Learning objectives

After studying this unit, you should be able to:

· examine captions, topics and subtopics and predict content related to the functioning of the stock market and its instruments;

· apply reading skills to comprehend, analyze, and interpret texts related to the organization and functions of the stock market, classification and characteristics of shares, the peculiarities of trading at the stock exchange (i.e. recognize main ideas in paragraphs, definitions, explanations, examples, classifications, comparisons and contrasts, sequence of events, cause/effect, pros and cons);

· use strategies to reinforce comprehension skills (i.e. use graphic organizers to visualize connections between main ideas and supporting details, cite evidence for main ideas, answer literal and critical comprehension questions);

· identify the main ideas, recall important details of a listening segment pertaining to the stock market, take notes from spoken context as well as relate new information to previously acquired concepts;

· give spontaneous and prepared monologs, dialogs, and group interaction using topical vocabulary;

· summarize, annotate, render and translate texts related to the issues covered in the unit.

Exercise 1. Comment on the following quotations. What do the authors mean? Do you agree with them?

1. “October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” (Mark Twain)

2. “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.” (Warren Buffet)

Exercise 2. Look at the following captions. What are these articles about? Comment on the following news.

Exercise 3. Read the text.

Background: Stocks and Shares

Stock markets perform a vital role in today’s world financial markets as a platform on which to trade shares (Br. E.) or stocks (Am. E.) in companies, and also as a place for companies to raise new capital.

Successful companies can issue shares or stocks, which are certificates representing part ownership of a company, to raise capital to expand their operations. If these shares are offered for sale to financial institutions and the general public, this operation is called going public, and the business will change from a private company to a public company (called PLC in Britain and a corporation in the US).

Offering shares to outside investors is generally called a flotation in Britain, and an IPO or initial public offering in the US. Companies usually get advice from an investment bank about how many shares to offer and at what price. The investment bank or other financial institution helps to find buyers, and will probably underwrite the share issue, meaning that it guarantees to buy the shares if there are not enough other buyers.

The company will commission a due diligence report – a detailed examination of its financial situation – from an auditing firm, and then issue a prospectus explaining its position, and giving details about the senior managers and the financial results from previous years.

Shares are also known as equity or equities. Investors called shareholders or stockholders buy stocks and shares in order to receive an income in the form of annual dividends (a share of the company’s profits), or because they hope to makea capital gain by selling the shares at a profit. The most common form of equities is called ordinary shares in Britain and common stock in the US. (In Britain stock means securities such as government bonds.). The ordinary shareholders bear the largest part of the risk, but the гeturns сan be muсh higher than with other forms of investment. Ordinary shareholders are entitled to one vote per share, whiсh givesthеm more say in the running of the сompany; but the amount of dividend they reсeive (if any) is determinеd by the сompany depending on how muсh profit has been made. Less common type of equities is preferred stock (Am. E.) or preference shares (Br. E.) These shares have a fixed dividend whiсh must be paid before the ordinary shareholders сan reсeivе their dividend, whiсh guarantees a return on investment as long as the company is making a profit. Unlike the ordinary shareholder, the preferenсe shareholder is not еntitled to vote in сompanу matters. Cumulative preference shares are a speсial сlass of preferenсe share whiсh offers a safer return on investment. This is beсause if thе сompany сannot pay the dividend one уear, the outstanding amount is сarried over to the following years. Convertible preference shares are another type of preferenсe share whiсh pays a fixed rate of interest until a сertain time. After this time, it is сonverted into an ordinary share on whiсh the holder reсeives a dividend rather than interest.

After an initial flotation, companies that require further capital can issue new shares. This is often in the form of a rights issue: existing shareholders are offered the first right to buy them. After shares have been sold the first time (on the primary market) they can be repeatedly traded at the stock exchange on which the company is listed or quoted, on the secondary market. The major stock exchanges, such as New York and London, require listed companies to publish a lot of financial information for shareholders. The majority of companies use smaller over-the-counter (OTC) markets, such as NASDAQ in New York and the Alternative Investment Market (AIM) in London, which have fewer regulations.

The nominal value of a share is rarely the same as its market price. This can change constantly during trading hours, because it depends on supply and demand. Some stock exchanges have computerized automatic trading that matches up buyers and sellers. Other markets have market makers: traders in shares who quotebid (buying) and offer (ask/selling) prices. The spread or difference between these prices is their profit or mark-up. Most customers place their buying and sellingorders with a stockbroker, who trades with the market makers.

Shareholders’ buying and selling decisions depend on the financial situation of the industry in which the company operates, and the state of the economy in general, but also on the benefits of investors – whether they think the price will rise or fall, and whether they think other investors will think this too. Although some investors keep shares for a long period, there are also speculators who buy and sell shares rapidly, hoping to make a profit. These include day traders – people who buy shares and sell them again before the settlement day: the day on which they have to pay for the shares they have purchased, usually three business days after the trade. If day traders sell at a profit before the settlement day, they never have to pay for their shares. Day traders usually work with online brokers on the Internet, who charge low buying or selling commission.

Companies that make a profit are not obliged to pay a dividend to their shareholders: they can also retain their earnings by keeping the profits in the company, which causes the value of the shares to rise. Alternatively, companies can also choose to capitalize part of their earnings, which means turning their profits into capital by issuing new shares to their shareholders rather than paying them a dividend. There are various names for this process, including scrip issue, capitalization issue and bonus issue. Companies with surplus cash can also choose to buy back some of their shares on the secondary market. These are then called own shares in Britain and treasury stock in the US.

Stock markets are measured by stock indexes (or indices), such as the Dow Jones Industrial Average (DJIA) in New York, and the FTSE 100 index (often called the Footsie) in London. These indexes show changes in the average prices of a selected group of important shares.

Investors and financial journalists tend to classify shares in different categories. Blue chips are shares in large companies with a reputation for quality, reliability and profitability. More than two-thirds of all blue-chip shares in industrialized countries are owned by institutional investors such as insurance companies and pension funds. Growth shares are those that are expected to regularly rise in value. Income shares are those that have a history of paying consistently high dividends. Defensive shares provide a regular dividend and stable earnings, but their value is not expected to rise or fall very much. Value shares are those that investors believe are currently trading for less than they should be worth, when compared with the companies’ assets. Financial journalists commonly call investors who buy shares expecting prices to rise bulls, and investors who sell shares expecting them to fall bears. Consequently a period when most of shares on a market rise is a bull market, and one in which most of them fall in value is a bear market. Stags buy newly issued shares in the expectation that priсes will rise, then sell them on in the hope of making a quick profit.

Word List

shares (Br. E.)/stocks (Am. E.) – акції

to go public – стати відкритим акціонерним товариством / публічною компанією шляхом випуску акцій на ринок

flotation (Br. E.) / Initial public offering (IPO) (Am. E.) – первинне розміщення акцій

to underwrite the share issue – гарантувати розміщення випуску цінних паперів

due diligence – комплексна перевірка

prospectus – проспект емісії акцій

equity / equities – фондові акції

to make a capital gain – отримувати приріст капіталу

ordinary shares (Br. E.) / common stock (Am. E.) – звичайні акції

to give sb more say in sth – зробити чиюсь думку вагомішою у чомусь

preferred stock (Am. E.) / preference shares (Br. E.) – привілейовані акції

fixed dividend – фіксований дивіденд

return on investment – дохідність інвестованого капіталу; прибуток від інвестицій

сumulative preference shares – накопичувальні привілейовані акції

outstanding amount – несплачена сума

сonvertible preference shares – конвертовані привілейовані акції

rights issue – випуск (емісія) прав (випуск нових акцій, що пропонуються акціонерам компанії за нижчою ціною, ніж ринкова)

to be listed / quoted – бути включеним до котирувального листка, котируватись на фондовій біржі

trading hours – час біржової сесії; час офіційної торгівлі на біржі

market maker – маркет мейкер; організатор торгівлі на ринку

to quote bid and offer / ask prices – визначати / встановлювати біржову ціну попиту (покупця) і ціну пропозиції (продавця)

spread – спред; різниця між курсами

mark-up – надбавка; позитивна для дилера різниця в ціні під час продажу цінних паперів

buying and selling orders – заявки на купівлю та продаж

settlement day – розрахунковий день

to charge commission – стягувати комісію

to retain earnings – утримувати прибуток від розподілення

scrip issue / capitalization issue / bonus issue – бонусна емісія

own shares (Br.E.) / treasury stock (Am.E.) – власні акції; акції, викуплені у акціонерів

stock index – індекс акцій

blue chips – «блакитна фішка»; надійна, першокласна акція

growth share – акція росту; акція, ціни на яку підвищуються

income share – дохідна акція

defensive share – захищена акція; низькоризикова і відносно низькодохідна акція зі стабільним біржовим курсом

value share – недооцінена акція

bull – бик

bear – ведмідь

stag – олень

Exercise 4. Give Ukrainian equivalents to the following words and word-combinations.

To offer for sale to the general public, to go public, to underwrite the share issue, IPO (initial public offering), to commission a due diligence report, a detailed examination of financial situation, to issue a prospectus, equity / equities, equity financing, debt financing, to bear the largest part of the risk, to be obliged to pay a dividend, to be entitled to one vote per share, to offer a safer return on investment, to make a capital gain, an initial flotation, a rights issue, to be listed / quoted on the secondary market, major stock exchanges, over-the-counter market, nominal value, business day, to quote bid and offer prices, a market maker, a mark-up, to place an order with a stockbroker, a day trader, to sell shares before the settlement day, to charge low commissions, to capitalize, scrip issue, reputation for reliability.

Exercise 5. Find in the text English equivalents to the following words and word-combinations. Make up your own sentences using them.

Залучати капітал, здійснювати вихід на фондовий ринок, здійснювати емісію акцій, аудиторська фірма, додаткова емісія акцій з переважним правом існуючих акціонерів на їх придбання, проста акція, привілейована акція, конвертована привілейована акція, фінансування через емісію акцій, фінансування шляхом залучення позичкового капіталу, отримувати дохід від приросту капіталу(від продажу акцій), акціонер, біржа, бути включеним до котирувального листа, подавати заявку на купівлю та продаж брокеру, стягувати невелику комісію, капіталізувати частину прибутку, внутрішньоденний трейдер, бонусна емісія акцій, спред, зводити покупців та продавців, замовляти висновок за результатами комплексної перевірки, продавати акції раніше розрахункового дня, викуплені власні акції, інституційний інвестор, активи компанії.

Exercise 6. Here are some word-combinations from the text. Match and translate them into Ukrainian.

1.	to commission	a.	ownership
2.	part	b.	a report
3.	outside	c.	the company
4.	to run	d.	Day
5.	outstanding	e.	investors
6.	business	f.	Amount

Exercise 7. Put the words and phrases in the table below.

Stock, IPO, share, flotation, common stock, treasury stock, ordinary shares, a shareholder, a stockholder, own shares.

British English	American English

Exercise 8. Match words and phrases in the box with their definitions.

1.	underwriter	a.	the highest price brokers are willing to pay for shares
2.	rights issue	b.	the difference between the bid and the offer
3.	to raise capital	c.	the lowest price at which the shares sell
4.	prospectus	d.	the first sale of a company’s stocks to the public
5.	stock exchange	e.	a situation in which a company decides to capitalize part of the profits and instead of paying dividends, they issue new shares, which are then given free to the shareholders in proportion to the number of shares they already own
6.	spread	f.	an occasion when new shares are offered to existing shareholders, often at a price lower than the current market price
7.	bid	g.	a bank or financial institution that arranges to sell shares to investors and agrees to buy any shares that are not bought; it gets a commission on what they sell and for acting as an intermediary
8.	scrip issue	h.	certificates representing part-ownership of a company
9.	blue chips	j.	to turn profits into stocks or shares
10.	share	k.	a document that gives information about a company’s shares before they are offered for sale
11.	to quote	l.	to get money from investors with which to run a business
12.	offer	m.	a market where securities are bought and sold under fixed rules
13.	to capitalize	n.	the shares of well-established commercial and industrial companies that produce quality goods or service and are considered the best, most reliable investment on the market
14.	flotation	o.	to give the price of a share on a stock exchange
15.	ordinary shares	p.	the most common form of shares

Exercise 9. Fill in the missing prepositions.

From, at (2), up, in (2), to, with.

1. The shares are traded … the stock exchange on which the company is quoted. 2. Computerized automatic systems are used to match … buyers and sellers. 3. If you want to buy some shares you should place your order … a stockbroker. 4. Market makers are traders … shares who quote bid and offer prices. 5. Some investors want to make a capital gain by selling shares … a profit. 6. If a company wants to capitalize it may issue new shares … existing shareholders instead of paying them a dividend. 7. Investors expect growth shares to rise … value. 8. If a company chooses equity financing money raised …equities doesn’t need to be paid back.

Exercise 10. Match two columns. Use the correct forms of word-combinations to complete the sentences below.

go produce underwrite offer retain make receive

a capital gain a dividend an issue a prospectus shares public earnings

1. After three profitable years, our company is planning to ____________ and we are _______100.00_______ for sale. We’ve __________ a very attractive ____________, and although a leading investment bank is __________ the _____, we don’t think they will have to buy any of the shares. 2. I pay less tax on capital gains than on income. So as a shareholder, I prefer not to ________a ________. If the company ______ its________, I can _________ ____________ by selling my shares at a profit instead.

Exercise 11. Complete the sentences using your knowledge of different categories of shares.

1. Pension funds and insurance companies, which can’t take risk, usually only invest in …..

2. The stocks of food, tobacco and oil companies are usually …., as demand doesn’t rise or fall very much in periods of economic expansion or contraction.

3. A stock whose price has suddenly fallen a lot after a company had bad news could be a …., as it will probably rise again.

4. This stock used to be considered an …, but two years ago the company started to cut its dividend and reinvest its cash in business.

5. The company is planning a … of one additional share for every three existing shares.

6. The financial director announced a forthcoming … of new shares to existing shareholders as the company needed further capital.

Exercise 12. Study the contexts for the verbs “to list” and “to quote”. Give Ukrainian equivalents to the following English sentences. Illustrate the use of the verbs with the examples of your own.

1.The company has applied to list its shares on the New York stock exchange.

2.The Swiss firm listed in London three years ago.

3.The company is quoted on the New York stock exchange.

4.Traders quoted the securities at about 70 cents on the dollar.

5.Trading in the NASDAQ- quoted stock was halted temporarily.

6.The target of the takeover bid is a firm, which is not listed.

7.The exchange requires companies to maintain a minimum share price or be delisted.

8.The company is trying to avoid delisting from NASDAQ.

Exercise 13. Check your knowledge of the stock market. Answer these questions.

1. What is the difference between a share and a stock? What does a share represent?

2. Why do companies issue shares?

3. What is an IPO?

4. What are the steps of becoming a listed company? What is the underwriter’s role?

5. In what way is equity financing different from debt financing?

6. What are the forms of equities? Characterize them.

7. What are the two main ways the shareholders make money from shares?

8. What is a rights issue? When a company makes a rights issue, the share price usually goes down. Why is that?

9. How is the stock market divided? What is the difference between a primary listing and the secondary market?

10.Where are stocks bought and sold?

11.What are the major organized stock exchanges and OTC exchanges?

12.What do market makers and stockbrokers do?

13.What do the shareholders’ decisions depend on?

14.Who are day traders?

15.Are companies obliged to pay a dividend to their shareholders? What alternative do they have? Why do some companies choose not to pay dividends?

16.How is stock market performance measured?

17.What categories of shares do investors and financial journalists single out?

18.What are the stock exchange “animals”?

Exercise 14. A. Learn more about investing in stocks. Fill in the gaps with the vocabulary from the box.

Investing in Stocks

mature	stock	corporate charter	be issued	claimants
return	claim	outstanding stock	stockholders	bondholders

A share of stock in a firm represents ownership. A stockholder owns a percentage interest in a firm, consistent with the percentage of... held.

Investors can earn a... from stock in one of two ways. Either the price of the stock rises over time, or the firm pays the stockholder dividends. Frequently, investors earn a return from both sources. Stock is riskier than bonds because... have a lower priority than... when the firm is in trouble, the returns to investors are less assured because dividends can be easily changed, and stock price increases are not guaranteed. Despite these risks, it is possible to make a great deal of money by investing in ..., whereas that is very unlikely by investing in bonds. Another distinction between stock and bonds is that stock does not....

Ownership of stock gives the stockholder certain rights regarding the firm. One is the right of a residual claimant: stockholders have a ... on all assets and income left over after all other... have been satisfied. If nothing is left over, they get nothing. As noted, however, it is possible to get rich as a stockholder if the firm does well.

Most stockholders have the right to vote for directors and on certain issues, such as amendments to the ... and whether new shares should....

Common Stock versus Preferred Stock

common	rights	stable	voting	vote
fixed dividend	preferred	dividends	issuing	distribution

There are two types of stock, common and preferred. A share of common stock in a firm represents an ownership interest in that firm. Common stockholders vote, receive ..., and hope that the price of their stock will rise. There are various classes of common stock, usually denoted as type A, type B, and so on. Unfortunately, the type does not have any meaning that is standard across all companies. The differences among the types usually involve either the... of dividends or... rights. It is important for an investor in stocks to know exactly what ... go along with the shares of stock being contemplated.

Preferred stock is a form of equity from a legal and tax standpoint. However, it differs from common stock in several important ways. First, because preferred stockholders receive a... that never changes. Second, because the dividend does not change, the price of preferred stock is relatively.... Third, preferred stockholders do not usually … unless the firm has failed to pay the promised dividend. Finally, ... stockholders hold a claim on assets that has priority over the claims of ... shareholders but after that of creditors such as bondholders.

Less than 25% of new equity issues are preferred stock, and only about 5% of all capital is raised using preferred stock. This may be because preferred dividends are not tax-deductible[1] to the firm but bond interest payments are. Consequently,... preferred stock usually costs the firm more than issuing debt, even though it shares many of the characteristics of a bond.

B. Choose the correct alternative.

1. Stocks / bonds offer an ownership stake in the company.

2. Stocks / bonds are akin to loans made to the company.

3. The value of stocks / bonds corresponds to the value of the company and therefore, stock / bond price fluctuates depending upon how the market values the company.

4. Stocks / bonds are loans offered at a fixed interest rate.

5. With s tocks / bonds, an investor is promised a fixed return.

6. While stocks / bonds are "safer" than stocks / bonds because of lower volatility, it should be noted that there is always a chance that company will be unable to repay bond / stock -holders.

7. However, when a company declares bankruptcy, bond-holders / stockholders are the first to bear losses. Creditors (including bond-holders / stockholders) are next.

8. Common / preferred stock typically does not carry voting rights but is legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders.

9. Common / preferred stock typically carries voting rights that can be exercised in corporate decisions.

Exercise 15. Learn more about trading on the stock exchange. Read an interview with the broker and match the interviewer’s questions and the broker’s answers.

Interviewer’s questions:

1. What are the largest organized stock exchanges?

2. How are stock markets measured?

3. Where are the stocks traded?

4. How does NYSE operate?

5. What does the membership in the New York Stock Exchange entail?

6. What requirements should a company meet to be listed on the organized stock exchange?

7. How does the trading floor work?

8. Is NYSE the only option for the US companies to be listed on the organized stock exchange?

9. Where is it listed then?

How Stocks Are Sold

I.: -

B.: -Literally billions of shares of stock are sold each business day in the United States and all over the world. We traditionally discuss stocks as trading on either an organized exchange or over the counter. Recently, however, this distinction is blurring as electronic trading grows in both volume and influence.

I.: -

B.: -The most active exchange in the world is the Nikkei in Tokyo. The largest of the organized stock exchanges in the United States is the New York Stock Exchange or NYSE, as we call it. Other major exchanges include the London Stock Exchange in England, the DAX in Germany, and the Toronto Stock Exchange in Canada.

I.: -

B.: -About 3000 companies around the world list their shares on the New York Stock Exchange. More than 70% of NYSE-listed companies have joined the exchange since 1986. The NYSE occupies a building in downtown New York City. Its trading floor, a place where the “trade” happens, is located at 11 Wall Street and is composed of four rooms used for the facilitation of trading. The actual exchange is made up of "members”. Only members of the exchange may engage in trading. To become a member, an individual or firm must buy or even lease a “seat”. Owning a “seat” on the NYSE enables a person to trade on the floor of the exchange, either as an agent for someone else (floor broker) or for one's own personal account (floor trader).There are 1366 seats on the NYSE, most of them owned by brokerage houses. The cost of a seat varies and could range from $50,000 dollars to $1,000,000 or more. The highest price paid till date is $4,000,000 in 2005. Prices for seats on the exchange depend on the market’s perception of the profit potential in being a trader.

I.: -

B.: -There are two ways of auctioning stock at this exchange. One is the traditional way of 'open outcry' format. The other option is electronic trading. In the 'open outcry' form, stock selling is conducted like an auction with buyers and sellers vocalizing their demands and fixing deals. About three- quarters of trades are executed by the SuperDOT system (Super Designated Order Turnaround system). The SuperDOT is an electronic order routing system that transmits orders directly to the specialist who trades in a stock. Only some very high-priced, premier stocks are withheld from electronic trade. They have to be bought and sold by the traditional auction route.

I.: -

B.: - NYSE has 17 "posts" that are positions on the trading floor where the brokers gather to trade their customers' buy and sell orders. The working of the exchange consists of many market makers. They include specialists, commission brokers and floor brokers. Specialists are the people employed by the member firms that stand at one of the 17 trading posts and act as the auctioneer in an open outcry format. They bring the buyers and sellers together. They also act as dealers for their own accounts and they execute market orders. The member firms also employ floor brokers on the trading floor who act as representatives of the customers' orders. The commission brokers are known as the stockbrokers; they are employees of investment firms acting on behalf of their customers. Their compensation is based on agreed-upon commission rates. When a customer places an order to buy or a sell stock, this order is first placed with the stockbroker. The stockbroker then contacts the exchange, and this information is transmitted to the floor broker and sometimes directly to the specialist. The floor broker then goes to the trading post and participates in the auction on behalf of the customer. The information of the transaction is relayed back to the stockbroker, who sends the confirmation to the customer. In about 90% of trades, 'the specialist matches buyers with sellers. In the other 10% the specialists may intervene by taking ownership of the stock themselves or by selling stock from inventory.

I.: -

B.: -To have a stock listed for trading on one of the organized exchanges, a firm must file an application and meet certain criteria set by the exchange designed to enhance trading. For example, the NYSE encourages only the largest firms to list so that transaction volume will be high. To list on the NYSE, a firm must have earnings of at least $10 million for the last three years as well as $500 million market value with $100 million in revenues.

I.: -

B.: -No, the American Stock Exchange or regional exchanges, such as the Philadelphia and Pacific Stock Exchange, are even easier to list on. Besides, some firms choose to list on more than one exchange, believing that more exposure will increase the demand for their stock and hence its price. Many firms also believe that there is a certain amount of prestige in being listed on one of the major exchanges. They may even include this fact in their advertising. However Microsoft, for example, is not listed on any organized exchange, yet its stock had a total market value of over $287 billion in late 2004.

I.: -

B.: -Its stocks are traded in the National Association of Securities Dealers Automated Quotation System (NASDAQ), one of the over-the-counter (OTC) markets. It is not organized in the sense of having a building where trading takes place. Instead, trading occurs over sophisticated telecommunications networks. This system was introduced in 1971. Whereas organized exchanges have specialists who facilitate trading, over-the- counter markets have market makers. Rather than trading stocks in an auction format, they trade on an electronic network where bid and ask prices are set by the market makers. There are usually multiple market makers for any particular stock. They each enter their bid and ask quotes. Market makers are compensated by the spread between the bid price (the price they pay for stocks) and ask price (the price they sell the stocks for). They also receive commissions on trades.

I.: -

B.: -Most investors consult one of two popular indicators. When these indicators go up, stocks in general also go up. When they go down, stocks in general go down. The most commonly quoted index is the Dow Jones Industrial Average (DJIA), an index based on the performance of the stocks of 30 large companies. At one time, a one-point change in the DJIA meant that an average share of stock changed by $1. Since this is no longer true, it is better to focus on the percentage change of the index rather than the number of points. Investors also use another popular benchmark of stock performance, the Standard & Poor’s 500 (S&P 500). It uses the price changes of 500 representative stocks as an indicator of overall market performance. Because the sum of 500 stock prices would be very large, it is reduced to an index number. Unlike the Dow Jones, which focuses primarily on the NYSE, the Standard & Poor’s 500 reports on stocks listed on the NYSE, AMEX, and OTC markets. The NASDAQ also computes several measures of market performance for investors. The most popular is the NASDAQ composite. In addition, there are more than 20 sub-indices that focus on everything from the size of the firms traded on the NASDAQ to the performance of individual industries.

Exercise 16. Translate into English.

Фондовий ринок – частина ринку капіталів, де здійснюються емісія, купівля і продаж цінних паперів.

Фондовий ринок – це абстрактне поняття, що служить для позначення сукупності дій і механізмів, що роблять можливими торгівлю цінними паперами. Його не слід плутати з поняттям фондова біржа – організацією, яка надає можливість для здійснення торгових операцій і зведення разом покупців і продавців цінних паперів.

До основних видів цінних паперів, які обертаються на біржі, належать акції й облігації, державні боргові зобов'язання, а також похідні від них. Процедура допуску їх до котирування на фондовій біржі називається лістингом і здійснюється вона у відповідності з конкретними вимогами до їх емітента. Цінні папери, які пройшли процедуру лістингу і дозволені для купівлі-продажу, називаються фондовими цінностями (активами).

Найбільшими біржами світу є Нью-Йоркська, Лондонська і Токійська. На них обертаються акції декількох тисяч великих корпорацій, які складають більш ніж 75 % всього фінансового капіталу, що обертається в світі.

Exercise 17. Discuss the following questions:

1.What are the main factors behind daily movements of a stock market?

2.Which three of these factors have the biggest effect on the performance of a company’s share price?

ü Performance of competitors

ü Company financial results

ü Company announcements

ü Sector outlook

ü Business/consumer confidence survey

ü Inflation data

ü Movements in interest rates

ü The views of analysts

Exercise 18. A. Listen to an interview with a fund manager who is explaining why stock markets move. Complete the two slides that she uses to explain the stock market.

Why do stock markets move?

- inflation rate - company results

- ___________ - contract wins

- unemployment

		Types of Investor
	______________		______________

- ordinary people - ___________

-hedge funds

-investment banks

- _____________

B. Listen again and write T (true) or F (false).

1. The New York market was up today, but the London market was down.

2. A fall in interest rates will boost the stock market.

3. Analysts upgrade a stock because they want to attract buyers.

4. The share price tells you about the probable future profits.

5. Retail investors have the biggest influence on profits.

6. Hedge funds make about 30% profit per year.

Exercise 19. A. Discuss the following question:

Do changes in share prices affect people who don’t own any shares themselves? If “yes” in what ways does this happen?

B. Read the text and compare it with your answer.

---

Дата добавления: 2015-10-26