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1) The dividend on (ordinary/preference) shares fixed and depends on the profit of the company.
2) The holders of (ordinary/ preference) shares receive their payments (before/after) the holders of other types of shares and bonds.
3) (Ordinary/preference) shareholders have (little/the greatest) say in the management of the company and they (can/can not) vote at an annual general meeting.
4) I would like to own a certain number of (ordinary/preference) shares of this company because they ____.
Ex.16. Read the characteristics of the corporate forms of business. Which of them are advantages and which are disadvantages. Explain your idea.
1. Owners of shares or stock have limited liability: they are not responsible for corporate debt. If a shareholder paid $ 100 for 10 shares and the corporation goes bankrupt, he/she will only lose $ 100 invested.
2. As a separate legal entity, the corporation must pay taxes. Dividends paid to shareholders are not tax deductible. When the corporation distributes profits to individuals in the form of dividends, the individuals are taxed again on these dividends. This is known as “double taxation”.
3. Because the corporation itself has legal standing, it safeguards its owners, relieving them of individual legal responsibility when they act as agents of the business.
4. Corporate stock is transferable. Thus, the corporation is not broken down by the death or disinterest of any person. An owner of stock can sell his/her holdings at any time or pass the stock along to heirs (children,relatives,friends).
Ex.17. Read the text. Discuss the role of the board of directors of a company
Typically, a big company is owned by a million or more people, many of whom own fewer than 100 shares. Blocks of stock are owned or controlled by individuals, banks or retirement funds. By the mid-1990s more than 40 million persons in the US owned common stock.
With shareholders living in all parts of the country, it is impossible for them to know all the details about their business and to manage it wisely. In this situation, effective direct control is in the hands of the corporation’s board of directors.
The board of directors develops general policy and places operational control in the hands of a chief executive officer (CEO). This person, who may be the chairman or president, usually supervises a number of vice-presidents who manage various aspects of the corporation and report to the CEO.
The makeup and role of the board of directors varies from one company to another. Only a minority of board members are internal officers of the corporation. Some directors are selected to give prestige to the board, others to provide certain skills or to represent lending institutions (like banks).
The board meets monthly or quarterly to consider policy related to operational decisions and to review results. At annual meetings of stockholders new directors are added as needed and major policy decisions are made.
UNIT III
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| Ex.6. Answer the following questions. | | | PRICES AND MARKETS. |