STOCKS

• Securities*:- Stocks – equity financing- Bonds – debt financing- money market instruments:

• (derivatives, futures, options)

- * vrijednosnice, vrijednosni papiri

STOCKS & SHARES (1)

1. Most companies begin as ……………. limited companies.

2. If they want to grow they must ………. capital.

3. One way to obtain capital for growth is to ……….. , i.e. apply to the stock exchange to become a public limited comp.

4. Smaller or newer companies usually sell their shares on the ………….……. markets.

private

raise

go public

over-the-counter

REVISION

FOUR TYPES OF ORGANISATIONS IN THE PRIVATE SECTOR

1) WITH UNLIMITED LIABILITY• __________________• ______________

2) WITH LIMITED LIABILITY• ___________________• ___________________

Sole proprietorship

Partnership

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.

* ______

Source: Longman Business English Dictionary

liable

LIMITED COMPANIES

• a legal ______ (independent legal existence from its

shareholders)

• shareholders have limited liability (liable for the

amount of capital ________)

• in case of bankruptcy, assets are __________ and

the company is wound up.

entity

invested

liquidated

LIMITED COMPANIES• owners put ___ the capital (divided into shares) • shareholders can _______the AGM and take a

share of the profit through dividend• shareholders elect a _______________ and a

Chairperson• the BoD ________managers to run day-to-day

business• documents which need to be ________ : the

Memorandum of Association and Articles of Association

• Registrar of Companies issues a Certificate of Incorporation

up

vote at

Board of Directors

appoint

drawn up

PRIVATE →PUBLIC LIMITED COMPANY

FLOTATION / IPO / GOING PUBLIC• change a private company into a public company

by issuing shares and soliciting the public to purchase them

The bank has closed its initial public offer early because of overwhelming demand from investors.

The price of the company’ shares on the day it floated on the stock market beat all expectations.

Investors expected the share price to rise steeply after the company went public.

Source: Longman Business English Dictionary

MK, p 87: Reading Stocks and Shares

STOCKS & SHARES (2)5. Issuing shares for the first time is known as

………… a company (making a …….........) or _ _ _.

6. To guarantee to purchase all the securities at an agreed price on a certain day, if they cannot be sold to the public: ……………..

floating flotation

I P O

to underwrite

VOCABULARY

Companies going public… • i____ shares• a_____ to a stock exchange• j____ over-the-counter market• a____ to be quoted or listed on a stock

exchange• f_____ a large number of requirements • u___ an investment bank to u________the issue

ssue

pply

oin

pply

ulfill

se nderwrite

SynonymsBritish EnglishBritish 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 EnglishAmerican English

corporations

stocks

stockholders

common stock

preferred stock

initial public offering

Annual Stockholders M.

Bylaws

Certificate of Incorporation

authorized capital stock

real estate

Security (finance)...

... a financial investment such as a bond, a share/stock or a d _ _ _ _ _ _ _ _ _.

Security (finance)...

... a financial investment such as a bond, a share/stock or a d e r i v a t i v e.

Derivatives

MK, U 18, p 92

• DERIVATIVE (finance) something such as an option, or a future, based on underlying assets such as shares, bonds, and currencies.

Longman Business English Dictionary

Cro =derivat, derivatni instrument, izvedenica

Derivative: A security whose price is d_ p _ _ _ _ _ t upon or d_ _ _ _ _ d from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by f _ _ _ _ _ _ _ _ _ s in the underlying asset. The most common u _ _ _ _ _ _ _ _ g assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage. 

http://www.investopedia.com/terms/d/derivative.asp

MK, p 92 Vocabulary

1F 2A 3E 4D 5C 6B 7H 8G• Investopedia explains Derivative

Futures contracts, forward contracts, options and swaps are the most common types of derivatives. Derivatives are contracts and can be used as an underlying asset. There are even derivatives based on weather data, such as the amount of rain or the number of sunny days in a particular region.