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

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: ENGLISH: Rasti (malo) __________ __________ Pasti (malo) __________ Rasti (znatno) __________ Pasti (znatno) __________ Stagnirati __________

CROATIAN: ENGLISH: Doseći najvišu točku __________ __________ Pasti na najnižu točku __________ Do the tasks in the RB, pp. 29, 30 & 31.

GRAPH DESCRIPTION – NOUNS B) NOUNS CROATIAN: ENGLISH: Porast (mali) __________ __________ Pad (mali) __________ Porast (znatni) __________ Pad (znatni) __________ Do the tasks in the RB, pp. 31 & 32.

GRAPH DESCRIPTION – ADVERBS, ADJECTIVES AND PREPOSITIONS – RB, pp 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.