38.1 38.2 284 Match the graphs (1-3) ro the descriptions fa-c). Look at A, Band C opposite to help you, 1 2 650. 600 S50. 500. 430 cL a2 sat or OB # After peaking early in 2001, Deutsche Bank shares declined for nearly two years, apart from a slight ris inthe autumn of 2001. They bottomed out in eatly 2003, ood climbed steadily for imost of the year. They fell again in the summer of 2004, but the end of the year saw an improvement, » Following a sharp fall early in 2001, UBS shares were up and down for a couple of years, reaching a low of CHP40 in September 2002. They improved steadily in 2008 saa after a Moderate drop in che middle of 2004 they began to increase again, « Hasclays shares reached a peak in spring 2002, and then fll steadily for six months, before "fing slightly and then dropping again until the end of the year, However 2003, saw an almost uninterrupted growth, which despite a couple of moderate bl continued in 2004, Complete the text describing the graph with word fig the box. Look at A, Band C Gemgth of befge fds opposite to help you, Number (line) Shn assets (bars) 9,000. 900 grew slowly increased rapidly | 8,000: 800 remained stable risen regularly pean ef P increases San. $,000- 3,000. ween BECO 1992 andl 0 1997 the assets of the funds only (4) Theee were (5). ermiesncnvevey it hedge funds’ rotal assets in 1999 and 2003, Describe the graph showing the price 550,00. of gold. Look at A, B and C opposite 500.00. to help you, 450.00 8 3 300.00. 250.00: 200.00: us$ Ga POU inen eet viene SVGiiectiniwteren stenctieh nie Profits oF stock price of 4 nthe opposite page Professional Engish in Use Finance 8337.1 Match the verbs in the box with the definitions below. Look at A and B opposite to help you, to leverage to pool to take a long position to take a short position 1 to put several people's resources together for shared use 2 to purchase securities, expecting their price to rise 3 to use borrowed money as well as one’s own money to increase the size of one’s investments 4 to sel sccurities that one has not yer purchased, anticipating that their price will fall 37.2. Are the following statements true or false? Find reasons for your answers in A, B and C opposite. 1 Hedge funds are so named because they protect against losses. 2. Hedge funds use their investors’ money as well as borrowed money. 43 Hedge funds conceptrate on making long-term investments. 4 The fact that investors can make a profit from arbitrage shows that markets are not perfectly efficient. 5 Structured products are individualized financial instruments offered by hedge funds, 37.3 Read the advertisement for structured procluets from the UBS website, and answer the questions below. Which group of structured products would you use ifs 1 you wanted the chance of big returns with only a small investment now? 2 you didn’t want to lose any of your moncy? 3 you wanted to trade in a particular combination of assets? 4 you wanted the highest return? nants Professional English in Use Finance al36.1 36.2 36.3 Find nouns in A and B opposite that can be used to make word combinations with the verbs below. Then use some of the word combinations to complete the sentences. allocate >) = (aayee eee Coat See es 1 I don't want to pay a bank t0 AMY 3Tcan do it myself. 2 T have lots of different types of securities, because | decided to ite ry el 3 As an asset manager, I discuss clients’ needs and objectives and then we decide how to 4 their... 4 If my clients want to » [take more risks, and buy a lot of stocks. Match the investment goals (1~3) with the statements (a-c). Look at B opposite o help you. 1 capital preservation 2 growth 3 income ‘want to accumulate wealth, but 1 know that this means taking risks and buying securities with volatile prices that could go down as well as up. Sn Twant a regular return every year, because I need that money, even if this means K I might have to risk losing some of my capital. ipl 8 y cay a © { definitely don’t want to risk losing any of my capital, even if this means that) some yeatsgeta vey low etn. eS Match the two parts of the sentences, Look at A, Band C opposite to help you. 1 The value of index-linked funds will change frequently 2 Private banks 3 Asset managers buy more bonds than shares 4 Mutual funds 5 Asset managers buy more shares than bonds aif the client wants to avoid risks, 8 diversify the money of small inves © if the whole market is volatile. 4 manage the investments of rich investors. € if the client hopes to accumulate capital. ONApe cere ay RLS tbipelstir: ren one + aialleenoeiiitrenctan ACS fomaiteetcrmerentas2 oh ee mnntcameiceot mere Nien Profesional English in Use Finance 7935.1 35.2 35.4 e 4d Match the two parts of the sentences. Look at A opposite to help you. 1 The price of a derivative always depends on 2 Options can be used to hedge against 3 Acall option gives its owner 4 A put option gives its owner 2 future price changes. b the right to buy something, the price of another financial product. the right to sell something. Choose the correct endings for the sentences. Some sentences have more than one possible ending. Look at A and B opposite to help you. 1 If you expect the price of a stock to rise, you can a ‘ b e 2 If you expect the price of a stock to fall, you can 3 If an option is out-of-the-money it will 4 If an option is in-the-money the seller will u b © d a bo a bo 5 The bigger risk is taken by a 5 buy a call option, sell a call option. buy a put option. sell a put option, buy a call option, sell a call option. buy a put option. sell a put option, be exercised. not be exercised. lose money. gain money. writers of options. buyers of options. Complete the definitions, Look at A, 8 and C opposite to help you. uy arelike call |? [ 5 can be used | | options, bur with much give the right to sell to speculate on interest | | longer ns, securities at a fixed price rate movements, | within a specified period. | Complete these sentences using words from A, B and C opposite. 1 If your put option is out-of-the-money, the seller will gain the e 2 You only exercise a call option if the market price is higher than the sco. « 3 IE Texpect a stock price to go up in the short term, I buy... the stock. 4 TF Lexpect a big company’s stock price to go up in the long term, I sometimes buy their instead of 5 We needed euros and had a lot of dollars in dhe bak, so we did a company which needed dollars. . with a Geman (ON Nee rot Kel ot Tats TI Ine RU UIC MIT UTS PRant Reto UPSsoON NOME TOOT ee trates oo ToDe carrnein eet34.1. Match the words in the box with the definitions below: Look at A opposite to help you. backwardation commodities to hedge ‘over-the-counter futures 1 the price for the immediate purchase and delivery of a commodity 2 the situation when the current price is higher than the future price 3 adjective describing a contract made between two businesses, not using an exchange 4 contracts for non-standardized quantities of time periods 5 physical substances, such as food, fuel and metals, that can be bought or sold with futures contracts 6 to protect yourself against loss 7 contracts to buy or sell standardized quantities 34.2 Complete the sentences using a word or phrase from each box. Look at A and B opposite to help you. A Commodity furures allow w banks x food manufacturers B Interest rate furures allow v companies importers C Currency futures allow ww farmers 2 investors z . €0 charge a consistent price for their products. Dies _ to be sure of the rate they will get on bonds which could be issued at a different rate in the future. at -vnsniinmnmnnn © knOW at What price they can borrow money to finance ew projects. 3 ... to make plans knowing what price they will get for theie crops. to offer fixed lending rates, to remove exchange rate risks {rom future international es. 24.3 Ave 1 Financial futures were created be regularly change. 2 Interest rate futures ate related to stocks and shares, 3 Financial futures contracts allow companies to protect themselves against short-term changes in exchange rates. 4 You can only hedge if someone who expects a price to move in the opposite direction is willing to buy of sell a contract. 5 Both parties can make money out of the same futures contract. owing statements true or false? Find asons for your answers in B opposite. stuse exchange rates, interest rates and stock prices all u ae nial fexcorruoaaeace ne ain ti cornimtinertmrtcntes Professional English in Use Finance 7533.1 Match the words in the box with the definitions below. Look at A and B opposite to help you. ‘coupon maturity date credit rating principal ailt-edged stock Treasury bonds default Treasury notes insolvent yield 1 the amount of capital making up a loan 2. anestimation of a borrower's solvency o ability to pay debts 3. bonds issued by the British government 4 non-payment of interest or a loan at the scheduled time 5 the day when a bond has to be repaid : 6 long-term bonds issued by the American government the amount of interest that a bond pays medium-term (2-10 year) bonds issued by the American government the rate of income an investor receives from a security tunable to pay debts Beco 1 33.2 Are the following statements true or false? Find reasons for your answers in A, B and C opposite. 1 Bonds are repaid at 100% when they mature, unless the borrower is insolvent. 2 Bondholders are guaranteed to get all their money back ifa company goes bankrupt. 3 AAA bonds are a very safe investment. 4 A bofid paying 5% interest would gain in value if interest rates rose to 6%. 5 The price of floating-rate notes doesn't vary very much, because they always pay market interest rates. & ‘The owners of convertibles have to change them into shates. 7 Some bonds do not pay interest, but are repaid at above their selling price. 8 Junk bonds have a high credit rating, and a relatively low chance of default. 33.3 Answer the questions. Look at A, B and C ite to help you. 1 Which is the safest for an investor? A a corporate bond B a junk bond C a government bond 2 Which is the cheapest way for a company to raise money? A a bank loan B anordinary bond Ca convertible 3 Which gives the highest potential return to an investor? ‘A a corporate bond B a junk bond C a government bond 4 Which is the most profitable for an investor if intecest rates rise? Aa Treasuey bond B afloating-ratenote Ca Treasury note ‘eS Teese ertinercmn anne Nyainenn Professional English in Use Finance 23a24 32.2 32.3 Match the two parts of the sentences. Look at A and B opposite to help you 1 The random walk theory states that 2 ‘The efficient marker hypothesis is that 3 Technical analysts believe that 4 Fundamental analysts believe that a studying charts of past stock prices allows you to predict future changes. b stocks are correctly priced so it is impossible to make a profit by finding undervalued ones. © you can calculate a stock’s true value, which might not be the same as its market price 4 iis impossible to predict future changes in stock prices. Are the following statcments true or false? Find reasons for your answers in B and C opposite. 1 Fundamental analysts think that stock prices-depend on psychological factors ~ what people think and feel — rather than pure économic data, 2 Fundamental analysts say that the true value of a stock is all the i investor in the future, measured at today’s money values. 43 Investors can protect themselves against unknown, unsystematic risks by having a broad collection of different investments. 4 Unsystematic risks can affect an investor’ entire portfolio. come it will bring an Match the theories (1-3) co the statements (a-c). Look at B opposite to help you. 1 fundamental analysis 2 technical analysis 3 efficiéht market hypothesis a St Share prices are correct at any given time. When new information appears, they change to a new correct price, ; . ao {By analysing a company, you can determine its real value. {_ allows you to make a profit by buying underpriced shares. ——— Sere eee It's not only the facts about a company that matter: the stock price also depends on what investors think or feel about thé company’s future L MOi/A ne roo) o DUA MIMEA CUE lo iad eee iA sa cHelsiie aus uss nieca need ENT Tae eres nile learn aR rS em Koa rae Professional Engish in Use Finance 1"31-1 Label the graph with words from the box. Look at A opposite to help you. Dull marker exash Bear market [2662.95] j 54 z vaso a 3 2 . 1833.55] (1376.09) ok 1984 1985 1986 1987 1988 31.2 Answer the questions. Look at A, B and C opposite to help you. 1 How do stags make a profit? 2 Why do some investors prefer not to receive dividends? 3 How'do you make a profit from a short position? 31.3 Make word combinations using a word or phrase from each box. Some words ean be used twice, Then use the correct forms of the word combinations to complete the sentences below. [ make al ga | own | a dividend | pay earnings | receive a position retain: a profit take securities: tax i a _.- on capital gains than on income, So as a shareholder, I prefer not 10... a «Ifthe company ce HS ee» C20. a by selling my shares at a profit instead. 2 Day trading is exciting because if a share price falls, you can a by . a short some + But it's risky selling emma that you don’t even The sculpture of a bull near the New York Stock Exchange Overto You AAT atta Cea ot tae i Pate raeatat ete) IPSec ire an a Professional Engish in Use Finance 630.1 March the words in the box with the definitions below. Look at A and B opposite to help you. to capitalize ‘market price primary market ‘own shares é rights issue secondary market nominal value new shares offered to existing shareholders the price written on a share, which never changes to turn profits into stocks or shares the marker on which shares can be te-solel the price at which a share is currently being traded shares that companies have bought back from their owners the market on which new shares are sold Noasene 30.2 Are the following starements tic oF false? Find reasons for your answers in A and B opposite. 1 Stocks that have alféady been bought at least once are traded on the primary market. 2 NASDAQ and the AIM have more regulations than the New York Stock Exchange and the London Stock Exchange. 3 The market price of stocks depends on how many buyers and sellers there are, 4 Automatic trading systems do not requite market makers. 5 Market makers make a profit from the difference between their bid and offer prices, 30.3 Complete the sentences. Look at B and C opposite to help you. "TA gigek whose price has suddenly fallen ] ® [ This stock used w be considered an a for after a company had bad news vu» BUE EWO years ago could bea... ‘ as it will the company started to cut its dividend probably rise agin, and reinyest its eash in the business. az oa oe SiS rs - TThe stocks of food, tobaceo and oil The financial director announc: companies are UstAlly svmnnnennnnm + Forthcoming. .somunnnnennnnns OF HEW | as demand doesn’t rise or fail very much shares to existing shareholders, | | in periods of economic expansion or | contraction, 7 - a The company is planning a ee = —— snnmnnensen OF ONE additional Pension funds and insurance companies, share for every three existing shares. which can’t take risks, usually only —— invest in, pigidinan 1 8 Fre have bought back 200,000 o1 shares, which increases the value of our The best way to make a profit in the to €723,000. long term is to invest in ne ener (Taoumenta raat SAORI ers eaten Mat Irv ettcernveu rh oN UeeneanttS Professional English in Use Finance 6723,1 29.2 293 Match the words in the box with the definitions below. Look at A, B and C opposite to help you. bankrupt prospectus going public ordinary shares flotation preference shares investors stock exchange liquidation to underwrite a document describing a company and offering stocks for sale a market on which companies? stocks are traded buyers of stocks changing from a private company to a public one, quoted on a stock exchange the first sale of a. company’s stocks to the public to guarantee to bity newly issued shares if no one else does shares that pay a guaranteed dividend the most common form of shares insolvent, unable to pay debts 10 the sale of the assets of a failed company eovonsen— Are the following statements true or false? Find reasons for your answers in A, B and C opposite. 1 New companies can apply to join a stock exchange. 2 Investfnent banks sometimes have to buy some of the stocks in an IPO. 3 The due diligence report is produced by the company’s own accountants. 4 The dividend paid on preference shares is variable, 5 Ifa company goes bankrupt, the first investors to yet any money back are the holders of preference shares. Make word combinations using a word or phrase from exch box. Then use the correct forms of the word combinations to complete the sentences helow. Look at A, Band C opposite to help yor off f go a prospectus produce shares underwrite public After three very profitable years, che company is planning t0 (1) By 2th La antl we're (3) ., 100,000 (4) ..ommm f0F Sale. We've (5) a very attractive .. » and although a leading investment bank is (7)... the (8) . we don’t think they'll have to buy any of the shares. Kel Ae oto ‘ — Civ egersciae vate seterenicaen MT an er neesenl ay eon arse 1ase stocks you would like to buy if (hey went public? Muiaieteni ois Professional Englsh in Use Finance 6528.1. Complete the crossword, Look at A and B opposite to help you. 5 fo fe] ye Across 3 A firm listed on a stock exchange isa... (6,7) 7 Individuals who lend money to new companies are sometimes called (6) 8 Banks that are risk... usually don’t want to finance new companies, (6) 10 The amount of money made from an investment is its rate of (6) UL Nev businesses often have to get finance from. 12 Thé,pcople who start companies. (8) Down 1 People who have ideas for setting up new businesses. (13) 2 capital firms specialise in financing new companies, (7) 4 Many banks don't Want £0 ue. tOUCY 0 new businesses, (4) 5 People who want to borrow money to start a company write a business sau. (4) 6 Money invested in a company just before it joins a stock exchange is sometimes called . financing. (3) and {3 down A new company is often called a (5-2) See 9 down, ‘companies. (4,7) 1 March the two parts of the sentences. Look at A and B opposite to help you. 1 Banks are usually reluctant 2 Start-ups often get money 3. New companies can grow rapidly 4 Risk capitalists usually expect 5 Venture capitalists need an exit strategy —a way § Mezzanine financing is a second round of financing @ a higher than average return on their money, b and so are potentially profitable. € before a company joins a stock exchange. d got their money back after a few years. € to lend money ro new companies. f from specialized venture capital firms, flannel MST aroma retin Cait ata ar{-tips? In whieh elds? Ff you wanted fo start a business, how fiketeetaiella Professional Engish in Use Finance 63