1. BONDS
UNIT 16

2. BONDS VS. SHARES TASK A - LISTENING
What is THE DIFFERENCE BETWEEN BONDS AND STOCKS, in terms of income and repayment?
What are the three types of INVESTOR CLIENTS mentioned?
Three examples of INVESTMENTS THAT GENERALLY CARRY VERY LOW, MODERATE AND HIGHER RISK are given. What are they?
What causes bonds to APPRECIATE AND DEPRECIATE in price?

3. WHY DO COMPANIES PREFER ISSUING BONDS TO BORROWING MONEY FROM BANKS?
It is often cheaper:
the market may be a better judge of the firm’s creditworthiness than a bank → it may lend money at a lower interest rate
not a good thing for the banks → have to lend large amounts of money to borrowers that are much less secure than blue chip companies

4. READING – BONDS – MK, p. 81 PARAGRAPH 1
What are the two main ways established companies can raise capital?
Who handles such transactions and who are the main buyers of bonds?
PARAGRAPH 2
What are the advantages of buying bonds for the bondholder?
PARAGRAPH 3
What are the advantages and disadvantages of debt financing over equity financing for companies and investors?
PARAGRAPH 4
When do governments issue bonds?
Which types of government bonds are mentioned?
PARAGRAPH 5
Describe the process of buying and selling bonds.
What causes bonds to appreciate and depreciate in price?
What does the yield of
a bond depend on?

5. READING – BONDS – MK, p. 82 TRUE/FALSE STATEMENTS, p. 82
Do the vocabulary tasks I & II, p. 82

6. READING – DIFFERENT TYPES OF BONDS – MK p. 84
Read the three extracts from newspaper articles, and answer
these questions.
What are the three classes of bonds mentioned?
What, according to the journalists and the experts quoted, is happening that makes each type of bond a good investment opportunity?
Why is the government buying back billions of pounds worth of bonds?
What kind of companies issue high-yield bonds?
What is the risk involved with buying high-yield bonds, and how can it be reduced?

7. HOW DO YOU EXPLAIN THIS WEALTH PYRAMID?

8. HOW DO YOU COMMENT ON THE FOLLOWING CARTOON?

9. HOW DOES THIS CARTOON RELATE TO BONDS?

10. READING – THE FINANCING OF CORPORATE ACTIVITY – RB, pp. 77, 78 & 79
VOCABULARY – Tasks I, II & II, p. 77.
READING – IV Read the text and put the proposed headings in their right positions in the text:
a. Stocks vs Bonds
b. Corporate Finance
c. Bond Risks
NOTE – MAKING AND SUMMARY WRITING – Tasks
V & VII, p. 79

11. HOMEWORK – CASE STUDY – MK, p. 84
Case study: Investing in funds
Writing (a short report explaining and justifying
your choices)