D. Match the terms given in the box with the correct definitions below.

blue chips OTC vitality listed company RR market price share index bears bulls shareholder

1) Number indicating how prices of shares have fluctuated.

2) An employee of a stock exchange who accepts to buy and sell orders from customers.

3) Stock of a large, national company with a solid record of stable earnings and/or dividend growth and a reputation for high quality management and/or products.

4) A name for investors who buy shares because they expect their price to rise.

5) A name for shareholders who sell because they expect the price to fall.

6) Financial organizations that own a lot of shares.

7) A company whose securities are traded on an organized exchange.

8) The indicator of a good market.

9) Last reported price at which a security was sold on an exchange.

Reading 2: Stocks and Shares

A. Read the following information on stocks and shares.

A share is a part of a company, offered for sale to the public. The company is able to raise cash for expansion and new ventures by selling shares in itself to investors. The first time it “goes public” (also known as flotation), a company will often announce its intentions with advertisements in the press. This is called an offer for sale.

As a shareholder, you are an owner of the company and are entitled to take part in its decisions. You are sent an annual company report, you can vote on company issues, and you have the right to attend shareholders’ meetings.

A share’s value is not fixed. Its price is determined by many things: the company’s recent performance; the state of the sector of the economy the company trades in; national and international economic and political changes; the level of consumer demand; and the peculiarly unpredictable human factors of confidence and pessimism. So, if you buy a share at one price and sell it at a higher price, you make a profit; if you sell it at a lower price, you make a loss. Shares can provide an income through the payment of dividends. However, a company can choose not to pay a dividend at all, investing any profits back into the company.

 

B. Match the types of securities below with their definitions.

 

The following basic types of securities are listed and traded on the Exchange:

 

	domestic equities and overseas equities	fixed-interest stocks, usually issued by companies or local authorities. They entitle the owner to regular interest payments and the repayment of a fixed sum at a given date in the future.
	preference shares	securities which are not listed and traded on an organized exchange. They are also called over-the-counter securities. These are the stocks of companies not big enough for a Stock Exchange listing or not wishing to pay for listing. In most cases, these stocks are thinly traded because they do not get much attention from the media or financial analysts, and so may be too risky for many investors.
	bonds	securities, issued by any country's government to raise money to fund any shortfall in public expenditures. They can be: longs, with a redemption date more than 15 years away; mediums, with a redemption date of between 5 and 15 years; shorts, with a redemption date of 5 years or less. Some are undated, with no fixed redemption date.
	unlisted securities	ordinary shares, issued by domestic or overseas companies
	gilts	is stock in a corporation with a national reputation for quality, reliability and the ability to operate profitably both in good and bad times. The term derives from the highest-value chip in a game of poker. One should consider blue chips for long-term investment.
	blue chip	shares earning a fixed income. Their owners are entitled to receive any dividend before the holders of ordinary shares. If the company is wound up, they are paid first, once all the creditors have been paid in full.

 

Speaking: Role-play