1. Read the following information on stocks and shares.

A share is a part of a company, offered for sale to the public. The company is able to raise cash for expansion and new ventures by selling shares in itself to investors. The first time it “goes public” (also known as flotation), a company will often announce its intentions with advertisements in the press. This is called an offer for sale.

As a shareholder, you are an owner of the company and are entitled to take part in its decisions. You are sent an annual company report, you can vote on company issues, and you have the right to attend shareholders’ meetings.

A share’s value is not fixed. Its price is determined by many things: the company’s recent performance; the state of the sector of the economy the company trades in; national and international economic and political changes; the level of consumer demand; and the peculiarly unpredictable human factors of confidence and pessimism. So, if you buy a share at one price and sell it at a higher price, you make a profit; if you sell it at a lower price, you make a loss. Shares can provide an income through the payment of dividends. However, a company can choose not to pay a dividend at all, investing any profits back into the company.

2. Match the types of securities below with their definitions.

The following basic types of securities are listed and traded on the Exchange:

1	domestic equities and overseas equities	fixed-interest stocks, usually issued by companies or local authorities. They entitle the owner to regular interest payments and the repayment of a fixed sum at a given date in the future.
2	preference shares	securities which are not listed and traded on an organized exchange. They are also called over-the-counter securities. These are the stocks of companies not big enough for a Stock Exchange listing or not wishing to pay for listing. In most cases, these stocks are thinly traded because they do not get much attention from the media or financial analysts, and so may be too risky for many investors.
3	bonds	securities, issued by any country's government to raise money to fund any shortfall in public expenditures. They can be: longs, with a redemption date more than 15 years away; mediums, with a redemption date of between 5 and 15 years; shorts, with a redemption date of 5 years or less. Some are undated, with no fixed redemption date.
4	unlisted securities	ordinary shares, issued by domestic or overseas companies
5	gilts	is stock in a corporation with a national reputation for quality, reliability and the ability to operate profitably both in good and bad times. The term derives from the highest-value chip in a game of poker. One should consider blue chips for long-term investment.
6	blue chip	shares earning a fixed income. Their owners are entitled to receive any dividend before the holders of ordinary shares. If the company is wound up, they are paid first, once all the creditors have been paid in full.

Speaking: Role-play

Work in pairs and each take one of the roles in a telephone conversation. Read your card and prepare what you are going to say. When you are ready, Student B begins.

Student A You are a financial adviser. One of your client telephones you. Take the client’s account number and then give some advice. The client owns shares in the following companies: AT Engineering .This group is performing very well and is probably worth investing in further. It has recently received a very large new contract in a new market. Inteco Company. This company will soon get a new chief executive who may want to make big changes. You are not sure if this will have a good or bad effect on the share price, so it is probably best to wait and see what happens.

Student B You own shares in these two companies: AT Engineering and Inteco Company. Your account number is 0994758367. You are worried about Inteco as there are stories in the news about changes to the board of directors. You think this may affect the share price. Should you sell the shares? You are also thinking of investing another sum of money. Telephone your financial adviser for advice.

Listening: Interview with the founder of an Internet business consultancy

(Market Leader, Upper Intermediate Business English CB by D. Cotton, Unit 9)

Writing

Part 1

1. Choose three companies from different sectors that interest you (entertainment, technology, telecommunications, food, cosmetics, transportation, etc.) and fill in the information that you obtain from your research. Then, based on your research, write a report analyzing these companies and graph their stock prices for the past six months.

Company Name:______ Symbol:_____________ History:_____________ Management:________ Products:____________ Income Analysis:______

B. Discuss the following questions.

1. Comparing the information you've found from your research, which companies would be a good investment? Why? Which ones might not? Why?

2. Many stock analysts think it is important to build a portfolio of varied stocks from different sectors. Explain why.

3. How will you build your portfolio from the stocks you have researched?

Module 2 Banking

Starting up

Look at the cartoon and express your vision of the painter’s message.

Discuss with your partner

• Are banks the best place to keep your money? Why?

• What are good and bad things about banks?

• Do you use a piggy bank? For what reason?

• Would you like to work for a bank? Why?

Reading: The Banking Industry

A. Study the topical vocabulary.

banking institutions	банковские учреждения
banks	банки
savings ~	сберегательные
commercial or retail ~	коммерческие
merchant ~	торговые
to issue	выпускать, выдавать
~ notes	зд. деньги
~ personal cheque	именной чек
~ money	деньги
~ shares	акции
to undertake	проводить, осуществлять, предпринимать
~ management	управление, администрирование
~ monetary policy	кредитно-денежную политику
to pay interest on the account	платить процент по счету
receipt of deposits	получение вклада
transfer of money	перевод денег
encashment	оплата наличными, инкассация
to save money/to keep money safe	экономить, сберегать, копить
to lend = to loan (to make a loan)	давать взаймы, одалживать
lender	заимодавец
to borrow	брать взаймы, в долг, в кредит
borrower	заемщик
to deposit	положить на счет
a depositor	вкладчик
insolvent	неплатежеспособный
legal tender	законное платежное средство
capital surplus	избыток капитала
collateral	залог
to be subject to	подлежать чему-либо
capital	капитал
~ surplus	избыток капитала
~ deficit	дефицит капитала
to charge interest	взимать комиссию
liquidity	ликвидность (способность банка своевременно выполнять обязательства)
maturity	срок действия вклада, срок долгового обязательства

B. Predict the answers to the questions before reading

1. What does the word ‘bank’ mean?

2. What is the role of ‘banking’ in society and financial systems?

3. Which types of banks can you name?

C. Read the text below and write short headings (one or two words) for each paragraph.

1 A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers that have capital deficits to customers with capital surpluses. Due to their critical status within the financial system and the economy generally, banks are highly regulated in most countries. Most banks operate under a system where they hold only a small reserve of the funds deposited and lend out the rest for profit.

2 A bank which is entrusted with the functions of guiding and regulating the banking system of a country is known as its Central bank, Reserve bank, or Monetary authority. Such a bank does not deal with the general public. It acts essentially as Government’s banker, maintain deposit accounts of all other banks and advances money to other banks, when needed. The Central Bank provides guidance to other banks whenever they face any problem. It is therefore known as the banker’s bank. The Central Bank maintains record of Government revenue and expenditure under various heads. It also advises the Government on monetary and credit policies and decides on the interest rates for bank deposits and bank loans. In addition, foreign exchange rates are also determined by the central bank. Another important function of the Central Bank is the issuance of currency notes, regulating their circulation in the country by different methods. It also prints the national currency, which usually serves as the nation's legal tender.

3 Commercial or retail banks are businesses that trade in money. They receive and hold deposits, pay money according to customers' instructions, lend money, offer investment advice, exchange foreign currencies, and so on. They make a profit from the difference between the interest rates they pay to lenders or depositors and those they charge to borrowers. Banks also create credit because the money they lend, from their deposits, 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 cheque (check) rather than the use of notes or coins - from where it can be lent to another borrower, and so on. When lending money, bankers have to find a balance between yield and risk, and between liquidity and different maturities.

4 The merchant banks are in many ways different from commercial banks as they deal mainly with businesses. Merchant banks in Britain raise funds for industry on the various financial markets, finance international trade, issue and underwrite securities deal with takeovers and mergers, and issue government bonds. They also generally offer stockbroking and portfolio management services to rich corporate and individual clients. Some merchant banks are known as accepting houses* as they specialise in acceptance credit*. Others are called issuing houses* as they float* new issues of shares on the capital market, both at home and overseas*. Investment banks in the USA are similar, but they can only act as intermediaries offering advisory services, and do not offer loans themselves, investment banks make their profits from the fees and commissions they charge for their services.

5 A country's minimum interest rate is usually fixed by the central bank. This is the discount rate, at which the central bank makes secured loans to commercial banks. Banks lend to blue chip borrowers (very safe large companies) at the base rate or the prime rate; all other borrowers pay more, depending on their credit standing (or credit rating, or creditworthiness); the lender’s estimation of their present and future solvency. Borrowers can usually get a lower interest rate if the loan is secured or guaranteed by some kind of asset, known as collateral.

Notes

accepting house	акцептный дом: торговый банк по международной торговле
acceptance credit	акцептный кредит: метод платежа в международной торговле
issuing house	эмиссионный дом: банк, организующий выпуск ценных бумаг
to float	зд. выпускать
at home and overseas	в своей стране и за рубежом

D. Answer the questions about banking system.

1. What are the other names of the Central bank?

2. What are the main functions implemented by the Central bank?

3. How is the Government's monetary policy implemented through the Central bank?

4. Which banks are called retail?

5. What services are offered by commercial banks? What is their primary business?

6. In what way do commercial banks make profit?

7. Why may the bank become insolvent?

8. What are the main activities of merchant banks in Great Britain?

9. What are the differences between investment banks and commercial banks?

10. How is the bank rate regulated?

E. Find the words or expressions in the text which mean the following.

1. to place money in a bank; or money placed in a bank

2. how much money a loan pays, expressed as a percentage

3. the date when a loan becomes repayable

4. buying and selling stocks or shares for clients

5. taking care of all a client’s investments

6. ability to pay liabilities when they become due

7. anything that acts as a security or a guarantee for a loan

8. controlling the amount of banknotes in circulation

9. lending money to a commercial bank in danger of going bankrupt

F. The text contains a number of common verb-noun partnerships (e.g. to lend money, to finance international trade). Match up the verbs and nouns below to make common collocations.

charge	advice
do	bonds
exchange	business
issue	currencies
make	deposits
offer	funds
pay	interest
raise	loans
receive	profits
underwrite	security issues

G. Complete the sentences with the words below.

bank borrowers draw out open exchange interest lenders limit current close limit

1. The sum … pays to …. for the use of their money is determined by the … rate.

2. The value of the money of one country compared to that of another is shown by the … rate.

3. The rate of interest fixed by a central bank, such as the Bank of England, is the… rate.

4. The bank account that covers daily needs - salaries are paid into it. Cash is drawn from it, and cheques are written against it - is the … account.

5. To start an account with a bank or with a supplier is to … it; to finish an account with a bank or with a supplier and formally to end the arrangement is to … it.

6. To obtain cash from bank at which one has an account is to … cash.

7. The greatest sum which debtors are allowed to owe is their credit…

Speaking: Banking System

A. Draw the flow chart describing the banking system.