STOCKS/SHARES /EQUITIES & BONDS

STOCKS/SHARES /EQUITIES  Who?  Why?  Who?  Why?  Where? How?

COMPANIES  issuing shares – raising funds for expansion public limited companies (Plc) publicly-held companies public companies (Attention!Public corporation*) to list shares at a stock exchange listing / quotation listed 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 issue bonus issue

INA IPO starts today 13 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 investors purchasing shares - taking part of the ownership small shareholders, major shareholder retail 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  Traders  Brokers, brokerage

STOCK MARKET The Stock Exchange e.g. The NYSE, the LSE -successful companies -strict requirements e.g. quarterly reports annual report -physical exchange The OTC market e.g. The NASDAQ -new companies -second-tier shares* (but also Dell, MS, Intel...) -virtual exchange (no trading floor)

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 table

Chart (R.p.46)  What ratios are important for analysing a company’s financial management?  What are cashflow problems due to?  Responsibilities of a CAO?  Treasurer’s responsibilities?  Two major sources of finance (incl.subdivision)?

BONDS

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

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: (e.g....) 3.

STOCKSVS.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: STOCKSvs.BONDS -ownership-lending -less risky:1. 2.

Bond risks  Full text: clear paragraphing & topic sentences  Notes: CORPORATE BOND RISKS