* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download Corporate finance 2 (Stocks)
Survey
Document related concepts
Federal takeover of Fannie Mae and Freddie Mac wikipedia , lookup
Financial economics wikipedia , lookup
Private equity secondary market wikipedia , lookup
Investment fund wikipedia , lookup
Financialization wikipedia , lookup
Private equity in the 1980s wikipedia , lookup
Business valuation wikipedia , lookup
Public finance wikipedia , lookup
Stock valuation wikipedia , lookup
Stock trader wikipedia , lookup
Transcript
HW check Vocabulary, MK p 82 1 cash flow 2 equity 3 mutual funds 4 pension funds 5 principal 6 maturity 7 coupon 8 insolvent or bankrupt 9 creditors 10 dividends 11 market makers 12 bid / bid price 13 offer / offer price 14 yield Match up verbs with nouns borrow money deduct interest payments finance activities issue shares issue bonds pay (a rate of) interest pay a (higher) return pay dividends pay tax receive interest payments raise money repay principal sell assets deduct tax receive dividends repay bonds repay money sell bonds HW check: MK, p 81 • • • • • • Meaning of T-notes, T-bonds and gilts? Who are market makers? Bid vs. offer price? What is a spread? What is inversely related? What does the yield of a bond depend on? More about bonds (MK, p.81) • Meaning of T-notes, T-bonds and gilts? dged stock (UK) Treasury notes, treasury bonds and gilt-e_____ SECURITIES*: BONDS (U16) DEBT FINANCING ( = loans) Risk rating: AAA (best) to C (worst) Companies: BONDS Governments: LONG-TERM BONDS: an interest paying GILTS – GB loan TREASURY BONDS-USA which can be traded T-bonds (10+ yrs) on bond markets TREASURY NOTES-USA securities, papers T-notes (less than 10 yrs) * vrijednosnice SHORT-TERM BONDS: TREASURY BILLS (one-year) More about bonds (MK, p.81) • Meaning of T-notes, T-bonds and gilts? dged stock (UK) Treasury notes, treasury bonds and gilt-e_____ • Who are market makers? rokerage companies which q____ uote bid and offer price. Banks & b________ • Bid vs. offer price? Bid _____ – the highest price that the buyer is willing to pay _____ – the price asked by sellers Offer • What is a spread? ifference between the bid & offer prices (bid/ask or buy/sell) D________ • What is inversely related? nterest r____ ate in the economy & the price of existing bonds. I_____ • What is the yield of a bond and what does it depend on? ncome given by a bond. It depends on its c______ oupon and its I______ purchase price. More about bonds (MK, p.81) • Meaning of T-notes, T-bonds and gilts? Treasury notes, treasury bonds and gilt-edged stock (UK) • Who are market makers? Banks & brokerage companies which quote bid and offer price. • Bid vs. offer price? Bid – the highest price that the buyer is willing to pay Offer – the price asked by sellers • What is a spread? Difference between the bid & offer prices (bid/ask or buy/sell) • What is inversely related? Interest rates in the economy & the price of existing bonds.WHY? • What is the yield of a bond and what does it depend on? Income given by a bond. It depends on its coupon and its purchase price. Debt Finance vs. Equity Finance (MK, p.81) BONDS ADVANTAGE DISADVANTAGE FOR INVESTORS FOR ISSUERS Debt Finance vs. Equity Finance (MK, p.81) BONDS FOR INVESTORS FOR ISSUERS ADVANTAGE generally safer bond interest is tax deductible WHAT DOES IT MEAN? DISADVANTAGE shares pay a higher return debt increases a company’s financial risk HOW? Comprehension CHECK, MK p 82 1 F Can you explain your answer? 2 T 3 T 4 F 5 T 6 F 7 F 8 F Words/expressions to remember? issue, mature, insolvent, coupon, tax advantages Stocks vs. Bonds (video) HANDOUT http://www.investopedia.com/video/play/stocks-versus-bonds Stocks and bonds are the two biggest omponents ortfolios c____________ of most p_________... Stocks ong erm g_____ usually provide a l____-t____ rowth and bonds tend to ensure a s_____ teady i______ ncome s_____.... tream ocal and n_______ ational Bonds can be bought from l____ ajor orporations and a g__________ c__________, overnments and m_____ careful selection of stocks will include both arge mall c___________ ompanies l______ and s_____ from a iverse group of i_________. ndustries A combination of d______ stocks and bonds is good for all kinds of investors. Stocks vs. Bonds (video), cont. rowth For aggressive investors who want g_________, alance the risk of stocks and bonds may b______ ps and d_____ owns of the market, stabilize the u____ while stocks can help r___ isk a_____ verse investors edge against the risk of inflation. Thus, stock h____ purchases will provide high reward and help to hedge against inflation while bonds give you a afety n___ et against stock market dependable s_____ losses. REVISION FOUR TYPES OF ORGANISATIONS IN THE PRIVATE SECTOR 1) WITH UNLIMITED LIABILITY Sole proprietorship • __________________ Partnership • ______________ 2) WITH LIMITED LIABILITY Private limited company • ___________________ Public limited company • ___________________ REVISION LIMITED vs. UNLIMITED LIABILITY FOR DEBT In businesses with limited liability, owners are responsible* for their company’s debts up to a certain amount if it goes out of business, and do not have to sell their personal assets to repay the debts. liable * ______ Source: Longman Business English Dictionary LIMITED COMPANIES entity (independent legal existence from its • a legal ______ shareholders) • shareholders have limited liability (liable for the invested amount of capital ________) liquidated and • in case of bankruptcy, assets are __________ the company is wound up. • • • • • • LIMITED COMPANIES up the capital (divided into shares) owners put ___ vote at shareholders can _______the AGM and take a share of the profit through dividend of Directors and a shareholders elect a Board _______________ Chairperson appoint the BoD ________managers to run day-to-day business drawn up : the documents which need to be ________ Memorandum of Association and Articles of Association Registrar of Companies issues a Certificate of Incorporation Synonyms British English companies shares/stock EQUITIES shareholders ordinary shares preference shares flotation Annual General Meeting Articles of Association Memorandum of Assoc. authorised share capital property American English corporations stocks stockholders common stock preferred stock initial public offering Annual Stockholders M. Bylaws Certificate of Incorporation authorized capital stock real estate STOCKS • - Securities*: Stocks – equity financing Bonds – debt financing money market instruments: • (derivatives, futures, options) - * vrijednosnice, vrijednosni papiri MK, p 87: Reading Stocks and Shares 1J 2D 3A 4F 5G 6C 7K 8E 9I 10H 11L 12 B Handout: STOCKS & SHARES (1) private 1. Most companies begin as ……………. limited companies. 2. If they want to grow / expand they must raise capital. ………. 3. One way to obtain capital for growth is to go public, i.e. apply to the stock exchange to ……….. become a public limited comp. 4. Smaller or newer companies usually sell their shares on the over-the-counter ………….……. markets. STOCKS & SHARES (2) 5. Issuing shares for the first time is known as floating a company (making a …….........) flotation or ………… _ _. I P_ O 6. To guarantee to purchase all the securities at an agreed price on a certain day, if they cannot be underwrite sold to the public: to …………….... 7. After stocks have been issued they can be secondary market at the stock traded on the .................... listed exchange on which the company is .................. nominal value of a share – the price written 8. The .............. on it – is rarely the same as its market price. A period in which most stocks fall in value is called a bear market, and the period during with most stocks (& ............ index are rising is called a ......... bull market. the stock .........) Handout: match phrases with the same meaning Issuing stocks and offering them for sale To underwrite a stock issue Equity Market makers How many sellers and buyers there are The price a stock is currently being traded at on the s.e. A period during which stocks are rising Bear market A period during which stocks are falling Supply and demand Market price Bull market Traders in stock who quote bid & offer prices To guarantee to buy the stocks if there are no other buyers Stocks or shares Going public Vocabulary: match phrases with the same meaning Issuing stocks and offering them for sale To underwrite a stock issue Equity Market makers How many sellers and buyers there are The price a stock is currently being traded at on the s.e. A period during which stocks are rising Bear market Going public To guarantee to buy the stocks if there are no other buyers Stocks or shares Traders in stock who quote bid & offer prices Supply and demand Market price Bull market A period during which stocks are falling HW: RB, p 79 VI Write a summary (200-300 words) of the text based on the notes above