Transcript Document

The Stock Market
The stock market appears in the news
every day:
 It is the organised trading of securities (a
general name for shares or bonds of all types); it
is a market in which the shares of corpoartions
are traded
 A company can raise money on the stock market
(or stock exchange) in two different ways
 It can issue shares (stocks), or units of its
capital, to institutional investors or the general
public
 Different types of shares or equities are
available, but the most common are known as
ordinary or common shares
 When an investor buys a share, using the services of a
specialist company or broker (a person who is
licensed to act as an agent for another in negotiating
the sale, purchase of real property in return for a fee
or commission), he or she becomes a shareholder and
owns a part of a company
 Shareholders can make money by receiving dividends
(an amount paid to shareholders from a company’s aftertax earnings), paid as a proportion of a company’s
annual profits, and when the value of their shares
increases
 Another way is the following: a company can also borrow
money from investors by issuing bonds, loans for fixed
period with fixed interest rates
 Securities refer to both shares and bonds ( a
written agreement by which a person insures he
will pay a certain sum of money if he doesn’t
perform certain duties properly)
 Each year billions of shares and bonds are sold
or traded on the world’s major stock exchanges
 Many companies are authorised to use the
stock exchange to trade their shares.
 Every day, the press gives prices and other
information about the shares of these listed
companies
How does the stock market work?
 Let’s say you want to start a business, and you
decide to open a restaurant. You buy a building,
buy all the kitchen equipment, tables and chairs,
supplies, you hire the cooks, servers..
 Let’s say that: you spend 500 000 dollars buying
the building and the equipment
 In the first year, you spend 250 000 on supplies,
food and payment for employees
 At the end of your first year, you add up all of the
money and your total income is 300 000 dollars.
 Since you have made 300 000 dollars and paid
out the 250 000 for expenses, your profit is 50
000
 At the end of the second year, you bring in 325
000 and your expenses reduce the profit to 75
000 dollars. At this point, you decide that you
want to sell the business. What is it worth?
 One way to look at it is to say that the business
is “worth” 500 000 dollars.
If you sell the building, the equipment and
everything else: the building probaly went
up in value but the equipment went down
because it is now used. Let’s say that the
total value of you business is 500 000. this
is the asset value, or book value, that is
the price of the business if you sold it right
now.
But what if you keep it going?
 If you keep the restaurant going, it will probably
make at least 75 000 dollars a year, you know
that from your history with the business
 Knowing this you can set the price according to
the profit forecast and even divide the
restaurant in 10 equal pieces and sell each
piece to a different person.
 In other words, you sell shares in the restaurant.
So, each shareholder would earn only a tenth of
the profits and an equal part in business
decisions.
Stock represents ownership of a
company’s profits. A dividend on a share
of stock represents that share’s portion of
profits, generally dispersed yearly.
A stock exchange
 An example: if I am a private citizen who owns a
restaurant, and I am selling my restaurant to
other private citizens in the community, I might
do the whole transaction by placing an ad in the
newspaper
 This makes selling the stock an easy job and the
stock exchange solves the problem.
 The exchange makes buying and selling easy.
You don’t have to actually go to New York to visit
the New York Stock Exchange. You can call a
broker and he or she will go to the NYSE on
your behalf.
 The stock exchange has an interesting side
effect. Becuase all the buying is concentrated in
one place, it allows the price of a stock to be
known every day. Therefore, the investors can
watch as a stock’s price fluctuates.
 The price of a stock also reflects the dividend
that the stock pays, the profit of the company in
the future and many useful information.
Phrasal verbs
The third conditional
Phrasal verbs: do the matching to obtain
meaningful phrasal verbs
 Point
 Think
 Call (2)
 Go
 Buy
 Look
 Let
 Out
 Over
 Off
 Up
 On
 About
 Down
 After
Replace the words in italics with the
correct phrasal verbs:
1) The meeting has been cancelled because
several people are unable to attend.
2) We already own 30% of the company’s shares
and we intend to purchase at least another
20% in the coming year.
3) The new subsidiary in Bahrain will be
supervising our operations in the Middle East.
4) It will be a difficult conference to organise. How
shall we start doing it?
5) We’ll need some more time to reflect upon your
proposal before we can give you an answer.
6) In her presentation she drew attention to some
of the problems that the new project would
involve.
7) One of our sales representatives will visit you
next week.
8) This year the company has disappointed
investors by announcing an unexpected loss.
The third conditional
We use the third conditional to talk about
actions or events which did not happen
in the past, and the imaginary
consequences.
FORM: past perfect + second conditional
(had gone)(would/could have earned)
If you had bought those shares, you
would have made a lot of money.
The employees would not have gone on
strike if the company had improved their
pension scheme.
You would have been much happier if
you had married Sarah instead of Ann.
Complete with the correct third conditional
verb solutions:
 The Macintosh presonal computer_________
(not provide) the solution for inexpensive
publishing, if Apple _________ (not introduce)
the LaserWriter, the first affordable laser printer
for the Mac.
 Apple probably ________ (remain) more
competitive if they __________ (sell) licences
for their operating system to other computer
manufacturers.
If the first generation of the Newton, a
revolutionary notepad computer,
___________ (work) better, sales
_________ (be) higher.
When the iMac was launched, people
loved the colourful, fun design. Perhaps if
it ___________ (be) less attractive, fewer
first-time computer buyers ________ (buy)
it.
If Apple __________ (not launch) the
iMac, they _______ (not recapture) 6.7%
of the computer market.
Apple shares _________ (not rise) in
1998, if their sales ________ (not
increase) substantially.