөр өртөгийг хэсэгчлэн болон бүрэн тэнцвэржүүлдэг.
7. A corporate treasurer is continually reissuing commercial paper at new interest rates or borrowing under a floating prime agreement at the bank.
A corporate treasurer is continually reissuing commercial paper at new interest rates or borrowing under a floating prime agreement at the bank.
under – аар4,
Компанийн санхүүчээс арилжааны бичгийг шинэ хүүгээр эсвэл тухайн банкнаас хөвөгч, бага хүүгийн гэрээгээр тогтоосон зээлээр дахин гаргаж байна.
8. He or she fears that interest rate will go up and make a big dent in projected profits.
(He or she fears) that( interest rate will go up) and (make a big dent in projected profits).
make a big dent – асар их бууруулах
projected profits - төсөвлөсөн ашиг
Хүүгийн түвшин нэмэгдвэл төсөвлөсөн ашгийг асар их бууруулна гэж тэрбээр болгоомжилно.
9. By selling interest rate futures, the corporate treasurer can make enough profit on interest rate futures if interest rates go up to compensate for the higher costs of money.
(By selling interest rate futures), (the corporate treasurer can make enough profit on interest rate futures) (if interest rates go up to compensate for the higher costs of money).
By selling - худалдах замаар
Өндөр өртөгөөр нөхөх байдлаар хүүгийн түвшин өсвөл хүүгийн түвшний фьючерсийг худалдах замаар хүүгийн фьючерсээс компанийн санхүүч хангалттай ашиг олно.
10. A mortgage banker has made a forward commitment to provide a loan at a set interest rate one month in future.
(A mortgage banker has made a forward commitment)2 (to provide a loan at a set interest rate one month in future)1.
Орон сууцны банкны зүгээс зээлийг ирээдүйд нэг сарын дараа тогтоосон хүүгээр олгох гэрээ хийнэ.
11. (If interest rates go up), (the resale value of the mortgage in the secondary market will go down).
Хэрвээ хүүгийн түвшин өсвөл хоёрдагч зах зээлд орон сууцыг дахин борлуулах үнэлгээ буурна.
12. (He can hedge the position)2 (by selling or going short on an interest rate futures contract)1.
Хүүгийн фьючерсийн гэрээг худалдах байдлаар позицдоо хеджинг хийнэ.
13. Pension fund manager has been receiving a steady return of 6 percent on his short-term portfolio in 90-day Treasury bills.
Pension fund manager has been receiving a steady return of 6 percent on his short-term portfolio in 90-day Treasury bills.
90 хоногын хугацаатай түргэн борлогдох үнэт цаасны богино хугацааны бондоос 6%-ын тогтмол өгөөжийг Тэтгэвэрийн сангын менежер хүртэнэ.
14. He is afraid interest rates will go down and he will have to adjust to receiving lower returns on the managed funds.
(He is afraid (interest rates will go down)2)2 and (he will have to adjust to receiving lower returns on the managed funds)3.
Хүүгийн түвшин буурвал тусгай сангаас орох өгөөж буурах эрсдэлийг зохицуулах шаардлагтай болон хэмээн тэрбээр болгоомжилно.
15. His strategy might be to buy (go long on) a Treasury bill futures contract.
Түргэн борлогдох үнэт цаасны фьючерсийн гэрээг худалдан авах нь түүний стратеги байх болно.
16. If interest rates go down, he will make a profit on his futures contract that will partially or fully offset his decline in interest income for one period.
(If interest rates go down)1, ((he will make a profit on his futures contract) (that will partially or fully offset his decline in interest income for one period)2)3.
Хүүгийн түвшин буурвал нэг хугацааны турш хүүгийн орлого буурахыг хэсэгчлэн болон бүрэн тэнцвэржүүлэх фьючерсийн гэрээнээсээ ашиг олох болно.
17. A commercial banker has most of her loans on a floating prime basis, meaning the rate she charges will change with the cost of funds.
(A commercial banker has most of her loans on a floating prime basis)1, (meaning (the rate she charges)2 will change with the cost of funds)3.
Арилжааны банкнаас хөвөгч, хамгийн бага хүүгээр зээлээ олгож байгаа нь санхүүжилтийн зардлаар тогтоож буй хүүгээ өөрчлөхийг харуулж байна.
18. However, some of the loans have a fixed rate associated with them.
Гэхдээ, зээлийнхээ зарим хэсгийг эдгээртэй уялдуулан тогтмол хүүгээр тогтоож өгч байна.
19. (If the cost of funds goes up)1, (the fixed-rate loans will become unprofitable)2.
Санхүүжилтийн зардал өссөн тохиолдолд, тогтмол хүүтэй зээл авах нь ашиггүй болно.
20. Similarly, a banker may make a commitment to pay a set amount of interest on certificates of deposit for the next six months.
(Similarly, a banker may make a commitment)2 (to pay a set amount of interest on certificates of deposit for the next six months)1.
Үүний нэгэн адил, банкнаас дараагын зургаан сарын хадгаламжийн сертификатанд тогтоосон хүүгийн хэмжээгээр төлөх гэрээ гаргана.
Problem Option
A. What will be the proceeds and net profits to an investor who sells the September-expiration Google call options with exercise price of $180 if the stock price at expiration is $150? What if the stock price at maturity is $230? Use the data in below table.
Examples of options on Google shares in March 2005, when Google stock was selling for $180.
Expiration date
|
Exercise price
|
Call price
|
Put price
|
September 2005
|
$160
|
$32.0
|
$9.60
|
180
|
19.60
|
17.90
| |
200
|
11.20
|
29.10
| |
January 2006
|
160
|
37.20
|
14.10
|
180
|
27.0
|
23.30
| |
200
|
18.00
|
33.60
| |
January 2007
|
160
|
51.10
|
21.50
|
180
|
41.20
|
30.30
| |
200
|
32.00
|
41.60
|
Solutions to problem
Call seller receives $19.60 for writing the call. If stock price at the expiration date is $150, the call expires valueless and the investor loses the entire $19.60. if the stock price is $230, the value of the call is $230-$180=$50, and the investor’s profit is $50-$19.60=$30.40
B. Now answer part for investor who sells an October-maturity Microsoft put option with exercise price $55.
Solutions to problem
The put costs $17.90. if the stock price at expiration is $150, put value is $180-$150 =$30, and the investor’s profit is $30-17.90=$12.10. if the stock price is $230, the value of the put is zero, and the investor’s loss is the price paid for put, $17.90.
Маркетинг, менежмент, нягтлан бодох бүртгэл, санхүү, статистик, экономиксийн англи нэр
томъёог орчуулах хэрэгцээ гарвал дараах толь бичгийг ашиглах боломжтой.
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