Self-study task Fill in the blanks with an appropriate answer

Task 2.Read and translate the text into your own language. Give definitions for the underlined words and make up sentences with them

What is a capital market

Capital is money, and it is represented by securities—bonds mostly—that are traded on the world’s capital markets just like any other commodity. The price borrowers pay for money is the interest rate. This “price” is determined by supply and demand. When there is a shortage of money to lend, borrowers have to pay a higher interest rate. When money is plentiful , interest rates decline.

There is no single center for capital market trading. The world’s securities are traded in a vast network of electronically linked banks and securities houses located all over the world—from Tokyo and Singapore to London and New York. The international capital markets serve one major purpose: to get money from those who have it into the hands of those who want it and are willing to pay a price to get it. Hundreds of billions of dollars—and euros, and yen and pounds— are traded daily on the world’s capital markets.

The international capital markets bring together a wide variety of borrowers and lenders. Investors can be as large as the California State Employees’ Retirement Fund or as small as a Swiss farmer buying a bond at a local bank. Borrowers include corporations, governments, and international organizations—from IBM to the Kingdom of Sweden to the African Development Bank. How does it work? When a Swiss investor buys a bond of the African Development Bank, the primary motivation isn’t necessarily to give money to Africa, even though that is the final result. An investor is looking for a “return” on the investment. Borrowers on the world’s capital markets have to assure investors that the bond will be paid back on time along with all the or the African Development Bank have the implicit backing of rich—country government, so investors are willing to loan development banks money at relatively low interest rates.