STOCKS/SHARES /EQUITIES

&

BONDS

A few things to remember ... Individuals and groups of people doing business as a

partnership, have ........... liability for debts, unless they form a limited company. If the business cannot pay its ..........., any creditor can have it declared ............ In order not to lose their personal ..........., most people doing business form ........... companies, i.e. legal ........... separate from their owners and only ........... for the amount of capital that has been ........... in it. If a limited company goes ..........., it is wound up and its assets are ........... (i.e. sold) to pay the debts. If the ........... do not cover the liabilities or the debts, they remain unpaid and ........... simply do not get all their money back.

STOCKS/SHARES /EQUITIES

Selling Who? Why?Buying Who? Why? Trading (selling and buying) Where? How?

COMPANIES issuing shares – raising funds for expansion

public limited companies (Plc)publicly-held companiespublic companies

(Attention!Public corporation*)

to list shares at a stock exchangelisting / quotationlisted companies / quoted companies

going public (e.g. They went public last year.)

flotation / IPO (Initial Public Offering)to float a company underwriting new share issues

rights issuebonus issue

INA IPO starts today13 November 2006

-- Croatia has set the price range for local investors seeking to buy shares in oil company INA at between 1,400 kuna and 1,900 kuna.

The IPO will start today, when subscription will open for local buyers. A roadshow for investors will start next Monday.

The books will close on November 23 for private individuals and four days later for institutional investors from Croatia. The government hopes to fetch up to 2.85 billion kuna from the sale of 15 percent of INA's stock and may float a further two percent, depending on investor interest.

SHAREHOLDERS/STOCKHOLDERS

investorspurchasing shares - taking part of the ownership

small shareholders, major shareholderretail shareholders / institutional investors Shareholders’ rights: to vote at AGM (AMS) to receive a dividend to claim the company's assets (in case of liquidation) to sell shares on the secondary market

TRADING

Trade in shares Stock market, stock exchange Traders Dealers Brokers, brokerage

The «Farm» Bulls Bears Chicken Pigs Stags

bull market / bear market bullish market / bearish market

Bulls make money, bears make money, but pigs just get slaughtered.

STOCK MARKETSee more at http://www.investopedia.com/articles/basics/03/103103.asp

The Stock Exchangee.g. The NYSE, the LSE

-successful companies

-strict requirementse.g. quarterly reports

annual report

-physical exchange

The OTC markete.g. The NASDAQ

-new companies-second-tier shares*(but also Dell, MS, Intel...)

-virtual exchange (no trading floor)

Stock table

Chart (R.p.46) What ratios are important for analysing a

company’s financial management? What are cashflow problems due to? Find words describing the financial

controller’s interest in past, present and future activities.

Responsibilities of a CAO? Treasurer’s responsibilities? Two major sources of finance

(incl.subdivision)?

What? Who? Why? borrowing/lending:

principal (the amount borrowed, the face value, par value)interest (coupon)

bond issuers: governments (government bonds)

companies (corporate bonds)

bondholders: selling or holding until maturity

BONDS

vocabulary

Tax deductible, tax deduction Debt/equity ratio VAT Gilt-edged securities Treasury bonds

Bonds (MacKenzie) Pg.1 make 5 questions Pg.2 explain: credit worthiness Pg.3 explain: bearer certificate,

primary/secondary market, bonds are liquid, above/below

par, coupon, yield Pg.4:debt financing /equity financing

(advantages and disadvantages)

Pg.5: government bonds – types and reasons for issue

The Financing of Corporate Activity McConnell/Brue, McGraw-Hill Inc.

Corporate finance Stocks vs. Bonds Bond risks

*Features of clear (well-structured) writing

CORPORATE FINANCE Full text: Generally speaking, ......

three different ways... First, ..., Second, ..., For example, ...Third,...

Notes:

THREE WAYS OF CORPORATE FINANCE: 1.2. .... (e.g. ...)3.

STOCKS VS. BONDS Full text: In contrast, ..., For example, ... This means

that... There are clearly important differences between..., First,... Second,..., On the one hand,..., On the other, ....

Notes:

STOCKS vs. BONDS

-ownership -lending-less risky: 1.

2.

Bond risks

Full text: clear paragraphing & topic sentences

Notes:

CORPORATE BOND RISKS1.2.3.