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STOCKS AND SHARES
UNIT 17
FOOD FOR THOUGHT…
If you possessed a large amount of money, which of
the following would give the best return on your
money? Which are very risky? Which are less risky?
putting it under the mattress
a high-interest deposit account
buying a lottery ticket
taking it all to Las Vegas or
Monte Carlo
putting it in a bank
FOOD FOR THOUGHT…
buying gold and precious
stones
buying a Van Gogh painting
investing in property or real
estate
buying bonds
buying stocks and shares
a new business venture
currencies
FINANCIAL MARKETS –
INTRODUCTION
STOCK MARKET – investors or financial institutions buy
S_________ of companies listed on the stock exchange
S_________ – both stocks and privately held stakes in small
firms that are not publicly traded
'Basket' of stocks→ picked by a fund manager and put
together into a M__________ FUND (UK - UNIT TRUST) →
invested in particular countries, different sectors of the
market or may track a particular I__________
FUNDS → different objectives: regular income (D________)
or long-term CAPITAL G_________ (increase in the share
prices)
FINANCIAL MARKETS –
INTRODUCTION
STOCK MARKET – investors or financial institutions buy
STOCKS of companies listed on the stock exchange
SHARES – both stocks and privately held stakes in small firms
that are not publicly traded
'Basket' of stocks→ picked by a fund manager and put
together into a MUTUAL FUND (UK - UNIT TRUST) →
invested in particular countries, different sectors of the
market or may track a particular INDEX
FUNDS → different objectives: regular income (DIVIDENDS)
or long-term CAPITAL GROWTH (increase in the share prices)
STOCK MARKET
STOCKS AND SHARES → bought and sold on the STOCK
EXCHANGE: a physical location (The NY Stock Exchange on Wall
street, the NASDAQ (an electronic exchange), or a small selected
group of stocks brought together to make an INDEX (D________
J__________ INDUSTRIAL AVERAGE based on a group of 30
major US corporations)
WHY DO STOCKS GO UP AND DOWN IN PRICE? WHEN IS A STOCK
WORTH BUYING?
Financial analysts use three main tools:
Analysis of individual c___________: their market position and
performance
Analysis of the national and global e___________
Technical analysis: using charts and internal market
s___________ to identify future t__________ and turning points
STOCK MARKET
STOCKS AND SHARES → bought and sold on the STOCK
EXCHANGE: a physical location (The NY Stock Exchange on Wall
street, the NASDAQ (an electronic exchange), or a small selected
group of stocks can be brought together to make an INDEX (DOW
JONES INDUSTRIAL AVERAGE based on a group of 30 major US
corporations)
WHY DO STOCKS GO UP AND DOWN IN PRICE? WHEN IS A STOCK
WORTH BUYING?
Financial analysts use three main tools:
Analysis of individual companies: their market position and
performance
Analysis of the national and global economy
Technical analysis: using charts and internal market statistics to
identify future trends and turning points
BOND MARKET
 about ten times bigger than the stock market
 government or a large company wants to borrow a large sum of
money → issues a bond and receives the money as a loan from
the institution or an individual who buys it (BONDHOLDER) →
the principal paid back over a fixed period of time (MATURITY)
→ the bondholder receives interest (COUPON)
 their price goes up or down over the term of the loan →
INFLATION (the interest repaid on a bond is fixed → rising
inflation will reduce its final value) and CURRENCY
MOVEMENTS (bonds issued and repaid in one particular
currency → their value changes as the currency fluctuates)
 GOVERNMENT BONDS → low-risk
 CORPORATE BONDS → depend on the CREDIT RATING of
the company
FOREIGN EXCHANGE
MARKET
 bigger than all the securities markets combined (around $2
trillion a day)
 DEALERS (commercial banks, central banks, pension funds,
etc.) buy and sell CURRENCY pairs such as EUR/USD.
 lots of SPECULATION in this market if a currency fluctuates →
implications → buying and selling foreign EQUITIES and
BONDS; international trade; inflation (because of payments
for imported goods), etc. → a lot of dealing is done to protect
against (HEDGE) such risks
COMMODITY MARKET
dealers trade the FUTURE PRICE of such things as
ENERGY (crude oil, natural gas, etc), METALS (gold,
silver, copper, steel, etc.), SOFT COMMODITIES (coffee,
sugar, grains (e.g. corn, wheat, soybeans), LIVESTOCK
(e.g. cattle, hogs, etc.)
VIDEO – TRADING PLACES (1983) –
HOW DOES THE STOCK EXCHANGE
WORK?
Watch the video and find out
how Billy Ray Valentine (Eddie
Murphy) learns about how
the stock exchange works.
https://www.youtube.com/watch?v=7EjdC0pjo1A
ORGANISATIONS IN
THE PRIVATE SECTOR
businesses set up by individuals, not the state
1) WITH UNLIMITED LIABILITY
Sole p__________
P__________
2) WITH LIMITED LIABILITY
P__________ limited company
P__________ limited company
ORGANISATIONS IN
THE PRIVATE SECTOR
businesses set up by individuals, not the state
1) WITH UNLIMITED LIABILITY
Sole proprietorship
Partnership
2) WITH LIMITED LIABILITY
Private limited company
Public limited company
JOINT-STOCK / LIMITED
COMPANIES
independent legal existence from its shareholders
shareholders have L__________ L__________ (in case of debt,
each shareholder is responsible only for the amount he has
invested)
the capital is divided into S__________
owned by S___________ who can vote and take a share of the
profit
shareholders elect a B__________ OF D__________ and a
C__________
the BoD appoint M___________ to run day-to-day business
A__________ G__________ M__________ is held every year
buying a share → ownership → right to v__________ at AGM +
a d__________
JOINT-STOCK / LIMITED
COMPANIES
independent legal existence from its shareholders
shareholders have LIMITED LIABILITY (in case of debt, each
shareholder is responsible only for the amount he has invested)
the capital is divided into SHARES
owned by SHAREHOLDERS who can vote and take a share of the
profit
shareholders elect a BOARD OF DIRECTORS and a CHAIRPERSON
the BoD appoint MANAGERS to run day-to-day business
ANNUAL GENERAL MEETING is held every year
buying a share → ownership → right to vote at AGM +
a dividend
FLOTATION/IPO/GOING PUBLIC
TO FLOAT A COMPANY:
 changing a private company into a public company
by issuing shares and soliciting the public to
purchase them
INITIAL PUBLIC OFFERING (IPO):
 the first sale of a corporation’s common shares to
public investors. Its main purpose is to raise capital
for the corporation
STOCK MARKET (EQUITY MARKET)
P__________ MARKET:
The market in which the
securities are bought and
issued for the first time.
S__________ MARKET:
The market for securities that
are being traded after they
are first issued.
STOCK MARKET (EQUITY MARKET)
PRIMARY MARKET: The
market in which the securities
are bought and issued for the
first time.
SECONDARY MARKET: The
market for securities that are
being traded after they are
first issued.
PEOPLE IN THE STOCK MARKET
S_____________: agents that charge a fee or commission for
executing buy and sell orders submitted by an investor
M____________ M____________: buy and sell shares on
their own account and make money on the difference they
pay for buying and selling shares (‘spread’)
S______________: trade with a higher-than-average risk, in
return for a higher-than-average profit potential, anticipating
future price movements (bulls, bears, stags)
PEOPLE IN THE STOCK MARKET
STOCKBROKERS: agents that charge a fee or commission for
executing buy and sell orders submitted by an investor
MARKET MAKERS: buy and sell shares on their own account
and make money on the difference they pay for buying and
selling shares (‘spread’)
SPECULATORS: trade with a higher-than-average risk, in
return for a higher-than-average profit potential, anticipating
future price movements (bulls, bears, stags)
HOW ARE THESE PICTURES RELATED TO
THE PEOPLE IN THE STOCK MARKET?
STOCKS AND SHARES – MK,
pp. 87, 88 & 89
READING, p. 87 – Match up the half-sentences, which make
up the text about stocks and shares.
LISTENING, p. 88 – Listen to an extract from a financial market
report on an American radio station and tick the right boxes in
the table.
VOCABULARY, p. 89 – Matching – describing movements of
security prices:
A to rise after previously falling
B to rise a little
C to rise a lot
D to fall a little
E to fall a lot
GRAPH DESCRIPTION – TYPES OF
GRAPHS AND CHARTS – RB, pp.
27 & 28
Study the graphs and charts in RB, pp. 27 &
28, and do the tasks I, II & III.
GRAPH DESCRIPTION – VERBS
A) VERBS
CROATIAN:
Rasti (malo)
Pasti (malo)
Rasti (znatno)
Pasti (znatno)
Stagnirati
ENGLISH:
__________
__________
__________
__________
__________
__________
__________
__________
__________
__________
CROATIAN:
Doseći najvišu točku
Pasti na najnižu točku
ENGLISH:
__________
__________
__________
__________
GRAPH DESCRIPTION – NOUNS
B) NOUNS
CROATIAN:
Porast (mali)
ENGLISH:
__________
__________
Pad (mali)
__________
__________
Porast (znatni)
__________
__________
Pad (znatni)
__________
__________
Do the tasks in the RB, pp. 31 & 32.
GRAPH DESCRIPTION – ADVERBS,
ADJECTIVES AND PREPOSITIONS –
RB, pp. 32, 33 & 34
Do the tasks in the RB, pp. 32, 33 & 34.
GRAPH DESCRIPTION – PRACTICE –
RB, pp. 35, 36, 37 & 38
Practice graph description by doing tasks in
RB, pp. 35, 36, 37 & 38.