ENGLISH FOR ACCOUNTING

GROUP 1V

OLEH

NAMA ANGGOTA KELOMPOK :

JULIUSTA LAU

MARIA ANDRIANI WELE MARING

MARIA ANNESA CLODETA ENE

MARIA FELIKSIA OSE WERUIN

KELAS: 3A D3 AKUNTANSI

POLITEKNIK NEGERI KUPANG

2020/2021

CENTRAL BANKING
Group 1

READING: The Bank of England

1. The Bank of England hasil two ¹ core purposes. One is ensuring monetary stability, i.e.
having stable prices-low ² inflation and consequently confidence in the currency.
The goverment sets an inflation ³ policy and the Bank's Monetary Policy Committee tries
to meet itu by raising orang lowering the official interest rate when necessary.
UK Banks and building Societies have to hold reserves at the Bank. These are ⁴
remunerated at the Bank's official interest rate. If British banks need to borrow short-term
funds they do this in the 5 oversight money Markets.
The Bank can influence ghe amount of money and the interest rates in these markets- this
is how implements its monetary 6 target
The bank's other core purpose is to maintain the stability of the financial system.
The bank has to detect and reduce an (7)thearts to financial stability, and make sure the
overall system is safe and secure. It monitors and analyses the behaviour of the major
participants in the financial system and the wider financial and economic environment,
and tries to identify potential risks. A (8) sterling and stable financial system is important,
and is also necessary for carrying out monetary policy efficiently.
The bank's role also includes (9) sound of payment system for transactions between
individuals, businesses and financial institutions.
The bank sometimes acts as 'lender of last resort' to financial institutions in difficulty, to
prevent panic or a loss of confidence spreading through the whole financial system
2. Comple the text with the words (1-9) from the Vocabularu excercise opposite
3. True or false the statements
1) The Bank of England wants to prevent price rising. (True)
2) The government sets a figure for what it thinks should be the maximum inflation rate.
(True)
3) The government makes decisions about interest rates. (False)
4) Commercial banks have to keep some of their funds at the Bank of England. (False)
5) The Bank does not pay interest on commercial banks' deposits. (False)
6) The bank can try to change the sterling exchange rate. (True)
7) Banks has to eliminate threats to financial stability. (True)
8) The Bank supervises the clearing system: settlement of claims between Banks. (False)
9) The Bank always lends money to financial institutions in danger of going bankrupt.
(True)

4. The correct form of some of the word combinations to comolete the sentences
Identify
Exchange rates
Implement
Policies
Influence
 Risks
Maintain
Stability
Reduce
Threats

1) Just like the central bank, all companies have to try to Maintain potential financial
Stability
2) The Bank can spend the country's currency reserves in order to Influence Exchange
Rates
3) The Bank can try to Reduce Threats to the financial system, but it can't eliminate
them completely
4) The bank has to Maintain the Implement of the financial system, but that doesn't
mean it rescues irresponsible banks
5) The Bank Implement Policies that should enable it to meet the inflation target set by
the goverment

Group 2

Listening 1: Monetary policy

questions below. You are going to listen to Kate Barker, an economist and a member of the

Bank of England's Monetary Policy Committee, talking about monetary policy. Before you

listen, rg to answer the

1. Whatis the aim of monetary policy?

 This policy is taken by the central bank or bank Indonesian with the purpose of
maintaining and achieving the stability of the currency value that can be done, with
control of the amount of money circulating in the community and interest rate
determination.

2. What tools does a central bank use to control supply and demand for money?

 the tools used are indirect instruments which are an attempt to controlling monetary
quantities by influencing bank balance sheets central.one thing that is important in
indirect instruments is the bank central moneycan affect the position of base money
or bank reserve this in turn can affect credit and money supply

3. What tends to happen when interest rates rise?

 when the interest rate rises,economic activity tends to decline and the income
 of large companies will also continue to shrink continueously, ultimately
reducing the rate of economic growth

4. What tends to happen when interest rates fall ?

 lower interest rates will make borrowing costs cheaper. investors will tend to be
motivated to expand their business or new investment,while consumers will
increase their spending.

5. What do commercial banks do after the central bank changes the base rate at which it
lends them money

 when interest rates are cut, the opposite happens – people spend rather than save and
companies have more incentive to invest.and that, means that demand incresa.
and thst ir by trying to regulate demand, to keep demand in line with future supply,
so that the central bank is always ahead

Group 3

DISCUSSION:

Jawaban:

1.a

2.s

3.s

4.a

5.n

6.a

7.n

8.a

9.a

10.a

11.n

12.a
13.a

14.s

15.a

16.a

VOCABULARY:

Jawaban:

1.Policy C .an agreand plao.at what tode

2.Theeats G. pontentaint sources of danger

3.Oversinght E. in goot candetion

4.Thargt A. a level er situation which you attend te

5.Core (Adjestive) D. basic and most impertan

6.Siund ( Aradjedtive) H. Supervasion

7.Sterling I. The name of the brithis corresy

8.Infalation B. a general, continuous iacresa ia presse

9.Reventraced F. Faid

Group 4

ANSWER

A. You are going to kate barker, an economist and a member of the bank of england’s
monetary policy comitree, talking about monetary policy, before you listen, try to
answer the question below
1. This policy was teken by the central bank or bank indonesia with the aim of
maintaining and achieving currency stability, which could be done, among
others, by controlling the amount of money circulating in the public and
setting interest rates. Maintain a balance between the aconomy’s liquidity
needs and price level stability
 2. How to fix it in 3 ways
 Monetary policy
 Cash inventory determination policy
 Discount policy
 Open market operating policies
 Fiscal policy
 Save on government spending
 Increase in tax rates
 Other policies
 Increase production and increase the number of goods on the market
 Set maximum prices for certain types of goods

3. Central bank use to control supply and demand for money

 Increased interest rates will reduce purchasing power and weaken interest
stability
 Economic growt missed target
 The company will reduce production,
 The unemployment rate has the potensial to rise

4. Decrease in lending rates

 Drive bussines growth
 Reduco the number of unemployed
 Import export costs become cheaper
 Lower investment interest rates

5. Commercial bank
 Creating demand deposit
 Collet public savings funds
 Storage of valuables
 Support the smooth running of international fransactionboth goods/service
and capital transaction
 Service providers such as accepting deposits and providing bussines loans
and basic investment product

B. Check your anderstanding of the language kate barker uses by matching the words in
the box with their definition

1. Ancouragement or a reason to do something. Incentive

2. Factories, and the machines and equipment in them. Labour
3. Money invested in companies, to buy buidings, machinery, etc. Plant
4. The quantity of good and services offered for sale by companies. Demand
5. The rate at which the central bank lends money to comercial banks. Capital
6. To spend money on goods and services. Consume
7. What people consume and how much they invest. Supply
8. Work done by people employed by busunesses. Base rate
 Group 5

1. What is central banking?

2. What are the function of a central banking?
3. Is there central banking in Indonesia? Make a list of it.

ANSWER

1. A.central bank, reservebank, or monetary autorithy is institution that manges the currency
and monetary policy of a state or formal monetory union ,and oversest heir commerciall
bank. Acentral bank possessed o monoply on increase the monetary, base in a financial crisis.
Most central banks also have supervision and regulatory powers to ensuare the stability of
member institutions, to prevent bank tuns, and to discoverage reckless of or fraudulent
behaviour by member banks.
2. Central banks are responsilve for overseeing the monetory system for a nation [or group of
naticos], along with a with a wice range of other responsibilityes, from overseeing monetory
policy to implementing speciti goals such as currency stability, low instlation and toll
employment.
3. Yes, this is a list of major banks in Indonesia.
There are 120 commercial banks in Indonesia
[4 state owend banks and 117 private banks].
Two of the state wned banks have Islamic banking units.
Of the 26 government regions banks, is have Islamic banking
Units, while of 86 private national, banks, 7 have Islamic

Banking unit, and there are tive Islamic commercial, banks.

4. The method central banks use to central the quantity of money depending on the
economic situation and central bank
Group 6

Reading: The Bank of England

10) A student has made notes during a lecture about the role of the Bank of England. Read
them quickly and decide which of the function listed in the Discussion activity opposite
are include in the Bank of England's work,and which are not mentioned.
Answer:
The text mentions the following functions from the discussion activity:
2, 4 (though it says official interest rate rather than minimum), 9, 10, 12, 13 and 16
(though it says monitoring rather than supervising).
11) Complete the text with the words (1-9) from the vocabulary exercises opposite.
Answer:
The Bank of England has two (1) core purpose. One is ensuring monetary stability, i.e
having stable prices - low (2) inflation - and consequently confidence in the currency.
The goverment sets an inflitation (3) target, and the Bank's Monetary Policy Committe
tries to meet it by raising or lowering the official interest rate when necessary.
UK banks and building societies have to hold reserves at teh Bank. These are (4)
remunerated at the Bank's official interest rate. If British banks need to borrow short-term
funds they do this in the (5) sterling money markets.
The Bank can influence the amount of money and the interest rates in these markets - this
is how it implements its monetary (6) policy.
The Bank also deals in the foreign exchange market. It can use the UK's foreign currency
and gold reserves to try to influence the exchange rate if needed.
The Bank's other core purpose is to maintain the stability of the financial system. The
Bank has to detect and reduce any (7) threats to financial stability, and make sure the
overall system is safe and secure. It monitors,and analyses the behaviour of the major
participants in the financial system and the wider financial and economic enviroment, and
tries to identify potential risks. A (8) sound and stable financial system is important, and
is also necessary for carrying out monetary policy efficiently.
The Bank's role also includes (9) oversight of payment system for transaction between
individuals, businesses and financial institutions.
The Bank sometimes acts as 'lender of last resort' to financial institutions in difficulty, to
prevent panic or a loss of confidence spreading through the whole financial system.
12) According to the text, are the following statements true or false?
6) The Bank of England wants to to prevent prices rising.
7) The goverments sets a figure for what it thinks should be the maximum inflation rate.
8) The goverment makes decisions about interest rates.
9) Commercial banks have to keep some of their funds at the Bank of England.
10) The Bank does not pay interest on commercial bank's deposits.
11) The Bank can try to change the sterling exchange rate.
12) The Bank has to eliminate threats to financial stability.
13) The Bank supervises the clearing system: the settlement of claims between banks.
14) The Bank always lends money to financial institutions in danger of going bankrupt.
Answer:
 1. True: 'The Bank of England has two core purposes. One is ensuring monetary
stability, i.e. having stable prices - low inflation'.
2. True: 'The Government sets an inflation target'.
3. False: 'the Banks Monetary Policy Commite tries to meet it by raising or
lowering the official interest rate...' - the rate ia not decided by the Government.
4. True: " UK banks and building societies have to hold reservet as the bank.'
5. False: 'These are remunerated are at the Bank's official interest rate.'
6. True: 'The Bank... can use the UK's foreign currency and gold reserves to try
influence the exchange rate if needed.
7. False: 'The Bank has to detect and reduce any threats to financial stability' - it
cannot eliminate them.
8. True: 'The Bank's role also includes oversight of payment systems...'
9. False: 'The Bank sometimes acts as 'lender of last resort' to financial institutions
in difficulty' - not always.
4. Use a word or phrase from each box to make word combinations from the text. You
can use some words than once. The use correct form of some of the word combinations to
complete the setences below.
identify exchange rates
implement policies
influence risks
maintain stability
reduce threats
Answer:
1. Just like the central bank, all companies have to try to identify potential financial
risks.
2. The Bank can spend the country's currency reserves in order to implement policies.
3. The Bank can try to influence exchange rates to the financial system, but it can't
eliminate them completely.
4. The Bank has to maintain the stability of the financial system, but that doesn't mean it
rescues irresponsible banks.
5. The Bank reduce threats that should enable it to meet the inflation target set by
goverment.
Group 7

Listening 1: Monetary policy

5. You are going to listen to Kate Barker, an economist and a member of the Bank ofEngland's
Monetary Policy Committee, talking about monetary policy. Before you listentry to answer
the questions below.
1. What is the aim of monetary policy
2. What tools does a central bank use to control supply and demand for Money
3. What tends to happen when interest rates rise?
4. What tends to happen when interest rates fall?
5. what do commercial banks do after the central bank changes the base rate at which it
lends them Money?
ANSWER :

1. which is the objective of monetary policy, namely:

1) Economic growth and income distribution.

2) Employment Opportunity.
3) Price of stability.
4) Balance of payments balance.

6. -The first tool, open market operations, is the central bank's way of controlling the money
in circulation. If you want to increase the money supply, the central bank buys its securities.
Conversely, if you want to reduce, the central bank will sell government securities to the
public. If there is too much money in circulation, it will cause the prices of goods and
services to increase so that inflation is high. Meanwhile, when there is too little money
supply, the economy becomes sluggish. Therefore, the central bank needs to carefully
monitor the amount of money in circulation to match the needs of the economy at that time.
In the context of the US economy, the Federal Reserve is trying to improve the economic
situation after the crisis by increasing the money supply. The Fed buys debt securities so that
the balance sheet is getting fatter. The purchase of long-term debt securities also depresses
interest rates so that they remain low. The low interest rate is expected to provide an
economic stimulus. Entrepreneurs are willing to borrow money from banks to expand their
business because of affordable interest rates.

-The second tool is to increase or decrease the reserve requirements. The minimum
obligatory current account is a savings fund that must be maintained by commercial banks in
the form of a checking account balance placed at the central bank. GWM is used as a tool to
tighten or loosen liquidity. If the central bank wants to tighten liquidity, the reserve
requirement is raised. So that more commercial banks save in the central bank. Conversely, if
you want to loosen liquidity, the central bank will reduce the reserve requirement. Starting
January 19, 2017, the US central bank has set GWM at 0-13% for various categories of
funds.
 -The third tool, namely discount rate facilities, is the interest rate charged to commercial
banks for loans received from the central bank. When the US financial crisis occurred in
2008, the central bank kept interest rates low in order to drive the economy. The rise and fall
of the main interest rate will also affect the commercial bank interest rates charged to
debtors. The movement of interest in the US central bank has always been closely watched
by analysts, economists and investors because it will affect the prices of various assets in
other countries.

7. When the interest rate rises, economic activity tends to decline, and the income of large
companies will also shrink. If it continues continuously, it will ultimately reduce the rate of
economic growth.

8. The opposite can happen. Lower interest rates will lower borrowing costs. Investors will tend
to be motivated to expand their business or new investment, while consumers will increase
their spending. Thus, the economic output is expected to increase and the number of workers
needed will also increase. In addition, investment in the stock market will also increase.

9. Commercial banks then have more money to lend, so they lower interest rates on loans,
making loans cheaper. Lower credit card interest rates increase consumer spending. In
addition, when business loans are more affordable, companies can expand to meet consumer
demand. They end up hiring more workers, whose income increases, which in turn also
increases demand.

2. Now listen to Kate Barker, and compare your answers with what she says. 9.1
3. Check your understanding of the language Kate Barker uses by matching the words in the
box
with their definitions (1-8).

base rate consume incentive plant

capital demand labour supply

ANSWER :

10. encouragement or a reason to do something ( incentive)

11. factories, and the machines and equipment in them (Plant )
12. money invested in companies, to buy buildings, machinery. etc.( capital)
13. the quantity of goods and services offered for sale by companies (demand)
14. the rate at which the central bank lends money to commercial banks (Base rate)
15. to spend money on goods and services ( consume)
16. what people consume and how much they invest ( supply)
17. work done by people employed by businesses (labour)
Group 8

Discussion :

1. Act as banker to the government and the commercial banks

answer : A=Always
2. Attempt to influence the exchange rate
answer :S=Sometimes
3. Clear cheques between commercial banks
answer :S=Sometimes
4. Decide all of a country’s minimum interest rate
answer :A=Always
5. Decide all of a country’s interest rates
answer :N=Never
6. Issue banknotes
answer :S=Sometimes
7. Issue securities for companies
answer :N=Never
8. Issue securities for the government
answer :A=Always
9. Keep minimum deposits of commercial bank’s reserves
answer :A=Always
10. Lend money to banks in
difficulty answer :S=Sometimes
11. Lend money to small businesses
answer :N=Never
12. Maintain financial stability
answer :A=Always
13. Manage reserves of gold and foreign currencies
answer : A=Always
14. Manage the assets of wealthy individuals
answer :N=Never
15. Publish monetary and banking statistics
answer : A=Always
16.ASupervise the banking system
answer :A=Always

V0CABULARY :

1. Policy
answer : c. An agreed plan of what to do
2. Threats
answer : g. Potential sources of danger
3. Oversight
answer : h. Supervision
4. Target
answer : a. A level or situation which you intend to achieve
5. Core (adjective)
answer : d. basic and most important
6. Sound
answer : e. in good condition
7. Sterling
answer : i. the name of the british currency
8. Inflation
answer : b. a general,continouns increase
9. Remunerated
answer : f. Paid
 DERIVATIVES

Group 1

Buffett Warns on Investment ‘ Time Bomb’

The rapidly growing trade in derivatives poses a ‘ mega-catastrophic risk’ for the economy,
legendary investor Warren Buffett has warned. The derivatives market has exploded in recent
years,with (1) investment banks selling billions of dollars worth of these investments to (2)clients
as a way to off-load or manage market (3)risk but Mr.Buffett, the world’s second=richest man,
argues that such highly complex financial (4)instruments are time bombs and ‘financial weapons of
mass destruction’ that could harm not only their buyers and sellers, but the whole economic system.

Contracts Devised By ‘Madman’

Derivatives are financial instruments that allow investor to derivatives (5) speculate on the
future price of, for example (6)commodities or shares-without buying the (7) underlying
investment. Derivatives like futures, options and swaps were developed to allow investors to (8)
hedge risks in financial markets-in effect buy insurance against market movements-but have
quickly become a means of investment in their own right. Outstanding derivatives (9) contracts –
excluding those traded on exchanges such as the International Petroleum Exchange-are worth close
to $85 trillion, according the international swaps and derivatives contracts, Mr.Buffet says, appear
to have been devised by ‘Madmen’ in his ‘annual letter to shareholders’ Mr.Buffett compares the
derivatives business to hell… easy to enter and almost impossible to exit.

Group 2

LISTENING : YOU SHUOLD SEND THE TRANSLATION ALSO

10. peter Sinclair,who we have already heard in other unit,was formerly director of the
centre of central banking studies at the bank of englan.steve Harrison works in the
compliance department of a large bank in London – you woill hear himtalking about
regulation in unit 23.listen first to peter Sinclair and then to steve Harrison talking about
derivaties.
“who sugestets that financial institutions need to take risks – Sinclair or horrison? “
 peter Sinclair, yang telah kita dengar di unit lain, sebelumnya adalah direktur pusat studi
bank sentral di bank englan. steve Harrison bekerja di departemen kepatuhan sebuah
bank besar di London - Anda akan mendengarnya berbicara tentang regulasi di unit 23.
Dengarkan pertama peter Sinclair dan kemudian steve Harrison berbicara tentang
turunan

11. Now listen again and answer the questions below.

 what do Sinclair and Harrison say about how long derivatives have existed?
(In the financial world, it is a bilateral kobtrak or payment exchange agreement whose
value is reduced or derived from the product being the main reference)
 what does Sinclair mean whenhe says derivatives change the structure of risks and
returns?
(Derivatives are used by the management of companies and financial institutions as well
as individual investors to manage the position they have against the risk from
movements in stock prices and commodity interest rates.)
 in what situation does Sinclair say a company would wants to get US dollar asset ahead
of time?
(Because the value of the rupiah is getting weaker (decreasing) while the US dollar is
getting stronger)
 what,according to Sinclair,is the danger whit derivatives
(The complexities inherent in derivative instruments can be exacerbated by the element
of manipulation, and can bankrupt the company.)
 Harrison says derivatives can be used to protect positions, but “they” can also give you
exposure to areas that the bank decides that it wants to haveexposure to “what does this
mean”.
(Financial institutions need to take risks.)

 what does Harrison mean when he says financial institutions are in the risk and reward
business ? do you agree?

a global company engaged in payment technology, giving awards to institutions that have carried
out various information and promoting best risk management
Group 3

1. DERIVATIVE

Translate

Derivative adalah istilah kolektif untuk produk pasar keuangan yang nilainya bergantung pada
(yaitu berasal dari) harga asset lain yang mendasari seperti saham,indeks saham (nilai rata-rata
saham reresenstif dipasar tertentu),mata uang, komoditas, dll. Derivatif utamanya adalah berjangka,
opsi, dan swap. Mereka dikembangkan untuk memungkinkan perusahaan mengurangi
ketidakpastian dengan menjamin harga di masa depan, dengan biaya yang wajar. Ini
memungkinkan perusahaan untuk merencanakan dengan lebih efektif. Kontrak berjangka adalah
perjanjian untuk membuat atau menerima pengiriman komoditas tertentu (bahan makanan, logam,
dll.) Atau instrumen keuangan pada tanggal tetap di masa depan, dengan harga yang ditentukan saat
kontrak dibuat. Kontrak berjangka memungkinkan penjual dan pembeli untuk melakukan lindung
nilai atau mengurangi risiko. Misalnya, petani kakao dapat menyetujui harga, kuantitas, dan
tanggal pengiriman dengan produsen cokelat. Penjual menghilangkan risiko harga akan turun, dan
pembeli risiko akan naik. Logika yang sama mengarah pada perkembangan masa depan keuangan:
kontrak untuk membeli dan menjual saham, indeks saham, suku bunga, dan mata uang di masa
mendatang. Opsi berbeda dari futures karena memberikan hak, tetapi bukan kewajiban, untuk
membeli atau menjual aset dengan harga tetap pada atau sebelum tanggal tertentu, Membeli opsi
beli memberi Anda hak untuk membeli asser, membeli opsi jual memberi Anda hak untuk menjual
aset. Misalnya, jika Anda mengharapkan harga Mock naik, Anda dapat membeli hak untuk
membeli saham itu di masa depan dengan harga pasar saat ini. Jika menurut Anda harga suatu
saham akan jatuh dalam beberapa minggu atau bulan ke depan, Anda dapat membeli hak untuk
menjualnya di masa mendatang dengan harga saat ini. Jika Anda salah, Anda tidak perlu
menggunakan opsi untuk membeli atau menjual saham, tetapi Anda kehilangan harga opsi. Ini
adalah premi yang diterima penulis atau penjual opsi dari pembeli. Jelasnya, ekspektasi penulis
dari suatu opsi tentang nilai masa depan dari aset berlawanan dengan harapan pembeli, dan penulis
tidak mengharapkan opsi tersebut dilaksanakan. Kontrak berjangka dan opsi diperdagangkan oleh
spekulan yang berharap mendapat untung dari fluktuasi harga, serta oleh perusahaan yang ingin
melakukan lindung nilai. Faktanya, saat ini jauh lebih banyak penggunaan derivatif yang
didasarkan pada spekulasi daripada lindung nilai. Peminjam dan pemberi pinjaman Chicago
Exchonge juga dapat menukar atau menukar pembayaran bunga di masa depan. Perusahaan yang
meminjam uang dengan tingkat bunga mengambang dapat melindungi dirinya dari kenaikan suku
bunga dengan menukarnya dengan pinjaman suku bunga tetap dengan perusahaan atau lembaga
keuangan lain. Ini adalah swap suku bunga. Perusahaan juga dapat melakukan pertukaran nilai
tukar, menukar dana dalam dua mata uang yang berbeda. Di masa mendatang, jumlah mata uang
yang sama akan dipertukarkan kembali dengan nilai tukar yang telah ditentukan. Selama jangka
waktu perjanjian, pihak lawan menukarkan pembayaran dengan suku bunga tetap atau
mengambang dalam mata uang yang ditukar.
Answer

a) Find words and praheses in the text to complete the sentences

1. Put option
2. Commodities
3. Futures
4. Call option
5. Hedge
6. Interest rate swap
7. Put
8. Speculator
9. Premium
b) Use a word phrase from each box to make word combinations from the text. You can use
some words more the once. Then use some of the word combinations to complete the
sentences below
1. Swap exercise interest playments
2. Eliminate guarantee
3. Reduce risks
4. Uncertainty options
5. Determine prices

Group 4

Answer
Reading 2
Read the article on derivatives and complete it using the words from the box

 Client
 Investment
 Contracts
 Risk
 Commodities
 Speculate
 Hedge
  Underlyng
 Instruments

Buffet warns on investment time bomb

The rapidlly growing trade in derivatives proces a mega-catasrhopich risk for the economy
legendary investor warren buffet has wared. The derivatives market has exploled in recent year
with, (1) speculate banks selling biliions of dollars worth of these investment to (2) client as a way
to oll-load or manage market (3) commodities but Mr buffet, the worlds second richest man argues
that such highly complex financial (4) underlyng are time bombs and financial weaporns off mass
descruction that could harm not only their buyers and sellers but the whole economic system

Contracts devised by madmen

Derivatives are financial instument that allow investor to (5) investment on the future price of for
example (6) contracts or shares- without buying the (7) instruments investment derivatives like
future options and swaps were developed to allow investors to (8) hedge risk in financial markets
in- effect buy insurance against market movements – but have quicly become a mrans of invstment
in their own right. Outsranding derivatives (9) risk excluding those traded on exchanges such as
the international petroleum exchange – are worth close to $85 trillion, according the international
swaps and derivatives asociation some derivatives contracts, Mr buffet says, apprear to have been
desived by madmen in his annual letter to shareholders Mr buffet compares the derivatives
bussines to hell ...easy to enter and almost imposible to exit.

Group 5
Listening 2: Investment styles

1.Listen to Paula Foley talking abaut Investment styles?

How many styles does she mention?

2.Now listen again and completethe notes below.

 Growth Investment means looking for Investment for profit.

 Value Investment is investing in paradigm values
 Large companies often into the spotght of many parties
 Aktive management means you have less number of warkers
 Passive Investment means you resulting in more effective uterine contractions
 Index-linked portofolios need meet future capital needs and provide peace of mind
3.Use word from each box to make common word cambinatoins.

One word can be used twice.

  Aseet
 Capital
 Conserfative
 Growth
 Investment
 Stable
 Accormulation
 Earlings
 Industries
 Management
 Values
Answer:

 One of the meansures related to asset is the sales ratio asset frame expressed as percentage
 - The benefit of capital is the felt to buy production meterials
 -Capital is used as sabings in business
 Un Investment for each community win provide development in getting benefits
 The importance of investing will take into account the money to save and what to inversf
 - A stable finansial system is able to allocate sources of fonds
-Smal and large companies are not comparable
 Retained earlings sholos that the company has a vision and goals to develop its business
activities
 -Unearhed income will apear on the balance sheet as an asset to the buyer and a debt to the
selles
-income is the amoot of money earned within a certain period
 The are two types of companies,nomely companies based on business field and owhersip
 Management system inciudes planing,organizing,staffing,leading and controling
 Values bring jugment about what is good ang right.
Group 6
DERIVATIVE

Translate

Derivative adalah istilah kolektif untuk produk pasar keuangan yang nilainya
bergantung pada (yaitu berasal dari) harga asset lain yang mendasari seperti saham,indeks
saham (nilai rata-rata saham reresenstif dipasar tertentu),mata uang, komoditas, dll.
Derivatif utamanya adalah berjangka, opsi, dan swap. Mereka dikembangkan untuk
memungkinkan perusahaan mengurangi ketidakpastian dengan menjamin harga di masa
depan, dengan biaya yang wajar. Ini memungkinkan perusahaan untuk merencanakan
dengan lebih efektif. Kontrak berjangka adalah perjanjian untuk membuat atau menerima
pengiriman komoditas tertentu (bahan makanan, logam, dll.) Atau instrumen keuangan pada
tanggal tetap di masa depan, dengan harga yang ditentukan saat kontrak dibuat. Kontrak
berjangka memungkinkan penjual dan pembeli untuk melakukan lindung nilai atau
mengurangi risiko. Misalnya, petani kakao dapat menyetujui harga, kuantitas, dan tanggal
pengiriman dengan produsen cokelat. Penjual menghilangkan risiko harga akan turun, dan
pembeli risiko akan naik. Logika yang sama mengarah pada perkembangan masa depan
keuangan: kontrak untuk membeli dan menjual saham, indeks saham, suku bunga, dan mata
uang di masa mendatang. Opsi berbeda dari futures karena memberikan hak, tetapi bukan
kewajiban, untuk membeli atau menjual aset dengan harga tetap pada atau sebelum tanggal
tertentu, Membeli opsi beli memberi Anda hak untuk membeli asser, membeli opsi jual
memberi Anda hak untuk menjual aset. Misalnya, jika Anda mengharapkan harga Mock
naik, Anda dapat membeli hak untuk membeli saham itu di masa depan dengan harga pasar
saat ini. Jika menurut Anda harga suatu saham akan jatuh dalam beberapa minggu atau
bulan ke depan, Anda dapat membeli hak untuk menjualnya di masa mendatang dengan
harga saat ini. Jika Anda salah, Anda tidak perlu menggunakan opsi untuk membeli atau
menjual saham, tetapi Anda kehilangan harga opsi. Ini adalah premi yang diterima penulis
atau penjual opsi dari pembeli. Jelasnya, ekspektasi penulis dari suatu opsi tentang nilai
masa depan dari aset berlawanan dengan harapan pembeli, dan penulis tidak mengharapkan
opsi tersebut dilaksanakan. Kontrak berjangka dan opsi diperdagangkan oleh spekulan yang
berharap mendapat untung dari fluktuasi harga, serta oleh perusahaan yang ingin melakukan
lindung nilai. Faktanya, saat ini jauh lebih banyak penggunaan derivatif yang didasarkan
pada spekulasi daripada lindung nilai. Peminjam dan pemberi pinjaman Chicago Exchonge
juga dapat menukar atau menukar pembayaran bunga di masa depan. Perusahaan yang
meminjam uang dengan tingkat bunga mengambang dapat melindungi dirinya dari kenaikan
suku bunga dengan menukarnya dengan pinjaman suku bunga tetap dengan perusahaan atau
lembaga keuangan lain. Ini adalah swap suku bunga. Perusahaan juga dapat melakukan
pertukaran nilai tukar, menukar dana dalam dua mata uang yang berbeda. Di masa
mendatang, jumlah mata uang yang sama akan dipertukarkan kembali dengan nilai tukar
 yang telah ditentukan. Selama jangka waktu perjanjian, pihak lawan menukarkan
pembayaran dengan suku bunga tetap atau mengambang dalam mata uang yang ditukar.

Answer

a) Find words and praheses in the text to complete the sentences

1. Put option
2. Commodities
3. Futures
4. Call option
5. Hedge
6. Interest rate swap
7. Put
8. Speculator
9. Premium
b) Use a word phrase from each box to make word combinations from the text. You can use
some words more the once. Then use some of the word combinations to complete the
sentences below
1. Swap exercise interest payments
2. Eliminate guarantee
3. Reduce risks
4. Uncertainty options
5. Determine prices

Group 7

Reading 2: An investment 'time bomb'

Read the article on derivatif and complete it using the words from the box.

Clients contracts commodities hedge instruments Instruments risk

speculate underlying

ANSWER :
Buffett warns on investment 'time bomb'

The rapidly growing trade in derivatives poses a'mega-catastrophic risk for the economy, legendary
investor

Warren Bufett has warned. The derivatives market has exploded in recent years, with (1) risk banks
selling billions of dollars worth of these investments to (2) clientsas a way to off load or manage
market (3) commoditiesBut Mr Buffett, the world's second-richest man, argues that such highly
complex financial (4) underlyingare time bombs and 'Tinancial weapons of mass destruction that
could harm not only their buyers and sellers, but the whole economic system.

Contracts devised by 'madmen'

Derivatives are financial instruments that allow investors to (5) investmenton the future price of,
for example,(6) instrumentsor shares-without buying the (7) contractsinvestment. Derivatives like
futures, options and swaps were developed to allow investors to

speculaterisks in financial markets -in effect buy insurance against market movements - but have
quickly become à means of Investment in their own right. Outstandingderivatives

hedgeexcluding those traded on exchanges Such as the international PetroleumExchange

- are worth close to $85 trillion, according to the International Swaps and Derivatives

Association. Some derivatives contracts, Mr Buffett says, appear to have been devised by madmen.
in his Annual leter to shareholders' Mr Buffett compares the derivatives business to hell. easy to
enter and almost impossible to exit.

Terjemahannya :

Klien

kontrak

komoditas

pagar

instrumen
Investasi

risiko

berspekulasi

yang mendasari

Buffett memperingatkan tentang 'bom waktu' investasi

Perdagangan derivatif yang tumbuh pesat menimbulkan risiko bencana besar bagi perekonomian,
investor legendaris

Warren Bufett telah memperingatkan. Pasar derivatif telah meledak dalam beberapa tahun terakhir,
dengan bank berisiko menjual investasi ini senilai miliaran dolar kepada klien sebagai cara untuk
melepaskan atau mengelola pasar komoditas Tapi Tuan Buffett, orang terkaya kedua di dunia
Manusia, berpendapat bahwa keuangan yang sangat kompleks yang mendasari adalah bom waktu
dan 'senjata pemusnah massal keuangan yang dapat merugikan tidak hanya pembeli dan penjual
mereka, tetapi seluruh sistem ekonomi.

Kontrak dibuat oleh 'orang gila'

Derivatif adalah instrumen keuangan yang memungkinkan investor untuk investasi pada harga
masa depan, misalnya, instrumen atau saham-tanpa membeli kontrak investasi.

Derivatif seperti futures, option dan swap dikembangkan untuk memungkinkan investor untuk
berspekulasi risiko di pasar keuangan - akibatnya membeli asuransi terhadap pergerakan pasar -
tetapi dengan cepat menjadi sarana Investasi dengan hak mereka sendiri. Derivatif yang beredar
lindung nilai tidak termasuk yang diperdagangkan di bursa seperti Pertukaran Minyak Internasional
- bernilai mendekati $ 85 triliun, menurut Asosiasi Swap dan Derivatif Internasional. Beberapa
kontrak derivatif, kata Buffett, tampaknya dibuat oleh orang gila. dalam Surat Tahunannya kepada
pemegang saham, Tuan Buffett membandingkan bisnis derivatif dengan neraka. mudah untuk
masuk dan hampir tidak mungkin untuk keluar.
Group 8

Reading 2: An investment 'time bomb'

Read the article on derivatif and complete it using the words from the box.

Clients contracts commodities hedge instruments Instruments risk

speculate underlying

ANSWER :

Buffett warns on investment 'time bomb'

The rapidly growing trade in derivatives poses a'mega-catastrophic risk for the economy, legendary
investor

Warren Bufett has warned. The derivatives market has exploded in recent years, with (1) risk banks
selling billions of dollars worth of these investments to (2) clientsas a way to off load or manage
market (3) commoditiesBut Mr Buffett, the world's second-richest man, argues that such highly
complex financial (4) underlyingare time bombs and 'Tinancial weapons of mass destruction that
could harm not only their buyers and sellers, but the whole economic system.

Contracts devised by 'madmen'

Derivatives are financial instruments that allow investors to (5) investmenton the future price of,
for example,(6) instrumentsor shares-without buying the (7) contractsinvestment. Derivatives like
futures, options and swaps were developed to allow investors to

speculaterisks in financial markets -in effect buy insurance against market movements - but have
quickly become à means of Investment in their own right. Outstandingderivatives

hedgeexcluding those traded on exchanges Such as the international PetroleumExchange

- are worth close to $85 trillion, according to the International Swaps and Derivatives

Association. Some derivatives contracts, Mr Buffett says, appear to have been devised by madmen.
in his Annual leter to shareholders' Mr Buffett compares the derivatives business to hell. easy to
enter and almost impossible to exit.
Terjemahannya :

Klien

kontrak

komoditas

pagar

instrumen

Investasi

risiko

berspekulasi

yang mendasari

Buffett memperingatkan tentang 'bom waktu' investasi

Perdagangan derivatif yang tumbuh pesat menimbulkan risiko bencana besar bagi perekonomian,
investor legendaris

Warren Bufett telah memperingatkan. Pasar derivatif telah meledak dalam beberapa tahun terakhir,
dengan bank berisiko menjual investasi ini senilai miliaran dolar kepada klien sebagai cara untuk
melepaskan atau mengelola pasar komoditas Tapi Tuan Buffett, orang terkaya kedua di dunia
Manusia, berpendapat bahwa keuangan yang sangat kompleks yang mendasari adalah bom waktu
dan 'senjata pemusnah massal keuangan yang dapat merugikan tidak hanya pembeli dan penjual
mereka, tetapi seluruh sistem ekonomi.

Kontrak dibuat oleh 'orang gila'

Derivatif adalah instrumen keuangan yang memungkinkan investor untuk investasi pada harga
masa depan, misalnya, instrumen atau saham-tanpa membeli kontrak investasi.

Derivatif seperti futures, option dan swap dikembangkan untuk memungkinkan investor untuk
berspekulasi risiko di pasar keuangan - akibatnya membeli asuransi terhadap pergerakan pasar -
tetapi dengan cepat menjadi sarana Investasi dengan hak mereka sendiri. Derivatif yang beredar
lindung nilai tidak termasuk yang diperdagangkan di bursa seperti Pertukaran Minyak Internasional
- bernilai mendekati $ 85 triliun, menurut Asosiasi Swap dan Derivatif Internasional. Beberapa
kontrak derivatif, kata Buffett, tampaknya dibuat oleh orang gila. dalam Surat Tahunannya kepada
pemegang saham, Tuan Buffett membandingkan bisnis derivatif dengan neraka. mudah untuk
masuk dan hampir tidak mungkin untuk keluar.
 ASSET AND MANAGEMENT

Group 1

A. How many styles does she mention?

Answer: There are 4 styles
B. Answer:
 For growth- for caoital accumulation and looks for growth
 Conservative industries with high asset values and stable of low growing earnings
 Large companies are supposed to be stable and more relieable, small companies
very often give faster rate of growth, but are more difficult to track and manage
 Active management, you buy and and sell quite frequently, to adapt your portfolio to
your objectives, and to changing market circumstances.
 Passive investment, you buy and hold, which used to be fot many years, sitting on
your positions, until thngs fundamentally changed or bonds came to maturity.
 Index-linked portfolio, try to follow stock market or bond market indices, and
replicate their movements.
 Even fund portfolio need are composed of funds also need to be managed.

C. Answer:
 Asset= PT. Indodarma has company assets of 2 billion rupiah.
 Capital= Not that it’s become less capital intersive that there’s less money that’s
required but that the ownership of this capital, the way the capitalization happens is
radically distributed.
 Conservatives= And if you look at governments around the world, ministries of
education tend to be most.
 Growth= Most of the economic models are built around scarcity and growth.
 Investment= My father works in the office, he is currently investing in
othercompamies so that there are corporation between companies.
 Stable= They had a stable income, and even received CPF.
 Accumulation= The accumulation depreciation in the first year of use of the fixed
assets is the same as the depreciation of large expense during the first year of the
fixed assets
 Earnings= The company earnings increase every month due to the company’s
excellent performance.
 Industries= The industry is managed by PT.Rang, which produces various types of
bread for delivery throughout Indonesia
  Investment= Entrepreneurs often investment in a growing company with the hope
that they will get a return from that investment.
 Management= In large company of industry requires people who will understand
financial management so that losses occur
 Values= The value of currency values often weaken and strengthen, it happens
because of the need and availability of the currency itself. Therefore, imports of
goods and use of services from aboard can also cause the rupiah to weaken.

Group 2

Listening 1 : Asset Management And Allocation

1. Paula Foley is an investement cinsultant in New York. Listen to her talking about asset
management. Which threee of the following things does she not mention?

Allocation Diversificatio Liabilities porfolios Size

Derivaties interest. Objectives Risk. Style

2. Read the stetements below, which summarize what Paula Foley says. And then listen
again. In what order does she say these things .
a. Asset allocation means deciding show much to invest in different classes of
infestment : bonds Stocks and so On.
 Portfolio investment techniques that aim to balance risk and create
difersification by dividing assets between major categories such as
cash,resignations,realestate,stocks,andderivaties.
b. Asset management involves investing in bonds, stocks cash, precious metals and
funds.
 Asset managements is not just the management and recording of and asset
management can be done by involving all parties in management level so
that decisions can be implemented properly all parts of the company.
c. How you manage assets depends on the client’s objectives and the portfolio’s size.
 Assign a reliable and trusted person in charge of assets,understand the life
cycleyour assets, do assets tracking regurarly, know your asset deprecation
well.useoutomotive asset management solutions.
d. If you diversify too much it becomes too expensive.
 Everyone who makes an investment will want to get abig profit whit
increased capital value wether using investmen long term of short term
investment products.
e. It’s easier to diversify a large portfolio than a small one.
  In the investment world,the higher the risk the higher the return on
investment that an investor should get.conversely,thesmalletherisk,the
smaller also the returns.
f. Objectives can be either long term orang short .
 Profitability,productivity,competitiveness,employeddevelopment,relationship
semployment,technology leadership, social responsibility.

g. The risk of a portfolio depends largely on the expected returns.

 The riskier the investment the higher the return, in longer term more stocks
tend to generate greaters returns resignation.

Group3

Reading: Fund management

The article opposite, from the Economist, was published in 2002 after actively managed equity
funds in Britain had lost over 30% ( on average) in 30 months. This was only 1% less than passive,
index-linked funds. Read the article, and answer the question below it.

Fund management: Mug`s game

Anger is growing with those who manage money, particularly with those poorly performing active
managers who claimed that it was precisely during tough times that they would come into their own
against indexed funds. In Britain, two-thirds of active managers underperformed the index last year,
even before the fess that day charged are subtracted. Those people are handsomely rewarded for
losing money. Each year they pocket 1-2% of the assets they manage, on top of initial charges of as
much as 5% Indexers, by contrast, charge only 0.5% a year, with now upfront fees.

An average fund manager will beat the market some of the time. Over the long run, though, the
great majority of funds managers will do no better than the market average, particularly once their
charges are taken into account. The chances are slim of finding one of those blessed few who can
show real, sustained skill in stock-picking. Even if you find one, you may discover that what made
him good in one economic period will serve him less well in the next.

Believers in the so-called efficient-market hypothesis, developed by American economists in the

1960s, have tried to demonstrate the impossibility of consistent outperformance. They argue that all
useful information that is available to market participants is already factored into a company`s
share price. Additional analysis of a share by, for instance, taking a closer at a company`s books or
to talking to its management – as well as all attempts at discovering patterns in price movements –
will be futile. This theory opened the door to those offering merely to track the index. Index-
tracking grew hugely during the bull market of the 1980s. In the bear market of the past two years,
people have not pulled out much money from index funds – or at least, no yet.

Not everybody buys the efficient-market hypothesis, however. George Soros, a well-known
speculator, thinks he made his money because markets often over-or undervalue things. He also
challenges the view that share prices are simply passive reflection of underlying value, or of the
expected earnings of a company. A high share price might, for example, trigger certain actions: a
public offering of a company`s shares, or a merger or an acquisition. A low share price,
meanwhile, might stop plans for an initial public offering or a merger. This is what Soros calls the
market`s reflexivity.

If knowledge of such a two-way relationship between share prices and assets can be put to good
use, a fund manager might consistently do better than the market. Peter Lynch, formerly of Fidelity
Investments,, showed that a more old-fashioned technique – looking for good companies that the
market fails for at time to appreciate – can also outperform. Yet a few examples among a cast of
many thousands of fund managers offer only small consolation to the average investor, who will
almost always be better off – or these days, rather worse off – putting his money in an index fund.

1) Why are people getting angry with active money managers?

a. Answer :
b. Because they are not performing better than passive managers, who simply invest in
indexed funds.

2) Why did indexed funds develop?

a. Answer :
b. Because people argued that it was impossible to consistently do better than the
markets (and they wanted to take advantage of the bull markets in the 80s and 90s)

3) What is the efficient-market hypothesis? Why does it suggest that it is impossible to beat
the market?
a. Answer :
b. The efficient-market hypothesis is that a company`s share price always accurately
reflects all available useful information. Further analysis will not reveal any
additional information, so there is no way of knowing more than the rest of the
market participants.

4) What is George Soros`s argument against the efficient-market hypothesis?

a. Answer :
b. George Soros argues that markets often over-or undervalue things,, and that high
and low share prices can make things happen which in turn have an effect on prices.
 5) How did Peter Lynch beat the market?
a. Answer :
b. Peter Lynch found good companies that the market was undervaluing.

6) Why does the article recommend that the average investor should use a passive index-linked
fund rather than an actively managed one?
a. Answer :
b. Because most active managers do worse than the market average, and unlike passive
managers they also charge fees.

Discussion

Do you agree with the people who say that it is impossible to beat the stock market, on average?

Answer :

No, because the stock market is where investors are connected to buy and sell investments - most
commonly, shares, which are ownership shares in public companies. Investors buy and sell stocks
and other investments through the stock market. Investing in the stock market does not provide the
immediate satisfaction or frustration that comes with short-term trading, but has several distinct
advantages over short-term trading.

In day trading, if you develop a large account, you are very quickly "limited". There is no liquidity
in most of your markets to keep increasing your ranking indefinitely. With long-term trading, you
can reach positions for days or weeks. The bigger you are, you will eventually need to consider
growing because you cannot find enough stocks / opportunities in a very short time frame to make
the most of all effective capital.

Investment is passive income. With short-term trading, you have to keep holding, close trades and
open new ones. Your investment works for you all year round, with minimal effort after the trade.

Investments are made like savings savings. Investing is fun, and it is your school to curb expenses.
Instead of spending money on trifles, money is transferred to your investment account as a school.

In any endeavor, it is best to look at the norm that outliers do. While developing here, there are two
norms to keep in mind:

Shares that have performed over the last three years will typically tend to outperform over the next
three years. The best performing stock over the last three years, will usually tend to underperform
over the next three years.
In other words, stocks don't stay strong or weak forever. If you are developing a solid company,
which has been around for a long time, then they will usually not last long or get low. There is
always a downtrend and an uptrend, given a long time. Ideally, you would buy the stock at a lower
rate than at a higher rate.

Group 4

1. Why are people getting angry with active money managers?

Answer:
Anger is growing with theso who manage money, particularly with those poorly performing
active managers who claimed that it was precisely during tough times that they would come
into their own against indexed funds. In britain, two-thirds of active managers
underperformed the index last year , even before the fees that they charged are subtracted.
2. Why did indexed funds develop?
Answer:
In britain, two-thirds of active managers underperformed the index last year, even before
the handsomely rewarded for losing meney. Each year they pocket 1-2% of the assets they
manage, on top of initial charges of as much as 5%. Indexers, by contrast, charge only 0,5%
a year, with no upfront fees.
3. What is the efficient-market hypothesis? Why does it suggest that it is impossible to beat
the market?
Answer :
 Believers in the so-called efficient -market hypotesis, developed by Amerika
economists in the 1960s, have tried to demontrate the imposssibility of conssistent
qutperformance, they argue that all useful information that is available to market
participant is already factored into a a company’s share price.
 Over the long run, though, the great majority of fund managers will do no batter
than the market average, particularly once their charges are taken into account.
4. What is George Soros’s argument against the efficient-market hypotesis?
Answer:
George Soros’s, a well-known speculator, thinks he made his money because markets often
over or undervalue things. He also challenges the view that share prices are simply a passive
reflection of underlying value, or of the expected earling of a company. A high share price
might, for example, trigger certain actions: a public offering of a company’s shares, or a
merger or an acquisition.
5. How did peter Lynch beat the market?
Answer:
Peter Lynch , formely of fidelity investment, showed that are moreold-fashioned technique-
looking for good companies that the market fails for a time to appreciate
 - Can also outperform. Yet a few examples among a cast of many thousands of fund
managers offer only small consolation to the avarage investor, who will almost always
be better off-or these days, rather worse off.
- Putting his money in an index fund.
6. Why does the article recommended that the avarage investor should use a passive index-
linked fund rather than an actively managed one?
Answer:
Because passive investment ia an investment strategy that is implement by limiting the
amount of turnover of funds. This strategy is suitable for investors who want to invest in the
long term. Passive investors will limit the number of purchases and lases in their pertfolio.
Although it seems simple, this strategy requires a strong mentality in buying and holding
portfolio. This means that investors must be able to resist the temptation to react to market
situations and changes that affect the stock market.

Discussion
7. Do you agree with the people who say that it is impossible to beat the stock market, on
avarage?
Answer:
Yes, because in our opinion the stock market has investment instrument that get a high
enough return that shares give in the long term. In addition, there are two advantages that an
investor can get when buying or owning shares,
 The profit from the difference between the purchase price and the selling price of
the shares.
 Divident distribution which is the company’s profit distributed to share winners.

Group 5

 Discuscion+ Vocabulery

1. A provinsial savings bank has bocl debst of $300 milion and may go bontrupt because it
lent to much money to property speculators, and the valce of their investimrnts has gone
down by 40%
 The vocabulary used is property specalent investament that proviks just
investing
 2. Intfastion has iacreased by.1,25% in thee monts,which is half the country's annver intlation
target.The economy seems to be working of for capacity
 The diccossion is that halft of the annual inflation target in the last three moaths was
67.1%. That is obtained from 1.25% corned for 3 montas and hal of the annual
intlation
3. A trader a large universal bant has lost $450 milion in adisastious derivatites trodes.This
bank know has absolutely no ligulidity
 What must be done is to enter into a controctoal agreement between two or mone
parties whore valce is based,on mutually agreed upon tinancial assest such as
sularities or in other wasy mate products that can be traded on market
4. Deman for consuber good has declined for the sixta successive mouthiand uneaplayment
has increased by 1.75% in thee months
 Which makes consomer goods that have decreased for the gth consecutive moth are
consumers who do not want to try to shop and sell their goods and ultymately have
am effect on the declining manufacturing mdos try and talling trade sector so what
has to be done to increase back all these lusser and onemplay ment is that
consummers have to keep doing smaal businesjes that make thein so ccestul
again.An example now is the accorrence of covid which makes many consumers
unemployed

 Vocabulary

 Property
 Speculators
 Working
 Capasity
 Disastrous
 Dirivatites
 Unemplay ment
 increased
 Group 6

Reading: Fund management

The article opposite, from the Economist, was published in 2002 after actively managed equity
funds in Britain had lost over 30% ( on average) in 30 months. This was only 1% less than
passive, index-linked funds. Read the article, and answer the question below it.

Fund management: Mug`s game

Anger is growing with those who manage money, particularly with those poorly performing
active managers who claimed that it was precisely during tough times that they would come into
their own against indexed funds. In Britain, two-thirds of active managers underperformed the
index last year, even before the fess that day charged are subtracted. Those people are
handsomely rewarded for losing money. Each year they pocket 1-2% of the assets they manage,
on top of initial charges of as much as 5% Indexers, by contrast, charge only 0.5% a year, with
now upfront fees.

An average fund manager will beat the market some of the time. Over the long run, though, the
great majority of funds managers will do no better than the market average, particularly once
their charges are taken into account. The chances are slim of finding one of those blessed few
who can show real, sustained skill in stock-picking. Even if you find one, you may discover that
what made him good in one economic period will serve him less well in the next.

Believers in the so-called efficient-market hypothesis, developed by American economists in the

1960s, have tried to demonstrate the impossibility of consistent outperformance. They argue that
all useful information that is available to market participants is already factored into a
company`s share price. Additional analysis of a share by, for instance, taking a closer at a
company`s books or to talking to its management – as well as all attempts at discovering
patterns in price movem
will be futile. This theory opened the door to those offering merely to track the index. Index-
tracking grew hugely during the bull market of the 1980s. In the bear market of the past two
years, people have not pulled out much money from index funds – or at least, no yet.

Not everybody buys the efficient-market hypothesis, however. George Soros, a well- known
speculator, thinks he made his money because markets often over-or undervalue things. He also
challenges the view that share prices are simply passive reflection of underlying value, or of the
expected earnings of a company. A high share price might, for example, trigger certain actions: a
public offering of a company`s shares, or a merger or an acquisition. A low share price,
meanwhile, might stop plans for an initial public offering or a merger. This is what Soros calls the
market`s reflexivity.

If knowledge of such a two-way relationship between share prices and assets can be put to good
use, a fund manager might consistently do better than the market. Peter Lynch, formerly of Fidelity
Investments,, showed that a more old-fashioned technique – looking for good companies that
the market fails for at time to appreciate – can also outperform. Yet a few examples among a
cast of many thousands of fund managers offer only small consolation to the average investor,
who will almost always be better off – or these days, rather worse off – putting his money in an
index fund.

1. Why are people getting angry with active money managers?

Answer :

Because they are not performing better than passive managers, who simply invest in
indexed funds.

2. Why did indexed funds develop?

Answer :

Because people argued that it was impossible to consistently do better than the markets
(and they wanted to take advantage of the bull markets in the 80s and 90s)

3. What is the efficient-market hypothesis? Why does it suggest that it is

impossible to beat the market?
 Answer :

The efficient-market hypothesis is that a company`s share price always accurately reflects
all available useful information. Further analysis will not reveal any additional
information, so there is no way of knowing more than the rest of the market participants.

4. What is George Soros`s argument against the efficient-market hypothesis?

Answer :

George Soros argues that markets often over-or undervalue things,, and that high and low
share prices can make things happen which in turn have an effect on prices.

5. How did Peter Lynch beat the market?

Answer :

Peter Lynch found good companies that the market was undervaluing.

6. Why does the article recommend that the average investor should use a passive index-
linked fund rather than an actively managed one?

Answer :

Because most active managers do worse than the market average, and unlike passive
managers they also charge fees.

Discussion

Do you agree with the people who say that it is impossible to beat the stock market, on average?

Answer :

No, because the stock market is where investors are connected to buy and sell investments - most
commonly, shares, which are ownership shares in public companies. Investors buy and sell stocks
and other investments through the stock market. Investing
in the stock market does not provide the immediate satisfaction or frustration that comes
with short-term trading, but has several distinct advantages over short-term trading.

In day trading, if you develop a large account, you are very quickly "limited". There is no liquidity
in most of your markets to keep increasing your ranking indefinitely. With long- term trading, you
can reach positions for days or weeks. The bigger you are, you will eventually need to consider
growing because you cannot find enough stocks / opportunities in a very short time frame to
make the most of all effective capital.

Investment is passive income. With short-term trading, you have to keep holding, close trades
and open new ones. Your investment works for you all year round, with minimal effort after
the trade.

Investments are made like savings savings. Investing is fun, and it is your school to curb
expenses. Instead of spending money on trifles, money is transferred to your investment account
as a school.

In any endeavor, it is best to look at the norm that outliers do. While developing here, there
are two norms to keep in mind:

Shares that have performed over the last three years will typically tend to outperform over the
next three years. The best performing stock over the last three years, will usually tend to
underperform over the next three years.

In other words, stocks don't stay strong or weak forever. If you are developing a solid
company, which has been around for a long time, then they will usually not last long or get low.
There is always a downtrend and an uptrend, given a long time. Ideally, you would buy the
stock at a lower rate than at a higher rate.
Group7

 Now listen again and complete the notesbelow

Giroth investment means looking for an investment strategy style focused on capital
appreciation. Those who follow this style, known as growth investors, invest in companies
that show above-average signs of growth, even though the stock price seems expensive
with such metrics as price-to-stick or price-to-book ratio. In typical usage the term "growth
investment" contrasts with the strategy known as valueinvestment.

The value of investment in investing is wheninvestors select companies that have not yet
reached their full potential to invest. This type of investment requires investors to do much
research to find companies that have the potential to thrive. And compete with other, often
larger, companies in thefield.

Generally, larger firms usually pay dividends to their shareholders, but developing
companies often reinvest their revenues in an effort to grow the company. These
companies are becoming more popular to investbecause they show greatpotential.

Small companies often fail because of lack or funding, maintain inadequate management
teams, faulty infrastructure or business models, and failed marketing initiatives.

Active management means actively carrying outall activities, creative and getting done
ontime

Passive investment means you target larger profits inthe long run, but it replaces
purchasing costs and selling minimum levels. His judgment is to avoid the costs and
barriers to potentially occurring performance. Passive investors do not specifically target
profit-makinggains.

Portfolios index try to address both long-term and current goalneeds

Even a need-fund portfolio allows you to reach a balanced investment portfolio is a hedge
fund. The first is to diversify my portfolio. You may include short-term investments in
your portfolio because they will be placed on instruments with a maturity of less than 1
(one) years such as bonds, debts, and deposits. The risk is also slight from the default side,
the reduction in net activation value (nab), or liquidity, and thus being able to keep you
from a single investmentrisk.
Use a word from each box to make common word combinations. One word can be
usedtwice.

Asset : treasure,legacy
Accumulation : Gather, hoarding
Capital : Asset ,balance
Earnings : the result,reception
Conservative : Maintain the circumstances,habit
Industries : company,industry
Growth : development, enhancement
Investmen : funding,planting
Management : making,process
Stable : just right,right
Values : price, amount
Group 8
Listening 1: Asset management and allocation

1. Paula Foley is an investment consultant in New York. Listen to her talking about asset
management. Which three of the following things does she not mention?
allocation diversification liabilities portfolios size
derivatives interest objectives risk style
Answer :
what Paul Foley does not mention in the reading above is :
1. Derivatives
2. Size
3. Style

2. Read the statements below, which summarize what Paula Foley says, and then listen again.
In what order does she say these things?

a) Asset allocation means deciding how much to invest in different classes of investments:
bonds, stocks and so on. (2 )
b) Asset management involves investing in bonds, stocks, cash, precious metals and funds.
(3)
c) How you manage assets depends an the client's objectives and the portfolio's size (6 )
d) If you diversify too much it becomes too expensive. ( 5 )
e) It's easier to diversify a large portfolio than a small one. ( 4 )
f) Objectives can be either long term or short term. ( 7 )
g) The risk of a portfolio depends largely on the expected returns.
 LOANS AND CREDIT

Group 1

Reading 1: Banks and bonds

1. Read the texts and below and then answer the questions on the opposite page

1. What are the two main ways in which large companies and corporations raise capital?
2. What might explain why only one bank has a AAA ranks?
3. What from of income do banks now get from large companies?
Answer:

1. Raising money directly from the public ( and from institutional investors like insurance
companies and pension funds).
2. The highest rating (AAA or Aaa) is given only to top quality institutions with minimal
credit risk.
3. The income that banks earn from large corporations is because companies use investment
banks to issue their bonds for them, permitting banks to make money from fees rather than
from interest.

2. Use a word from each box to make word combinations from the text. You can use some
words more than once. Then use some of the word combinations to complete the sentences
below.

credit date

debt finance

equity instruments

financial payments

interest performance

investment rating

maturity risk

tradeable situation

1. Bondholders get debt finance until the bond’s maturity date

2. Because bonds are tradeable instrument you can sell them at any time, but their price will
depend on the company’s interest payments and the level of interest rates.
3. Only companies with hardly any credit get a AAA investment rating.
 Group 2

LISTENING 1 : LENDING DECISIONS

Gerlinde lgler work for a German bank. Listen to her talking about how banks make
lending decisions for commercial and corporate custumers, the notes on what she says.

1. Normally the bank analyses :

 The debtor's business has been running for 3 years.
 The debtor's business is not included in the type of industry that cannot be financed
based on bank policy or is included in the industrial target that cannot be financed
based on the bank's policy.
 Debtors are not included in the category of debtors who have non-performing loans
based on the results of checking with Bank Indonesia or the Financial Services
Authority (OJK).
 The debtor is not included in the black list of Bank Indonesia or the Financial
Services Authority.
 The debtor has never received a money loan from the bank concerned which is
classified as problematic.
 The debtor submits collateral according to the terms of collateral that can be accepted
at the bank, such as land and buildings, vacant land, vehicles, machinery, merchandise
inventory, and accounts receivable.
 The debtor passes the credit analysis process in accordance with the applicable
policies at the bank.
 Debtors are usually asked to open a savings account or business checking account at
the bank that lends money.
2. The bank has to evaluate :
 Character
 Capacity
 Capital
 Condition
 Collateral

3. The bank discusses :

 Banks have different restrictions such as different interest rates
4. Normally the company should be able to :
 They also have a rating for fiscal and monetary policies that keep the economy stable.
5. The bank has got different limits for :
 discussed the exchange of information on the experiences of the second central bank
in the monetary, banking and payment system fields
6. They also have a rating for :
 
facilitate employee needs, and provide all the means that employees need but also
prioritize employees' personal needs
7. Before financing foreign transactions,the bank :
 The bank must check before approving foreign loans

8. If the bank doesn’t have a limit :

 yes

Group 3

Answer :
1.Ebit
2.Collateral
3.Credit line
4.Penilaian credit
5.Credit limit
6.Porfalio
7.Over head cost
8.Suitability
9.Operation chas flow
10.Fund fee
Group 4

1. What are the two factors that determine the interest rate a customer is charged?

Answer:
 Fund requirement
The funding requirement factor is specifically for depositing funds, namely how
much the desired fund is needed.
 Profit target
What is desired is that this factor is specific to the interest on the loan. Conversaly,
if the are a lot of funds in deposits in banks, while the loan application is smaal, the
deposit interest will decrease because this ia a burgen.
 Quality assurance
Quality assurance is also intended for loan interest. The more guarantees privided,
the lower the credit interest charged and vice versa.
2. What is the advantage for a business of having a Triple A or AAA rating?
 To report economic information to allow an assessment of the decision making
process that is clear to them and firmly uses information.
 Provide financial reports.
 To make decisions in doing business.
3. What are the different costs involved in the calculation of the bank’s margin?
 Operating costs.
 Overhead costs.
 Production cost.
 Loan interest costs.
4. How can a bank reduce the risks involved in granting a loan?
 Preventive handling: namely by preparing to make propviate credit SOPs and
conducting credit analysis carefully and with great care. AO (account officer) does
not only pursue targets because it will result in frant committed by AO it self.
 Repressive handling: namely by supervising credit and fostering good debtors by
extending credit tenors credit saving (credit restructuring) write off credit books.
Group 5

1. That of some phrases of giving advice and making suggastion or recommendations in a

business situation.

Answer:

a. How about opening a savings account?

b. I think that you should reduce your expenses for useles things
c. I think that you should make the first debt payment
d. It would be a good idea to pay your bills regulary
e. I suggest that you should immendiatery sell the stock
f. It is advisable to you that it is recommended that you get your porttoro veritied.
g. Have you considered doing it for life insurance.

2.Which of the phrases oppsite are more formal and which more informal?

Phrases used in official latters are:

 Receive
 Obtain
 Assist

3.a.it is time you be more responsible with you life

b.after what the did to me,I will never trust her again

c.you should not be in too much debt

d.you have to seve a lot for my needs in the days to come

e.it is time for you to stop owing

f.better if you have to seve a lot for you surviral

g.you better have to clean your clean

4.use some of the phares oppsite to give advice or make sugegestion of following pople

Answer :

a.i suggest that you immendiately the debt and interst on the clean

b.i suggest you should stillbe gratetul for what you get

c.i suggest you have to encourage ferivacation

d.it’d (it would)be a good idea to do

e.need to be recondsidered for the common good

f.i’d (I would) advice you(not) to do

g.i think (that) you should do

h.you should consider doing so

Group 6

EXERCISE 4.

1. Withdraw (withdrawing) $ 3,000 from your deposit account and pay ( paying) off your
credit card debt.
2. Open (opening) a higher interest savings account
3. diversify (diversifying) your investment, and buy (buying) stocks in several different
companies, and perhaps some bonds as well
4. Get (getting) a new mortgage instead, which will be cheaper than a loan
5. Think (thinking) about a pension plan, and start (starting) saving regular amounts of
money each month
6. use (using) a credit or debt card, or buy (buying) some traveller’scheques instead
7. use (using) our ATMs or cash dispensers and our online banking facilities
8. use (using) our night safe or our automated deposit machine instead of taking the money
home.
Group 7

 Think of some phrases for giving advice and making suggestion or

recommendations in a businesssituation.

Answer:

Phrase

how if youcan

I think that's what will happen doing,

what if it happened todo,

it makes no sense todo

I think that's a good suggestion todo

I think I disagree withdoing

I think that's right for you todo

You'vetried

Maybe this could be a good idea if youdid.

I think you shoulddo

Example :

How to open a businessventure

I think the business is doingwell

how about spendingfunds

It probably won't happen if youdid

I think I can be anentrepreneur

I think I don't agree that it shouldhappen

I think I can become a successfulentrepreneur

I have tried to open anaccount

This could be a great idea to open a businessventure

I think you should be able to spend half of yourfunds

Which of the phrases opposite are more formal and which more informal? Which of them would
you use in a formal letter? Which would you use with a colleague you knowwell?

Answer :

Formal :

Thank you for your invitation. However, I regret that I will be unable to attend.

We would be delighted if you could attend the scoutopening ceremony.

I don't agree with your idea because it can reduce the efficiency ofthe company'sbudget.

Informal :

I think it looks like you will be interested in knowing that we are going on vacationtogether

I'm having a party on Monday, November 8th, I hope you cancome

Anyway, that’s all I have to say toyou.

I was wondering if you’d like to go see the movie with us this Saturday.
Group 8

4. Use some of the phrases opposite to give advice or make suggestions to the following
people:
1. A customer who has $5,000 in a savings account paying 2.5% p.a. and a credit card
debt of $3,000 on which she is paying 1.25% per month.
Answer :
withdraw (withdrawing) $3,000 from your deposit account and pay (paying) off your credit
card debt.

2. A customer who has just had a pay rise of $1,000 a month

Answer :
open (opening) a higher interest saving account.

3. A customer who wants to invest $50,000 in the stock of just one company
Answer :
diversify (diversifying ) your investment, and buy (buying) stocks in several different
companies, and perhaps some bonds as well.

4. A customer who has just finished paying off this mortgage and asks for a loan of
$50,000 to make improvements to his house
Answer :
get (getting) a new mortgage instead, which will be cheaper than a loan.

5. A self-employed customer without any plans for retirement

Answer :
think (thinking) about a pension plan, and start (starting ) saving regular amounts
moneyeach month

. 6. A customer who wants to take €10,000cash on long vacation

Answer :
use (using) a credit or debit card, or buy (buying) some traveller`s cheques instead.

7. A customer who complains about the length of the queues at his local branch
Answer :
use (using) our ATMs or cash dispensers and our online banking facilities.
8. A shopkeeper who always keeps the day`s takings at home overnight and pays them in
to the bank the following morning.
Answer :
use (using) our night safe or our automated deposit machine instead of taking the money
home.