1. Describing graphs in a paragraph, cont. HW check: RB 37 1)The number of inhabitants... is ____________ 2)Both countries’ exports ___________________. 3)In both countries, the number of people out of work _____________, in Croatia this was ___________________. 4)The GDP in both countries _______________, in Finland __________, in Croatia __________. 5)Croatia’s GDP ________________ this year. 6)Personal income tax was _______ by ________ the corporate tax rate was ________ by ________ in F. quite similar. decreased / declined increased/soared by approximately 13% plummeted by 13 %by 6.9 % contracted further cut 12% slashed 14%

2. Describing graphs in a paragraph, cont. HW check: RB 37 – cont. 7) Finland _________ its taxes by _________ %. 8) Last year there was a ___________ in VAT in Croatia. 9) In Croatia taxes ___________, while income from taxes is __________________. 10) The World Bank forecasted a ______________ 1.5% in 2014. decreasedalmost 50 2% rise rose decreased small increase of

3. Practice describing a graph Handout (start now, finish for HW) Source: www.fxstreet.com/rates-charts/bond-yield If you like, use the following sentences /phrases: The graph shows weekly yields on USD T-Bonds between 2005 and the present date.... weekly yields on US government bonds with maturities ranging from 5 to 30 years. 30-yr, 10-yr and 5-yr T-Bond yields 5-yr T-Bond yield 30-yr yield

4. HW check: Match up verbs with nouns MK, p 82, task Vocabulary 2 1 borrow ______ 9 deduct ______ _______ 2 finance ________ 10 issue ______ 3 issue ______ 11 pay (a rate of) ______ 4 pay a (higher) ______ 12 pay _________ 5 pay ______ 13 receive ______ ______ 6 raise ______ 14 repay ______ 15 sell ______ 7 deduct ______ 16 receive ________ 17 repay _____18 repay ______ 19 sell ______

5. HW check: Match up verbs with nouns borrow money deduct interest payments finance activitiesissue shares issue bondspay (a rate of) interest pay a (higher) returnpay dividends pay taxreceive interest payments raise money repay principal sell assets deduct taxreceive dividends repay bonds repay moneysell bonds

6. The Financing of Corporate Activity, RB p77 Based on: McConnell, C.R., Brue, S.L. (1996). Economics. McGraw-Hill Inc. Match headings with paragraphs Text headings: Corporate finance Stocks vs. Bonds Bond risks

7. Pg. 3 BOND RISKS RB, p 77-79 CORPORATE BOND RISKS 1. market value of bonds may fall, selling before maturity may cause you to incur a capital loss 2. price of existing bonds varies inversely with interest rates in the economy 3. inflation

8. Revision: BOND RISKS – finish the sentences Corporate bonds are not.... riskless. The market value of bonds... varies over time in accordance with... the financial health of the corporation. If the corporation falls on hard times and its financial integrity is shaken.... the market value of your bond may.... fall. Selling the bond on the bond market prior to... maturity (for less than its... nominal value) will cause... a capital loss.

9. BOND RISKS, cont.– finish the sentences Market prices of bonds are also affected by... changes in interest rates. Increases in interest rates cause bond prices to... fall. Decreases in interest rates cause... bond prices to rise. In other words, the market value of a bond rises if it pays a... higher fixed interest rate than the current interest rate. Bondholders face another element of risk due to... inflation. Substantial inflation will diminish the... purchasing power of the... principal. You will have lent “dear” dollars, but... will be repaid in “cheap” dollars.

10. Intro to stocks? CORPORATE FINANCE, RB p 77: Corporations (PLC’s) finance their activities in ____ different ways. Internally, out of ________ ________ _____ and externally, by _________ from financial institutions such as commercial banks, _______ & ____ ___________ or insurance companies. Finally, corporations can issue ______ & _______. * štedno kreditna zadruga three undistributed corporateprofitsborrowing savingsloanassociations* stocksbonds

11. STOCKS VS. BONDS A stock is an ________ _____ while a bond is not. A bond purchaser is ______ money to a corporation. The stated value of a bond when it is first issued is its _______________ value. The amount lent to the corporation is the ______ and the corporation promises to repay it at a specified future date, also known as the bond’s ______ date. The bondholder also receives annual ______ payments. ownershipshare lending face / par / nominal principal maturity interest

12. STOCKS VS. BONDS, cont. Bonds are considered to be less ______ for two reasons: 1. Dividends can be paid to ___________ only after the interest rates due to bondholders have been paid. This means that bondholders have a _____ _____ _____. 2. If the corporation runs into problems, stockholders may receive no ________ and the value of their stock may ___________________. Unless the corporation goes bankrupt, bondholders are guaranteed a fixed interest rate and the return of the _______ at _______. HW MK, p 87: Reading Stocks and Shares risky stockholders legally prior claim dividends plummet / plunge / sink principal maturity