复试金融专业英语(传世版)

专业英语汇总
1. How to define the aggregate price level? 如何衡量价格指数？
Three measures of the aggregate price level are commonly encountered in economic data.
(1)The first is the GDP deflator(GDP平减指数), which is defined as nominal GDP divided by real GDP.
(2)Another popular measure of the aggregate price level is the Producer Price Index (生产者价格指数) which is a measure of the cost of a basket of goods and services bought by firms.
(3) The measure of the aggregate price level that is most frequently reported in the press is the Consumer Price Index(消费者价格指数), which is measured by pricing a basket of goods and services bought by a typical urban household.
2. What’s the disadvantage and advantage of holding equity rather than debt? 持有股权的优劣？
(1)The main disadvantage of ow ning a corporation’s equities rather than its debt is that an equity holder is a residual claimant (剩余求偿权), that is, the corporation must pay all its debt holders before it pays its equity holders .
(2)The main advantage of holding equities is that equity holders benefit directly from any increases in the corporation’s profitability or asset value because equities confer ownership rights on the equity holders. Debt
holders do not share in this benefit, because their payments are fixed.
3. What’s the difference between primary and secondary market? 一级市场与二级市场的区别？
(1)A primary market is a financial market in which new issues of a security, such as a bond or a stock, are sold to initial buyers by the corporation or government agency borrowing the funds.
(2)A secondary market is a financial market in which securities that have been previously issued can be resold.
4. What’s the difference between foreign bond and Eurobond? 外国债券和欧洲债券的区别？
(1)Foreign bonds are sold in a foreign country and are denominated in that country’s currency. For example, a bond issued by a Chinese company denominated in U.S. dollars sold in New York.
(2)Eurobond is a bond denominated in a currency other than that of the country in which it is sold. For example, a bond denominated in U.S. dollars sold in China.
5. What’s asset transformation and diversification？资产转换和分散化(1)Financial intermediaries create and sell assets with risk characteristics that people are comfortable with, and the intermediaries then use the funds they acquire by selling these assets to purchase other assets that may have
far more risk. This process of risk sharing is referred as asset transformation, because in a sense, risky assets are turned into safer assets for investors.
(2)Diversification entails investing in a portfolio of assets whose returns do not always move together with the result that overall risk is lower than for individual assets. It also refers to “You shouldn't put all your eggs in one basket”. Diversification can eliminate firm-specific risk—the uncertainty associated with the specific companies. But diversification cannot eliminate market risk—the uncertainty associated with the entire economy, which affects all companies traded on the stock market. For example, when the economy goes into a recession, most companies experience falling sales, profit and low stock returns. Diversification reduces the risk of holding stocks, but it does not eliminate it.
6. Explain the following concepts: asymmetric information, adverse selection and moral hazard.
(1)A symmetric information (信息不对称) refers to that one party often does not know enough about the other party to make accurate decisions. For example, a borrower who takes out a loan usually has better information about the potential returns and risk associated with the investment projects for which the funds are invested than the lender does.
(2)Adverse selection(逆向选择) is the problem created by asymmetric information before the transaction occurs. Adverse selection in financial
markets occurs when the potential borrowers who are the most likely to default are the ones who most actively seek out a loan and are thus most likely to be selected.
(3)Moral hazard(道德风险) is the problem created by asymmetric information after the transaction occurs. Moral hazard in financial markets is the risk that the borrower might engage in activities that are undesirable from the lenders point of view, because they make it less likely that the loan will be paid back.
7. What’s the function of money? 货币的职能？
Money has three primary functions in any economy: as a medium of exchange, as a unit of account, and as a store of value.
(1)When money is used to pay for goods and services, it plays the role of
a medium of exchange (流通手段). The use of money as a medium of exchange promotes economic efficiency by minimizing the time spent in exchanging goods and services.
(2)The second role of money is to provide a unit of account(价值尺度), that is, it is used to measure value of goods and services in the economy. (3)Money also functions as a store of value (储藏手段). A store of value is used to save purchasing power from the time income is received until the time it is spent. This function of money is useful, because most of us do not want to spend our income immediately upon receiving it, but rather prefer to wait until we have the time or the desire to shop.
8. What’s the Fisher equation and Fisher effect? 费雪等式与费雪效应？(1)The Fisher equation states that the nominal interest rate equals the real interest rate plus the expected rate of inflation. The equation tells us that all else equal, a rise in a country’s expected inflation rate will eventually cause an equal rise in the nominal interest rate. Similarly, a fall in the expected inflation rate will eventually cause a fall in the nominal interest rate.
(2)This long-run relationship between inflation and interest rates is called the Fisher effect. The Fisher effect implies, for example, that if U.S. inflation were to rise permanently from a constant level of 5 percent per year to a constant level of 10 percent per year, dollar interest rates would eventually catch up with the higher inflation, rising by 5 percentage points per year from their initial level. These changes would leave the real rate of return on dollar assets unchanged. The Fisher effect is therefore another example of the general idea that in the long run, purely monetary developments should have no effect on an economy’s real variables.
9. How to explain the negative relation between the quantity of money demanded and the interest rate?
We can explain that the quantity of money demanded and the interest rate should be negatively related by using the concept of opportunity cost (机会成本), the amount of revenue sacrificed by taking one course of action rather than
another. As the interest rate on bonds rises, the opportunity cost of holding money rises, thus money is less desirable and the quantity of money demanded must fall.
10. Risk Premium 风险溢价
The spread between the interest rates on bonds with default risk and default-free bonds, both of the same maturity, called the risk premium, indicates how much additional interest people must earn to be willing to hold that risky bond.
11. Briefly introduce expectations theory, segmented markets theory and liquidity premium theory.
(1)The expectations theory (预期假说) of the term structure states the following proposition: the interest rate on a long-term bond will equal an average of the short-term interest rates that people expect to occur over the life of the long-term bond.
(2)The segmented markets theory (市场分割假说) of the term structure sees markets for different-maturity bonds as completely separate and segmented. The interest rate for each bond with a different maturity is then determined by the supply of and demand for that bond, with no effects from expected returns on other bonds with other maturities.
(3)The liquidity premium theory(流动性溢价假说) of the term structure states that the interest rate on a long-term bond will equal an average of short-term
interest rates expected to occur over the life of the long-term bond plus a liquidity premium. It is also called preferred habitat theory (偏好停留假说).
12. What’s the difference between adaptive expectation and rational expectation?
(1)Adaptive expectation(适应性预期) states that expectations form from past experience only and changes in expectations will occur slowly over time as past data change. For example, expectations of inflation is typically viewed as being an average of past inflation rates. So if inflation had formerly been steady at a 5% rate, expectations of future inflation would be 5% also.
(2)Rational expectation (理性预期) can be stated as follows: expectations will be identical to optimal forecasts (the best guess of the future) using all available information.
13. Efficient Market Hypothesis 有效市场假说
The efficient market hypothesis states that current prices in a financial market will be set so that the optimal forecast of a security’s return using all available information equals the security’s equilibrium return, because in an efficient market all unexploited profit opportunities will be eliminated by arbitrager (套利者).
14. “Lemons Problem”次品问题
A particular aspect of the way the adverse selection problem interferes with the efficient functioning of a market is called “lemons problem”.
We can use the used-car market to illustrate this concept. Potential buyers of used cars are frequently unable to assess the quality of the car, that is, they can’t tell whether a particular used car is a good car or a lemon (次品). The price that a buyer pays must therefore reflect the average quality of the cars in the market, somewhere between the low value of a lemon and the high value of a good car. The owner of a used car, by contrast, is more likely to know whether the car is a good car or a lemon. If the car is a lemon, the owner is more than happy to sell it at the price the buyer is willing to pay, which, being somewhere between the value of a lemon and a good car, is greater than the lemons value. However, if the car is a good car, the owner knows that the car is undervalued at the price the buyer is willing to pay, and so the owner may not want to sell it. As a result of this adverse selection, few good used cars will come to the market. Because the average quality of a used car available in the market will be low and because few people want to buy a lemon, there will be few sales. The used-car market will function poorly or even disappear.
15. Principal-agent Problem 委托-代理问题
Principal-agent problem refers to that the managers in control (the agents) may act in their own interest rather than in the interest of the stockholder (the principals) because the managers have less incentive to maximize profits
than the stockholder do. The principal-agent problem, which is an example of moral hazard, arises only because a manager has more information about his activities than the stockholder does. So, there is asymmetric information.
16. What’s “irrational exuberance” proposed by Alan Greenspan? 非理性繁荣
Irrational exuberance refers to a phenomenon that asset prices, in the stock market and real estate, are driven well above their fundamental economic values by investor psychology. The result is an asset-price bubble (资产价格泡沫), such as the tech stock market bubble of the late 1990s or the recent housing price bubble in subprime crisis.
17. How to solve asymmetric information problems? 如何解决信息不对称的问题？
18. Securitization and Subprime mortgage 资产证券化与次级抵押贷款
(1)Subprime mortgages are mortgages for borrowers with less-than-stellar credit records.
(2)Securitization is the process of transforming otherwise illiquid financial assets (such as residential mortgages, auto loans, and credit card receivables), which have typically been the main business of banking institutions, into marketable capital market securities.
19. What’s time-inconsistency problem? 时间不一致问题
The time -inconsistency problem is some thing we deal with continually in everyday life. We often have a plan that we know will produce a good outcome in the long run, but when tomorrow comes, we just can't help ourselves and we deny our plan because doing so has short-run gains. In other words, we find ourselves unable to consistently follow a good plan over time, and the good plan is said to be time-inconsistent and will soon be abandoned .
20. Political Business Cycle 政治经济周期
Political business cycle is a process that can be illustrated in the following example. Just before an election, expansionary policies are pursued to lower unemployment and interest rates. After the election, the bad effects of these policies, that is high inflation and high interest rates, come home to roost, requiring contractionary policies that politicians hope the public will forget before the next election.
21. What’s money multiplier and what are the factors that affect it? 货币乘数及其影响因素？
(1)The money multiplier, denoted by m, tells us how much the money supply changes for a given change in the monetary base. The relationship between the money supply, the money multiplier and the monetary base is described by the following equation: M = m × MB
(2)The money multiplier is a function of the currency ratio set by depositor c, the excess reserves ratio set by banks e, and the required reserve ratio set by the Fed r. The money multiplier m is thus
22. What are the tools of monetary policy? 货币政策工具
There are three tools of monetary policy that can be conducted by the central bank, such as open market operations, discount lending and reserve requirements.
(1)Open market operations (公开市场操作) are the most important monetary policy tool, because they are the primary determinants of changes in interest rates and the monetary base, the main source of fluctuations in the money supply. Open market purchases expand reserves and the monetary base, thereby increasing the money supply and lowering short-term interest rates. Open market sales shrink reserves and the monetary base, decreasing the money supply and raising short-term interest rates.
Open market operations have four advantages over the other tools of monetary policy: ①Open market operations occur at the initiative of the Fed, which has complete control over their volume. ②Open market operations are flexible and precise, and they can be used to any extent. ③Open market operations are easily reversed.④Open market operations can be implemented quickly, since they involve no administrative delays.
(2)The facility at which banks can borrow reserves from the Fed is called the discount window (贴现窗口). The facility is intended to be a backup source of liquidity for banks during financial crisis.
The most important advantage of discount policy is that the Fed can use it to perform its role of lender of last resort (最后贷款人). The disadvantage of discount policy is that the decisions to take out discount loans are made by banks and are therefore not completely controlled by the Fed.
(3)Changes in reserve requirements(法定存款准备金) affect the money supply by causing the money supply multiplier to change. A rise in reserve requirements reduces the amount of deposits that can be supported by a given level of the monetary base and will lead to a contraction of the money supply.
A rise in reserve requirements also increases the demand for reserves and raises the federal funds rate. Conversely, a decline in reserve requirements leads to an expansion of the money supply and a fall in the federal funds rate.
Reserve requirements have at least three disadvantages: ①Owing to financial innovation, reserve requirements are no longer binding for most banks, so
this tool is much less effective than it once was. ②Raising the requirements can cause immediate liquidity problems for banks where reserve requirements are binding. ③Continually fluctuating reserve requirements would also create more uncertainty for banks and make their liquidity management more difficult.
23. Law of One Price and Theory of Purchasing Power Parity一价定理与购买力评价理论
(1)The law of one price states that if two countries produce an identical good, and transportation costs and trade barriers are very low, the price of the good should be the same throughout the world no matter which country produces it.
(2)The theory of purchasing power parity (PPP) states that exchange rates between any two currencies will adjust to reflect changes in the price levels of the two countries. The theory of PPP is simply an application of the law of one price to national price levels rather than to individual prices. The statement that exchange rates equal relative price levels is sometimes referred to as absolute PPP (绝对购买力平价). Relative PPP (相对购买力平价) states that the percentage change in the exchange rate between two currencies over any period equals the difference between the percentage changes in national price levels.
24. Real Exchange Rate 实际汇率
The real exchange rate refers to the rate at which domestic goods can be exchanged for foreign goods. In effect, it is the price of domestic goods relative to the price of foreign goods denominated in the domestic currency. For example, if a basket of goods in New York costs $50, while the cost of the same basket of goods in Tokyo costs $75 because it costs 7500 yen while the exchange rate is at 100 yen per dollar, then the real exchange rate is 0.66 (=$50/$75). The real exchange rate is below l, indicating that it is cheaper to buy the basket of goods in the United States than in Japan.
25. Why the theory of purchasing power parity cannot fully explain exchange rates? 购买力平价的缺陷
(1)Contrary to the assumption of the law of one price, transport costs and restrictions on trade certainly do exist. These trade barriers may be high enough to prevent some goods from being traded between countries.
(2)Monopolistic practices in goods markets may interact with transport costs and other trade barriers to weaken further the link between the prices of similar goods sold in different countries.
(3)Because the inflation data reported in different countries are based on different commodity baskets, there is no reason for exchange rate changes to offset official measures of inflation differences, even when there are no barriers to trade and all products are tradable.
26. Monetary Neutrality 货币中性
Monetary neutrality states that in the long run, a one-time percentage rise in the money supply is matched by the same one-time percentage rise in the price level, leaving unchanged the real money supply and all other real variables such as real interest rates.
27. Exchange Rate Overshooting 汇率超调
The phenomenon that the exchange rate falls by more in the short run than it does in the long run when the money supply increases is called exchange rate overshooting. It can help explain why exchange rates exhibit so much volatility.
Exchange rate overshooting is a direct consequence of the short-run rigidity of the price level. In a hypothetical world where the price level could adjust immediately to its new, long-run level after a money supply increase, the interest rate would not fall because prices would adjust immediately and prevent the real money supply from rising. Thus, the exchange rate would maintain equilibrium simply by jumping to its new, long-run level right away.
28. Interest Parity Condition 利率平价条件
(1)The uncovered interest parity condition(非抛补利率平价)states that the domestic interest rate equals the foreign interest rate minus the expected appreciation of the domestic currency, or equivalently, the domestic interest rate equals the foreign interest rate plus the expected appreciation of the foreign currency. If the domestic interest rate is higher than the foreign
interest rate, there is a positive expected appreciation of the foreign currency, which compensates for the lower foreign interest rate. This condition can be rewritten as
(2) The covered interest parity condition(抛补利率平价) states that the rates of return on dollar deposits and “covered” foreign deposits must be the same. Suppose you want to buy a euro deposit with dollars but would like to be certain about the number of dollars it will be worth at the end of a year. You can avoid exchange rate risk by buying a euro deposit and, at the same time, selling the proceeds of your investment forward. We say you have “covered” yourself, that is, avoided the possibility of an unexpected depreciation of the euro.
29. Unsterilized Foreign Exchange Intervention and Sterilized Foreign Exchange Intervention
(1)A foreign exchange intervention in which a central bank allows the purchase or sale of domestic currency to have an effect on the monetary base, is called an unsterilized foreign exchange intervention(非冲销式干预). An unsterilized intervention in which domestic currency is sold to purchase foreign assets leads to a gain in international reserves, an increase in the money supply, and a depreciation of the domestic currency. An unsterilized intervention in which domestic currency is purchased by selling foreign assets leads to a drop in international reserves, a decrease in the money
supply, and an appreciation of the domestic currency.
(2)A foreign exchange intervention with an offsetting open market operation that leaves the monetary base unchanged is called a sterilized foreign exchange intervention (冲销式干预). A sterilized intervention leaves the money supply unchanged and so has no direct way of affecting interest rates or the expected future exchange rate.
30. Fixed Exchange Rate Regime, Floating Exchange Rate Regime and Managed Float Regime
(1)In a fixed exchange rate regime (固定汇率制), the value of a currency is pegged relative to the value of one other currency, which is called the anchor currency (锚货币), so that the exchange rate is fixed in terms of the anchor currency.
(2)In a floating exchange rate regime (浮动汇率制), the value of a currency is allowed to fluctuate against all other currencies.
(3)When countries intervene in foreign exchange markets in an attempt to influence their exchange rates by buying and selling foreign assets, the regime is referred to as a managed floating regime (管理浮动汇率制)or a dirty floating (肮脏浮动).
31. What are the advantages and disadvantages of Gold Standard? 金本位的利与弊？
(1)Before World War I, the world economy operated under the gold standard,
a fixed exchange rate regime in which the currency of most countries was convertible directly into gold at fixed rates, so exchange rates between currencies were also fixed.
(2)The fixed exchange rates under the gold standard had the important advantage of encouraging world trade by eliminating the uncertainty that occurs when exchange rates fluctuate.
(3)There are disadvantages of gold standard as follows: ①Adherence to the gold standard meant that a country had no control over its monetary policy, because its money supply was determined by gold flows between countries. ②Monetary policy throughout the world was greatly influenced by the production of gold and gold discoveries.
32. Currency Board and Dollarization 货币局制度与美元化
(1)Currency board (货币局制度) means that the domestic currency is backed 100% by a foreign currency and in which the note-issuing authority, whether the central bank or the government, establishes a fixed exchange rate to this foreign currency and stands ready to exchange domestic currency for the foreign currency at this rate whenever the public requests it. A currency board is just a variant of a fixed exchange-rate target in which the commitment to the fixed exchange rate is especially strong because the conduct of monetary policy is in effect put on autopilot, and taken completely out of the hands of the central bank and the government.
(2)Dollarization (美元化) means the adoption of a sound currency, like the
U.S. dollar, as a country’s money. Indeed, dollarization is just another variant of a fixed exchange-rate target with an even stronger commitment mechanism than a currency board provides. The common disadvantage of both regimes is that a country that ties its exchange rate to an anchor currency of a larger country loses control of its monetary policy.
33. Quantity Theory of Money 货币数量论
The quantity theory of money states that nominal income is determined solely by movements in the quantity of money. We can derive the conclusion from the equation of exchange (交易方程式): MV=PY.
Since the institutional and technological features of the economy would affect velocity of money (货币流通速度) only slowly over time, so velocity V would normally be reasonably constant in the short run.
Because the classical economists thought that wages and prices were completely flexible, they believed that the level of aggregate output Y produced in the economy during normal times would remain at the full-employment level, so Y in the equation of exchange could also be treated as reasonably constant in the short run.
So, for the classical economists, the quantity theory of money provided an explanation of movements in the price level: movements in the price level result solely from changes in the quantity of money.
34. Liquidity Preference Theory 流动性偏好理论
The liquidity preference theory of John Maynard Keynes pointed out that there are three motives behind the demand for money: the transactions motive, the precautionary motive, and the speculative motive. The demand of money for transaction and precautionary motives is proportional to income, while the demand of money for speculative motive is negatively related to the level of interest rate. So the demand for real money balances is a function of interest rate and income as follow
35. Friedman’s Modern Quantity Theory of Money 弗里德曼的现代货币数量论Friedman stated that the demand for money should be a function of the resources available to individuals (their wealth) and the expected returns on other assets relative to the expected return on money. From this reasoning, Friedman expressed his formulation of the demand for money as follows:
Unlike Keynes’s theory, which indicates that interest rates are an important determinant of the demand for money, Friedman's theory suggests that changes in interest rates should have little effect on the demand for money.
36. Crowding Out Effect of Fiscal Policy 财政政策的挤出效应
Expansionary fiscal policy will crowd out investment and net exports, which decrease because of the rise in the interest rate. This situation is called crowding out (挤出效应).
When the demand for money is unaffected by the interest rate, the LM curve is vertical. An expansionary fiscal policy does not lead to a rise in output but a sharp in interest rate, which means the increased government spending have completely crowed out investment and net exports. This situation is called complete crowding out (完全挤出).
37. Transmission Mechanisms of Monetary Policy 货币政策传导机制
(1)Traditional Interest-Rate Channel 利率机制
An expansionary monetary policy leads to a fall in real interest rates, which in turn lowers the cost of capital, causing a rise in investment spending, thereby leading to an increase in aggregate demand and a rise in output.
(2)Exchange Rate Channel 汇率机制
An expansionary monetary policy leads to a fall in real interest rates, which in turn the currency depreciates, causing a rise in net exports, thereby leading to an increase in aggregate demand and a rise in output.
(3)Tobin’s q Theory 托宾q理论
Tobin defines q as the market value of firms divided by the replacement cost of capital. If q is high, the market price of firms is high relative to the
replacement cost of capital, and new plant and equipment capital is cheap relative to the market value of firms. Investment spending will rise, because firms can buy a lot of new investment goods with only a small issue of stock. Conversely, when q is low, firms will not purchase new investment goods because the market value of firms is low relative to the cost of capital. Investment spending, the purchase of new investment goods, will then be very low
(4)Wealth Effects 财富效应
(5)Bank Lending Channel 银行贷款渠道
(6)Balance Sheet Channel 资产负债表渠道
38. Cost-Push Inflation and Demand-Pull Inflation 成本推动通货膨胀与需求拉动通货膨胀
(1)Cost-push inflation occurs because of negative supply shocks or a push by workers to get higher wages. Persistent cost-push inflation is a monetary phenomenon because it cannot occur without the monetary authorities pursuing an accommodating policy of a higher rate of money growth.
(2)Demand-pull inflation results when policymakers pursue policies that shift the aggregate demand curve to the right. If policymakers set a target for unemployment that is too low because it is less than the natural rate。