A

A personal line of credit is an unsecured revolving line of credit which applicants can use in a variety of
ways.

⇒ buying a new car, purchasing furniture, or dealing with other life expenses
1. What bank customers can personal line of credit be suitable to?

⇒without the need for collateral.

2. What is the meaning of the adjective “unsecured”?

3. What is the difference between personal loans and personal lines of credit? Answer

⇒ personal loans: fixed sum distributed all at once, make monthly payment
briefly.

personal lines of credit: unlimited amount, use any time, no monthly payment

⇒ fill out an application and undergo a credit check.

4. How can a bank customer use the line of credit facility?

A venture capitalist is a person who invests in a business venture, providing capital for start-up or
expansion.

⇒ seek a high rate of return by investing in promising startup or young businesses that have a high
1. What are the venture capital firms?

potential for growth but are also high risk

⇒An investment from a venture capitalist

2. What is equity financing?

⇒This is normally how long it takes for a young business to mature to the point where its equity shares
3. Why are venture capital investments long-term?

have value and the company goes public.

⇒ pension funds, insurance companies, and wealthy investors

4. Where is the source of money for a venture capitalist to invest?

An overdraft occurs when an account balance goes below zero after a transaction and can be viewed
as a short-term loan from a financial institution.

⇒ occurs when an account balance goes below zero after a transaction and can be viewed as a short-term
1. What is an overdraft?

loan from a financial institution

⇒ manage short-term cash flow problems

2. When is an overdraft facility useful for businesses?

⇒ funds can be reimbursed and re-used at any time.

3. What is a revolving basis?

⇒ no , Interest on the overdraft will accrue on a daily basis and only on the amount outstanding.
4. Is interest on the overdrafts fixed at the beginning?

A mortgage loan, also referred to as simply a mortgage, is used either by purchasers of real property
to raise funds to buy real estate

⇒ to raise funds to buy real estate

1. Why do bank customers apply for a mortgage loan?

for any purpose, while putting a lien on the property being mortgaged

⇒ a legal mechanism is put in place which allows the lender to take possession and sell the secured
2. What is foreclosure?

property to pay off the loan in the event that the borrower defaults on the loan

⇒ individuals mortgaging their home or they can be businesses mortgaging commercial property (for
3. Who can apply for a mortgage loan?

example, their own business premises, or an investment portfolio)

4. Which financial institutions can offer mortgage loans?
 ⇒ a bank, credit union or building society
B
Banks are very important for the functioning of the modern world. Banks enable people

1. According to the text, what could people do with the banking services?

Banks enable people to save money, borrow money and to pay for things with ease and security.

2. What is the function of the head office of a bank?

This is where all central tasks are performed that let the local branches function.

3. What is the role of the bank teller?

The bank teller works behind the bank counter and helps the customers.

4. What happens when a bank customer spends more money…they have in their account?

They might need to see the bank manager.

5. Why is a debit card or credit card convenient?

Because customers just need to carry a small plastic card to be able to pay for anything.

Banks are financial institutions that accept deposits from citizens and pay interest in

1. Why do banks have to make money?

Because banks have to pay expenses.

2. How do banks make money by charging on loans from their depositors?

They pay interest to depositors but charge a higher rate on money they lend out.

3. How do banks make a profit from depositors’ money?

They do this by giving loans and earning interest.

4. Why do some banks merge with investment institutions?

Because banks want to step into rather dangerous business areas of investing and being connected to
the stock market.

5. What were the original purposes of ATMs?

ATMs were supposed to replace bank branches, save banks operating expense and that savings would
be passed on to customers.

NEW CUSTOMERS ONLY!

Banks always want to get new customers and so they make attractive offers: new

1. Why do banks make attractive offers?

Because banks always want to get new customers.

2. Where can people see the words ‘’new customers only’’ advertised by banks?

In the small print at the bottom of their advertisements.

3. How do existing customers react when they can’t get the offers?

It makes existing customers angry.

4. Why does an existing customers go to the Nationwide Building Society?

Because the Nationwide Building Society offers the special offers for all customers.

5. What is the clever business strategy?

Banking began in the twelfth century in Italy. Moneylenders set up benches in the

1. How did banking work in the twelfth century in Italy?

Moneylenders set up benches in the marketplace to do transactions.

2. Why did people in the UK begin to use banks?

Because they want to keep their gold and silver safe.

3. What do people generally use to pay their bills instead of cheques?

Most customers use direct debits or standing orders to pay their bills.

4. Why it is much more difficult today for bankers to get to know their customers?

Because many customers open online accounts. This means that...don’t speak with a banker at all.

5. Why do some banks hold events?

To hear about investments or other financial topics.

LAYOFFS IN BANK OF AMERICA CORP

Bank of America Corp (BAC.N), the second-largest in the United States by assets,…

1. In what sector is the Bank of America Corp, planning to have the layoff?

Investment banking and capital markets group.

2. Why does the Bank of America Corp want to lay off their employees?

Because it struggles to reduce costs to make up for weak revenue growth.

 3. What is the name of the program to reduce costs?

Project New BAC.

4. By how much will the first round of layoffs cut expenses over the next couple of years?

$5 billion.

5. When is the second phase of the program intended to end?

In May.

1. In the seventeenth century, why did people use banks?

To keep their gold and silver safe.
2. Today, how do most people pay their bills?
Use direct debits or standing orders.
3. Why is it more difficult for bankers today to get to know their customers?

Because customers don’t speak with a banker at all

4. Why do customers no longer know the people that they deal with?

Because today many banks have become larger and have merged with other banks.

C
Commercial or retail banks are businesses that trade in money. They receive and hold

1. List 3 functions of a commercial bank.

Receive and hold deposits, pay money according to customers’ instructions, lend money.

2. How can the commercial banks make profits?

They make a profit from the difference (known as a margin) between the interest rates they pay to
lenders or depositors and those they charge to borrowers.
 3. How can commercial banks create credit?

The money they lend is generally spent either on goods or services, or to settle debts and in this way
transferred to another bank account - often by way of a bank transfer or a check - from where it can be
lent to another borrower and so on.

4. What should the bankers do when lending money…that their banks could make a profit?

When lending money, bankers have to find a balance between yield and risk and between liquidity and
different maturities.

5. What are the differences between British and American investment banks?

Investment banks in the USA can only offer advisory services and do not offer loans. Text

Companies report to the public through a number of different channels

⇒ hold an annual general meeting (AGM) and publish an annual report to inform the markets through
1. How do companies report their performance results to the public?

press releases of any events that may affect the valuation of the company.

⇒ Notes to the accounts ( formal balance sheet, income statement, and cash flow statement)
2. What information can be read at the end of a report?

⇒ the pressure for more transparency, begun to disclose much more about their activities
3. How have the reports changed recently?

⇒ Environmental policy- the company’s policy concerning sources of raw materials, recycling,energy
4. What are the ethical and green issues a company expresses in their annual report?

and carbon use, and its effects on climate change

Corporate customers who want to borrow large amounts of money come to the Corporate
Banking Department in our bank.
1. What are two things that a company needs if it wants to arrange a loan?

a good credit rating and collateral

2. What does the shareholders’ equity show?

how much money is invested

3. What do companies use their retained earnings for?

their business or to pay debts

4. What does a bank find out by looking at the income statement?

how much companies earned and spent

5. Why is the cash flow statement important for the bank?

if the company can pay bill

E
Essentially, a bank company is defined as the business entity or group that actually owns one or more

1. In the USA, which institution grants the license for a bank company to operate? ⇒ the Federal
banks.

Reserve Bank

⇒ minimum required assets, a reasonable amount of experience and expertise

2. What factors influence the approval of the government in granting the license?

⇒ losing money of customers, a serious blow to the economy.

3. What are the consequences of the failure of financial entities?

⇒ No, there aren’

4. Are the requirements for a bank company establishment the same in the world?

BANKING ONLINE
More and more people are choosing to do their personal banking on-line. But what can

1. When can we check the account online?

We can check our bank account 24 hours a day, whenever it suits our.

2. How long does it take to check the interest you have earned in the banking online?

Just a few seconds.

3. According to the reading text, what is the database?

The database contains details of all your accounts and the business you have done over the years.

4. What is the full name of SWIFT?

Society for Worldwide Interbank Financial Telecommunications.

5. What is the function of SWIFT?

SWIFT provides the network that enables financial institutions to send and receive information about

financial transactions in a secure, standardized and reliable environment.

F
For tens of millions of Americans, banks are the first choice for saving, borrowing,…

1. Why do Americans need banks?

Because banks are the first choice for saving, borrowing, and investing.

2. How do banks use community’s surplus funds to make a profit?

Lending to people to buy homes and cars, to start and expand businesses, to put their children through
college, and for countless other purposes.
 3. For what purpose do OCC examiners use technology in banking?

To help ensure that the banks they supervise…world of financial services.

4. How does OCC supervise national banks and enforce federal banking laws?

It rules on new charter…and the economy.

5. What is the basic mission of OCC?

To ensure a safe, …of the United States.

FIRST NATIONAL BANK

For tens of millions is run entirely through the telephone and the Internet. Its success

1. What is special about the operation of First National bank?

First National bank is run entirely through the telephone and the Internet.

2. What quality do they look for when recruiting a new employee?

They only recruit people who already exhibit good communication skills.

3. Why does First National Bank refuse to use scripts?

Because the managers recognize that customers find them impersonal and unnatural.

4. How can the staff establish good relationship with customers?

The member of staff has to pick up on the caller’s mood and react accordingly.

5. What does First National Bank do to offer services which meet customers’ needs?

They already offer a service in which customers receive a text when funds are received or when their
account falls below a certain level.

I
If you have a debt problem, one of your options for sorting it out might be bankruptcy. You can apply for
bankruptcy if you can’t pay back your debts.

⇒ if you can’t pay back your debts.

1. When does a business apply for bankruptcy?

⇒ no, you're allowed to keep certain things, like household goods and a reasonable amount to live on
2. Do you still have to sell all your property to pay for the debt when the bankruptcy order is over?

⇒ no, To apply to go bankrupt you’ll need to pay a £680 fee

3. Is it free to apply for bankruptcy?

⇒ if you’re worried you or your family maybe the victims of violence, you can ask that your details
4. What may happen when your bankruptcy is published publicly?

aren’t given out

 In the old days in Britain, the merchant or investment banks were pretty well all British and
there

⇒ do all the things– insurance, mortgages, advice, raising capital for companies, and retail banking
1. What do banks do nowadays?

⇒ changed ownership:
2. What happened to the Midland Bank and National Westminster?

⇒Tyou can now think of the City of London, the world’s leading centre for foreign exchange dealings
3. IN what way does the author compare the City of London to the Wimbledon tennis tournament?

and a great deal of finance, as rather like Wimbledon. In other words, it’s a great big international stage,
happens to be in London, but most of the players are foreign; they are nearly all foreign companies that
do, for example, the investment banking and so many other things.

⇒ internationalization , homogenization
4 What are the two words to summarize the two big trends in banking?

BANK LOANS
Recently banks have started to offer many new facilities to their customers. There are

1. What facilities have banks started to offer their customers?

There are new types of accounts, cheque cards, cash cards, credit cards, insurance cover, investment
services. However, one of the most important services banks offer is that they lend money to their
customers.

2. When is it useful to overdraw on the account?

This is useful if you only wish to borrow a small amount for a short time.

3. According to the text, what is the requirement to have an overdraft?

You can only have an overdraft with your manager’s permission.

4. What does the customer have to do every month when he takes out a personal loan?

Each month the customer makes a payment on the loan to the bank.

5. According to the text, what is the requirement to take out a personal loan?

The bank requires some kind of security e.g., shares.

RAISING CAPITAL
Ruth Henly, who works in an investment bank in New York, said: ‘’Unlike commercial

1. What is the difference between commercial banks and investment banks?

Unlike commercial banks, investment banks don’t lend money.

 2. How can investment banks help companies and governments raise capital?

Investment banks help companies and governments raise capital by issuing securities such as stocks and
bonds – that is, investment banks offer them for sale.

3. According to the text, what does ‘’underwrite securities’’ mean?

‘’Underwrite securities’’ means investment banks guarantee to buy the securities themselves if they

can’t find other purchasers.

4. List 3 institutional investors mentioned in the text.

Insurance companies, investment funds and pension funds.

5. What are the roles of the stockbroking department?

The stockbroking department also offers advice to investors.

P
Prepaid credit cards provide an alternative to all those people that need a credit card…

1. In what way are prepaid credit cards similar to debit cards?

That is an account is set up by a monetary deposit.

2. Why are prepaid credit cards better than credit cards?

Because you are entitled to spend only as much as you have in your account – thus you will not be in
debt, and you will have no bill to pay.

3. What is a set-up fee used for?

To both open and maintain the prepaid credit card account.

4. Besides the set-up fee, what are some…customers have to pay for prepaid credit cards?

Customers will be required to pay taxes on your cash deposits, and you may be required to pay an
annual membership fee.

5. Why do most online merchants reject prepaid credit cards?

Because they have no guarantees that the account can completely cover payment for an online
purchase.

T
 BANK ACCOUNTS
There are different kinds of bank accounts. The most popular are the current and deposit

1. What is the disadvantage of the current account?

A current account pays no interest.

2. What is the purpose of the cheque book?

The purpose of the cheque book is people do not have to carry a lot of cash.

3. What is the role of the branch manager?

The branch manager decides whether the applicant is likely to keep the account in credit.

4. Why does the branch manager want to…if the customer wants to open a current account?

The branch manager wants to meet the applicant to get the necessary background information.

5. List 2 advantages of the deposit account over the current account.

The deposit account is easier to open than a current account and deposit account earns interest for the
customer.

The BBC says that HSBC, the world's second largest bank, helped rich people to hide money so
they would not have to pay tax.
1. For what purpose did HSBC help rich people to hide their money?not have to pay tax
2. What did a whistleblower do in Geneva in 2007?stole the personal details online
3. What did the French banking team conclude about 99.8% of French citizens in 2013?
were probably evading tax
4. What happened with the woman when she complained that HSBC did not keep the promise
to change?the bank fired her
5. What was the duty of Sue Shelley?ensuring HSBC followed the law
1. Why did HSBC help rich people to hide their money?

Because they did not want to pay tax.

THE FUTURE OF RETAIL BANKING

What is the future of banking?

⇒ Without banks, business and personal life quickly grind to a halt in developed nations where finance
1. How important is banking to a country?

and credit needs to flow quickly and easily.

⇒ retail outlets- bricks- and-mortar bank branches

2. What can traditional bank branches also be called?

⇒ re-inventing local branches as specialist advisory centres for financial services products such as
3, How have banks reinvented their local branches?

pensions, life insurance, larger mortgages, and home loans.

 ⇒ yes,try to grab market share by encouraging their existing customers to bank with them.
4, Is the market becoming competitive for banks? Why or why not?

The way in which a bank is organized and operates is determined by its objectives and

1. What does a bank organization and operation depend on?

A bank organization and operation depends on its objectives and by the type of economy in which it
conducts its business.

2. What are two aims of development banks?

Increase the economic growth of a country and raise the living standard of its population.

3. What are the similarities between wholesale and retail banking?

Wholesale and banking have three essential functions, including deposits, payments, and credits.

4. Why are these three functions very important for bank operation

Because they make it possible for banks to generate profits and to achieve their operating aims.

5. What are some new facilities offered by the banks?

Cheque cards, cash cards, credit cards, insurance cover, investment services.

ONLINE SHOPING
The Internet has expanded our choices of where and when to shop, but it also has its

1. What information of the company should we know before making the purchase?

Check carefully all the contact details of the company. Look for a street address and a telephone
number, not just an e-mail address.

2. How do customers make sure that the site is secure?

At the bottom of the site, you should see a small ‘s’ – which stands for ‘secure’ – along with a picture of
a padlock.

3. When we pay for online goods with credit cards, what should we keep?

Keep copies of the order form and the acknowledgment notice that you receive.

4. What should we do after making a purchase online?

Always check your bank statement after making a purchase and make sure that only the amount that
you paid has been deducted from your balance.

5. What is the role of ‘’consumer affairs offices’’?

 Advise you if you find that you have been cheated while shopping online. Text

The clever business strategy is not just to attract new customers, but to keep the ones you already
have.

INVESTING IN SHARES
There are many ways to invest in shares

⇒ Buying individual shares directly

1. What are three (3) ways in which investors can buy individual shares directly?

Buying shares via a Listed Investment Company (LIC)

Buying shares via an Exchange Traded Fund (ETF)

⇒ buy through a full service broker, an online trading account or from the company itself
2. What is the advantage of buying individual shares directly?

You have control over the shares you buy and sell.

⇒ must be prepared to put in the time and effort to track their performance and watch the market to
3. What is the disadvantage of buying individual shares directly?

make your own buy or sell decisions.

⇒ hopefully its shares increase in value over time.

4. What is the advantage of buying shares of a Listed Investment Company?

THE STOCK MARKET

The stock market is a financial institution

⇒ in real life / on the internets

1. What are the two (2) ways in which exchanges in stock market occur?

⇒ Secondary Stock Market

2. In what market can we buy the existing stocks or shares?

⇒ is the stock price multiplied by the number of shares.

3. What is market capitalization?

⇒ The dividend yield is calculated by dividing the annual dividends per share by the price per share.
4. How is the dividend yield calculated?

The post office in a country of about 10 million people has recently been privatized
1. What does the post office want to do?
 Want stobe come moreefficient
2. Why do they say this is necessary?
 To be more competitive when the mark etisopened to in ternational competition

⇒ advantages: save €200 million a year in salaries and increased efficiency.

3. What are the advantages and disadvantages?

disadvantages: The number of sorting staff would be reduced from 10,000 to about 5,500
4. Who is for and who is against the plan?
=> for : The post office would try to find jobs for the other 4,500 people elsewhere in the
organization
against: The trade unions are obviously against this proposal, and so are the local governments in
areas
The Role of government
Though the United States has not adopted central economic planning
1. What do the Friedmans think will be the consequence of increased government intervention in

⇒The limitations imposed on our economic freedom threaten to bring two centuries of economic
the economy?

progress to an end, limited our human freedom

2. In which sentence do they criticize taxation?
 ⇒ As consumers, we are not even free to choose how to spend that part of our income that is left after
taxes.
3. What is the only restriction they believe to be necessary regarding professional occupations,

⇒ freedom to enter any occupation, engage in any business enterprise, buy from or sell to anyone else,
business and trade)

so long as we do so on a strictly voluntary basis and do not resort to force in order to coerce others.

⇒ You are not free to work overtime at terms mutually agreeable to you and your employer, unless the
4. What is their objection to the law regarding labor contracts?

terms conform to rules and regulations laid down by a government official

W
What makes money valuable? You could say there is no reason. It’s true that a special

1. According to the text, why is money valuable?

Because they are a special kind of paper is used to make dollar bills, and they are pretty.

2. What objects were used as money in ancient Greece?

Tools or cattle.

3. Where are large stone discs used as money?

On the Pacific island of Yap.

4. Why were gold and silver used as money?

Because they were easier to carry around.

5. Why did people accept paper money?

Because the government or bank issuing it would exchange an equal amount of gold for the paper.