SECURITIES
Securities
 a contract that can be assigned a
value and traded.
 instruments representing ownership
(stocks), a debt agreement (bonds)
or the rights to ownership
(derivatives).
Source: Investopedia
STOCKS/SHARES /EQUITIES
A few things to remember ...
 Individuals and groups of people doing business as
a partnership, have 1........... liability for debts,
unless they form a limited company. If the
business cannot pay its 2..........., any creditor can
have it declared 3............ In order not to lose their
personal 4..........., most people doing business
form 5........... companies, i.e. legal 6...........
separate from their owners and only 7........... for
the amount of capital that has been 8........... in it.
If a limited company goes 9..........., it is wound up
and its assets are 10........... (i.e. sold) to pay the
debts. If the 11........... do not cover the liabilities
or the debts, they remain unpaid and 12...........
simply do not get all their money back.Based on MacKenzie (2002), p.91
A few things to remember ...
 Individuals and groups of people doing business as a
partnership, have unlimited liability for debts, unless
they form a limited company. If the business cannot pay
its 2 debts, any creditor can have it declared 3 bankrupt.
In order not to lose their personal 4 assets, most people
doing business form 5 limited companies, i.e. legal 6
entities separate from their owners and only 7 liable for
the amount of capital that has been 8 invested in it. If
a limited company goes 9 bankrupt, it is wound up and
its assets are 10 liquidated (i.e. sold) to pay the debts. If
the 11 assets do not cover the liabilities or the debts,
they remain unpaid and 12 creditors simply do not get
all their money back.
Based on MacKenzie (2002), p.91
A few things to remember ...
 Most companies begin as 13… limited companies.
Their owners have to put capital themselves, or
14 ….. from friends or a bank. A growing
company can apply to a stock exchange to
become a 15 … limited company (GB)/listed
company (US). Very successful companies can be
quoted/listed on major stock exchanges. Public
companies fulfill a large number of requirements
including publishing independently audited
annual reports for their 16….
Based on MacKenzie (2002),
p.91
A few things to remember ...
 Most companies begin as 13 private-limited companies.
Their owners have to put capital themselves, or 14
borrow from friends or a bank. A growing company can
apply to a stock exchange to become a 15 public-limited
company (GB)/listed company (US). Very successful
companies can be quoted/listed on major stock
exchanges. Public companies fulfill a large number of
requirements including publishing independently audited
annual reports for their 16 shareholders.
Based on MacKenzie (2002), p.91
STOCKS/SHARES /EQUITIES
Selling
 Who?
 Why?
Buying
 Who?
 Why?
Trading
 Where?
ISSUERS (COMPANIES)
issuing shares – raising funds for expansion
public limited companies (Plc)
public companies
*Attention!What does ’public’ mean here?
to list shares at a stock exchange
listing / quotation
listed companies / quoted companies
ISSUERS (COMPANIES)
going public (e.g. They went public last year.)
flotation / IPO (Initial Public Offering)
to float a company
underwriting new share issues
IPO IN PRIVATISATIONS …
INA IPO starts today
13 Nov 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.’
…OR BY FAMOUS COMPANIES
 ‘Nine years ago today, Google started trading on the
public markets at $85 a share. The stock price has since
risen by more than 900% through Friday’s close, and at
last glance was trading north of $870.’
Source: http://blogs.wsj.com/moneybeat/2013/08/19/ (Aug, 2013)
 Facebook’s newly public shares are losing an average
of about $1 per trading day since their offering. If that
lasts, the social-networking company would be worth
nothing before the end of June, and Chief Executive
Mark Zuckerberg’s trips to McDonald's will seem less chic
and more necessary…. Some newly public companies
actually had worse first days than Facebook did. …Like
Facebook, many initial public offerings were overvalued
by traditional measures.
Source: http://online.wsj.com/news/articles (30 May, 2012)
…OR BY FAMOUS COMPANIES
 ‘Nine years ago today, Google started trading on the
public markets at $85 a share. The stock price has since
risen by more than 900% through Friday’s close, and at
last glance was trading north of $870.’
Source: http://blogs.wsj.com/moneybeat/2013/08/19/ (Aug, 2013)
 Facebook’s newly public shares are losing an average
of about $1 per trading day since their offering. If that
lasts, the social-networking company would be worth
nothing before the end of June, and Chief Executive
Mark Zuckerberg’s trips to McDonald's will seem less chic
and more necessary…. Some newly public companies
actually had worse first days than Facebook did. …Like
Facebook, many initial public offerings were overvalued
by traditional measures.
Source: http://online.wsj.com/news/articles (30 May, 2012)
SHAREHOLDERS/STOCKHOLDERS
investors purchasing shares - taking part of the ownership
small shareholders vs. majority shareholder
retail shareholders vs. 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
 secondary market
 stock market: stock exchanges, OTC
 traders: market makers,dealers, brokers
 different types of shares
(e.g. ordinary shares/common stock,
preferential shares/preferred stock)
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.
Questions based on MK, p.87
1. Stocks – definition?
2. What banks are engaged in issuing
stocks?
3. Nominal value - definition?
4. Measures of the value of stock markets?
5. Bull/bear market – definition?
6. Syn: common stock, buying/selling
prices
Stock table
What does the table show? (Find it below:
http://www.investopedia.com/university/stocks/stocks6.asp
Assignment
 Find the current information for the stocks you
checked in class (the Financial Times, October 2008:
a)price b)yield, c)price/earnings ratio – P/E). Do the
same for the stocks of three famous companies of your
choice if you were not in class.
 The website below may help your search
http://uk.finance.yahoo.com (enter the symbol for the
company you are searching)
What are Stocks?
http://www.investopedia.com/video/play/what-are-stocks
1. Definition of a stock?
2. What do stockholders have a claim
on?
3. What assets are mentioned in the
video?
4. What major stock exchanges are
mentioned in the video clip?