ENGLISH FOR BANKING AND FINANCE
Course book: ENGLISH FOR BUSINESS STUDIES -3RD
EDITION
ENGLISH FOR BANKING AND FINANCE
Main course book : English For Business Studies, 3rd Edition
(Units: 14-16-17-19)
Reference book: Accounting and Finance: Market Leader,
Pearson, 2010 Unit 7-8-9-13-14-15 (Vocabulary and
translation)
REVIEW
We check slide UNIT
14-16-17-19 in the course book
ENGLISH FOR BUSINESS STUDIES.
VOCABULARY
UNIT 14. BANKING
UNIT 16. BONDS
UNIT 17. STOCKS AND SHARES
UNIT 19. ACCOUNTING AND FINANCIAL STATEMENTS
PART 2. PARAGRAPH WRITING (150-200 WORDS)
1. INCOME STATEMENT
2. CASH FLOW STATEMENT
TOPIC SENTENCE
SUPPORTING SENTENCES:
Significant figures (3)-details
concluding sentence
CASH FLOW STATEMENT
Topic sentence
SUPPORTING SENTENCES:
cash flow problem
Reasons (3) of the problem
Solutions (3)
concluding sentence
FINAL TEST
PART I. LANGUAGE KNOWLEDGE
Q.1. match the words/phrases with their correct definitions.
Write your answers on the answer sheet.
Q.2. Fill in the numbered blanks with the correct words
/phrases given in the box. Write your answers on the answer
sheet. (8 blanks-12 words)
PART II. LANGUAGE USE
Q.3. Read the following passage and answer the questions
briefly. Write your answers on the answer sheet. (5 questions)
Q.4. Translate the following sentences into vietnamese. Write
your answers on the answer sheet. (2 sentences)
Q.5. Complete the following incomplete sentences between 6
and 12 words. You have to use your own words. Write the
completed sentences on the answer sheet. (3 sentences)
REVIEW-UNIT 15-VENTURE CAPITAL
Start-up companies:
q Borrow money from banks/relatives/friends…
q Business angels
Established companies
q Venture capitalists
q Banks
q Issueing shares/stocks
VOCABULARY
share noun 1 [ countable ] FINANCE one of the parts into
which ownership of a company is divided : •
issue (= make available and sell ) shares (1)
issues shares or stocks especially AmE , it makes
them available for people to buy for the first time.
The process of issuing shares in order to obtain money for
investment is called equity financing
Shareholders/ stockholders especially AmE are
people who buy and own shares, and they receive a
dividend (= a part of the profits of a company ) for every
share they own. When a company makes its shares
officially available, they are listed on a stockmarket or
stock exchange especially BrE .
A stockbroker is a person or company whose job is to
buy and sell shares
VOCABULARY
bond noun [ countable ] 1 FINANCE an amount of money
borrowed by a government or an organization. The government or
organization produces a document promising that it will pay back
the money that it has borrowed, usually with interest. The
document, which can be bought and sold, is also called a bond
Bondholder
Coupon
Issue/ Sell/buy bonds
Mature
Maturity date
UNIT 14-BANKING/BANK
q Consider banking products and services and different types of banks
q Discuss the subprime crisis and microfinance
Lead-in
• Which of the following banking products or services do you find the most
useful or necessary?
q a current account (BrE) or checking account (AmE)
q a savings or deposit account (BrE) or time or notice account (AmE)
q cashpoints (BrE) or ATMs (Automated Teller Machines, AmE)
q a chequebook (BrE) or checkbook (AmE)
q a credit card
q a debit card
q a loan
q buying or selling foreign currency for travelling (BrE) or traveling (AmE)
q a mortgage (a loan to buy property (BrE) or real estate (AmE))
q an overdraft (the possibility to borrow money by spending more than you have in
your bank account
q investment advice
q internet banking (payments, transfers)
q telephone banking (payments, transfers)
• What other banking services do businesses use?
Check/cheque: paper: chequebook: cash the check
UNIT 14-BANKING
Subprime: A situation starting in 2008 affecting the mortgage
industry due to borrowers being approved for loans they could
not afford. As a result, a significant rise in foreclosures (taking
possession of a mortgaged property as a result of the mortgagor’s
failure to keep up mortgage payment) led to the collapse of many
lending institutions and hedge funds. The financial crisis in the
mortgage industry also affected the global credit market resulting
in higher interest rates and reduced availability of credit.
Result from
Result in
UNIT 14-BANKING
Subprime: A situation starting in 2008 affecting the mortgage
industry due to borrowers being approved for loans they could
not afford. As a result, a significant rise in foreclosures (taking
possession of a mortgaged property as a result of the mortgagor’s
failure to keep up mortgage payment) led to the collapse of many
lending institutions and hedge funds. The financial crisis in the
mortgage industry also affected the global credit market resulting
in higher interest rates and reduced availability of credit.
Microfinance: a system that allows people in poor countries to
borrow a small amount of money to help them to start business
VOCABULARY
Overdraft: possibility to borrow money by spending more
than you have in your bank account
Mortgage: a loan to buy property
Mortgagor: a person who have mortgage
Reading: Banks and financial institutions
Insert the names of the following types of financial institutions in the spaces
in the text.
commercial banks/hedge funds /investment banks/ Islamic
banks/non-bank financial intermediaries/private banks/stockbrokers
Retail banks or 1…… (often called High Street banks in Britain) receive deposits
from, and make loans to, individuals and small companies. 2 …… work with big
companies, giving financial advice, raising capital by issuing stocks or shares
and bonds, arranging mergers and takeover bids, and so on. They also
generally offer stockbroking and portfolio management services to rich
corporate and individual clients. Wealthy individuals can also use 3 ……, which
provide them with banking and investment services, and 4……, which are
private investment funds for wealthy investors (both individuals and
institutions) that use a wider variety of (risky) investing strategies than
traditional investment funds, in order to achieve higher returns.
In the USA, where many banks went bankrupt following the Wall Street Crash
in 1929, a law was passed in 1934 (the Glass-Steagall Act) that separated
commercial banks and investment banks or stockbroking firms.
Reading: Banks and financial institutions
Insert the names of the following types of financial institutions in the spaces
in the text.
commercial banks/hedge funds /investment banks/ Islamic
banks/non-bank financial intermediaries/private banks/stockbrokers
For the rest of the 20th century, there were regulations in the US, Britain and Japan that
prevented commercial banks from doing investment banking business.
In other countries, including Germany and Switzerland, large banks did all kinds of
financial business. But starting in the 1980s, many rules were ended by financial
deregulation, and Glass-Steagall was repealed in 1999. Large banks became
international conglomerates offering a complete range of financial services that were
previously provided by banks,5 …… and insurance companies.
6 …… , in Islamic countries and major financial centres, offer interest-free banking. They
do not pay interest to depositors or charge interest to borrowers, but invest in
companies and share the profits (or losses) with their depositors.
Some car manufacturers, food retailers and department stores now offer products like
personal loans, credit cards and insurance. Technically these are not banks but 7 ……
Religion
Money makes money…SIN
Reading: Banks and financial institutions
Insert the names of the following types of financial institutions in the spaces
in the text.
commercial banks/hedge funds /investment banks/ Islamic
banks/non-bank financial intermediaries/private banks/stockbrokers
Retail banks or 1…… (often called High Street banks in Britain) receive deposits
from, and make loans to, individuals and small companies. 2 …… work with big
companies, giving financial advice, raising capital by issuing stocks or shares
and bonds, arranging mergers and takeover bids, and so on. They also
generally offer stockbroking and portfolio management services to rich
corporate and individual clients. Wealthy individuals can also use 3 ……, which
provide them with banking and investment services, and 4……, which are
private investment funds for wealthy investors (both individuals and
institutions) that use a wider variety of (risky) investing strategies than
traditional investment funds, in order to achieve higher returns.
In the USA, where many banks went bankrupt following the Wall Street Crash
in 1929, a law was passed in 1934 (the Glass-Steagall Act) that
Reading: Banks and financial institutions
Insert the names of the following types of financial institutions in the spaces
in the text.
commercial banks/hedge funds /investment banks/ Islamic
banks/non-bank financial intermediaries/private banks/stockbrokers
separated commercial banks and investment banks or stockbroking firms. For the rest of
the 20th century, there were regulations in the US, Britain and Japan that prevented
commercial banks from doing investment banking business.
In other countries, including Germany and Switzerland, large banks did all kinds of
financial business. But starting in the 1980s, many rules were ended by financial
deregulation, and Glass-Steagall was repealed in 1999. Large banks became
international conglomerates offering a complete range of financial services that were
previously provided by banks,5 …… and insurance companies.
6 …… , in Islamic countries and major financial centres, offer interest-free banking. They
do not pay interest to depositors or charge interest to borrowers, but invest in
companies and share the profits (or losses) with their depositors.
Some car manufacturers, food retailers and department stores now offer products like
personal loans, credit cards and insurance. Technically these are not banks but 7 ……
NOTES
Hedge fund: a limited partnership of investors that uses high risk
methods such as investing with borrowed money, in hopes of realizing
large capital gains
se‧cur‧i‧tize also securitise BrE verb [ transitive ] FINANCE if a
financial institution securitizes loans, it buys the loans from lenders such
as banks and uses them as BACKING for bonds. The financial
institution uses the repayments on these loans to make payments to
investors who buy the bonds. Money that the lenders get from the
financial institution when it sells the bonds is used to improve its
financial situation, make more loans to customers etc :
• The company purchases and securitizes mortgages from all over the
United States.
— securitization also securitisation BrE noun [ uncountable ] : • The
government is counting on securitization to help resolve the mortgage
problem.
Read the text in section Reading (pp.73-74) and
decide whether the following statements are True or
False
1. Retail banks make loans to big companies.
2. Investment banks raise capitals by just issuing stocks or shares.
3. Investment banks generally offer stockbroking and portfolio
management services to rich corporate and individual clients.
4. Private banks provide wealthy individuals with banking and investment
services.
5. Hedge funds are private investment funds for small investors.
6. Hedge funds use a wider variety of (risky) investing strategies than
traditional investment funds to achieve higher returns.
7. In 1934, a law separated commercial banks and investment banks.
8. From 1934 to 1999, regulations were made in the US, Britain and
Japan that allowed commercial banks to do investment banking
business.
9. Islamic banks offer interest-free banking.
10. Islamic banks only charge interest to borrowers.
VOCABULARY
Find the words or expressions in the text which mean the following:
1 money placed in a bank
2 a sum of money borrowed from a bank
3 the money invested in a business
4 certificates representing part-ownership of a company
5 certificates of debt issued by governments or companies to raise money
6 when one company combines with another one
7 when one company offers to buy or acquire another one
8 buying and selling stocks or shares for clients
9 all the investments owned by an individual or organization
10 the profits made on investments
11 unable to pay debts or continue to do business
12 the ending or relaxing of legal restrictions
13 a group of companies, operating in different fields, which have joined together
14 the price paid for borrowing money, paid to the lenders
Insolvent/bankrupt
2 Match up the verbs in the left-hand box with the nouns in the right-hand
box to make common verb-noun combinations found in the text above.
•
•
•
•
•
•
Charge
Do
Give
Issue
Make
Offer
pass
pay
provide
raise
receive
share
•
•
•
•
•
•
Advice
Bonds
Business
Capital
Deposits
Laws
loans
profits
interest
services
stocks or
shares
What other verb-noun combinations can you make with these words?
•
•
•
•
•
•
Charge
pass
Do
pay
Give
provide
Issue
raise
Make
receive
Offer
share
•
•
•
•
•
•
Advice
loans
Bonds
profits
Business
interest
Capital
services
Deposits
stocks or
Laws
shares
READING: THE SUBPRIME CRISIS AND THE CREDIT
CRUNCH /squeeze
Deregulation in the 1980s was one of the factors that led to the
subprime crisis. Read about the crisis and then put the sentences
below in the right order.
When American house prices began to fall in 2007, many
'subprime' borrowers, defined as those with poor credit ratings
and consequently a high risk of default, their debtstopped paying
their mortgages, as was greater than the value of their house.
Unfortunately, the institutions which had issued the mortgages
had created financial products called mortgage-backed securities
(MBS) and collateralized debt obligations (CDO), which had been
bought by many financial institutions including investment banks,
hedge funds, insurance companies, pension funds, mutual funds,
and so on. This process is called securitization: financial assets
like mortgages which produce a cash flow are pooled (grouped
together) and converted into securities that are then sold to
investors.
READING: THE SUBPRIME CRISIS AND THE CREDIT CRUNCH
/squeeze
Deregulation in the 1980s was one of the factors that led to the subprime
crisis. Read about the crisis and then put the sentences below in the right
order.
MBSs and CDOs give their buyers the right to receive the payments on the
underlying mortgages, and banks bought them because they believed that
house prices would continue to rise, and households would continue to make
their mortgage payments. But when many subprime borrowers stopped paying,
the value of subprime related securities fell dramatically. Many banks in the
USA, Britain and elsewhere lost billions of dollars on their MBSs; some went
bankrupt, and others (other banks) had to be rescued by governments.
It is estimated that banks around the world will eventually have to write off
$1.5 trillion (one thousand of billion) of worthless subprime MBSs (now often
referred to as 'toxic debt'). These losses destroyed much of the capital of the
world banking system, leading to a credit crisis or a 'credit crunch': a massive
reduction in the amount of credit available for banks to lend to other banks,
businesses and households.
a 'credit crunch: a 'credit sweeze/credit limit:
READING: THE SUBPRIME CRISIS AND THE CREDIT CRUNCH /squeeze
Deregulation in the 1980s was one of the factors that led to the subprime crisis. Read
about the crisis and then put the sentences below in the right order.
When American house prices began to fall in 2007, many 'subprime' borrowers, defined
as those with poor credit ratings and consequently a high risk of default, stopped paying
their mortgages, as their debt was greater than the value of their house. Unfortunately,
the institutions which had issued the mortgages had created financial products called
mortgage-backed securities (MBS) and collateralized debt obligations (CDO), which had
been bought by many financial institutions including investment banks, hedge funds,
insurance companies, pension funds, mutual funds, and so on. This process is called
securitization: financial assets like mortgages which produce a cash flow are pooled
(grouped together) and converted into securities that are then sold to investors.
MBSs and CDOs give their buyers the right to receive the payments on the underlying
mortgages, and banks bought them because they believed that house prices would
continue to rise, and households would continue to make their mortgage payments. But
when many subprime borrowers stopped paying, the value of subprime related
securities fell dramatically. Many banks in the USA, Britain and elsewhere lost billions of
dollars on their MBSs; some went bankrupt, and others had to be rescued by
governments.
It is estimated that banks around the world will eventually have to write off $1.5 trillion
of worthless subprime MBSs (now often referred to as 'toxic debt'). These losses
destroyed much of the capital of the world banking system, leading to a credit crisis or a
'credit crunch': a massive reduction in the amount of credit available for banks to lend to
other banks, businesses and households.
READING: THE SUBPRIME CRISIS AND THE CREDIT CRUNCH
Deregulation in the 1980s was one of the factors that led to the subprime crisis. Read
about the crisis and then put the sentences below in the right order.
………American house prices fell and many borrowers stopped repaying.
…….. Lenders granted mortgages to 'subprime' borrowers.
………Some went bankrupt, and others had to be rescued by governments.
………The mortgage lenders sold mortgage-backed securities to financial institutions.
………The value of MBSs fell to almost zero and many banks lost billions of dollars.
………There was a credit crisis as there was little capital left for lending and
borrowing.
Little/ Few: almost no
a little/a few: some
Little/a little
Few/a few
VOCABULARY
Grant: agree to give Sb what they ask for especially formal or
legal permission
Grant Sb Sth
Grant Sth to Sb
VOCABULARY
Match up the words and definitions.
1 credit rating
2 default
A cancel a bad debt or a worthless asset from an account
3 collateralized
4 cash flow
5 write off
C failure to repay a loan
B estimates of people's ability to fulfil their financial
commitments
D the money generated by an investment
E with property or another asset used as a guarantee of
payment
Hedge fund: high risk funds
Pension funds
Mutual funds: a company that offers a service to people by investing their money
in various different businesses
DISCUSSION
q Who do you think was responsible for the subprime
crisis? What did the financial industry do wrong?
Read the text in section Reading (p. 75) and decide
whether the following statements are True or False.
1. In 2007, American house prices began to rise.
2. In 2007, many “subprime” borrowers started paying their
mortgages as their debt was smaller than the value of their
house.
3. In 2007, MBSs and CDOs allowed their buyers to receive the
payments on the underlying mortgages.
4. During the 2007 crisis, when many subprime borrowers
stopped paying, the value of subprime related securities went
down dramatically.
5. During the 2007 crisis, many banks in the USA, Britain and
elsewhere lost few dollars on their MBSs.
LISTENING 2: MICROFINANCE
• Do you know (and can you explain) what 'microfinance' is?
Anna-Kim Hyun-Seung from South Korea is a former MBA student
from the Judge Business School in Cambridge who works in the
not-for-profit sector.
Listen to her talking about microfinance, and answer the
questions.
1 In microfinance, what replaces normal financial collateral?
2 What is the 'risk-management tool' that Anna-Kim mentions?
3 Why is lending money to poor people not necessarily as risky as it
sounds?
4 Why are conventional banks now developing microcredit products?
5 In which three continents are there successful microfinance schemes?
1. a written order to a bank to pay on demand a specified sum to a named
person or business
A. cheque
B. banker
C. bank note
D. coin
2. an amount of money that somebody borrows from a bank and is paid back
usually with interest
A. interest
B. discount
C. loan
D. bonus
3. a bank account which pays no or little interest, but allows the holder to
withdraw his or her cash with no restrictions
A. deposit account
B. current account
C. savings account
D. fund
4. a plastic card with your signature on that you can use to pay for things. The
money is taken directly from your bank account.
A. debit card
B. credit card
C. cheque
D. note
5. an arrangement by which a customer can withdraw more from an account
than has been deposited in it, up to an agreed limit, and interest on the debt is
calculated daily
A. mortgage
B. interest
C. overdraft
D. loan
6. a bank account that pays interest, but usually cannot be used for paying
cheques, and notice is often required to withdraw money
A. check
B. current account C. savings account
D. fund
Diversify: increase a range of products or services
16 BONDS
1. Consider the different types of bonds
2. Discuss mortgage-backed securities and bond funds
Lead-in
• What are the two main ways governments can raise money?
• What are the two main ways established companies can raise
money?
• What are the advantages and disadvantages of bonds for
companies and investors?
Reading: Bonds
Read the text and underline the answers to the questions
above.
1. What are the two main ways governments can raise money?
2. What are the two main ways established companies can
raise money?
3. What are the advantages and disadvantages of bonds for
companies and investors?
Reading: Bonds
COMPREHENSION
Are the following statements TRUE or FALSE ?
1 Companies regularly finance their activities by issuing bonds.
2 Bond-issuing companies use investment banks to find investors.
3 Bonds are repaid at 100% when they mature, unless the borrower is
insolvent.
4 Bondholders get their money back if a company goes bankrupt.
5 Bond coupons are generally lower than share dividends.
6 For profitable companies, there are tax advantages to issuing stocks or
shares rather than bonds.
7 Governments systematically finance public spending by issuing bonds.
8 A bond paying 5% interest would rise/increase in value if interest rates fell
to 4%.
raise/rise
Raise (transitive verb)
Rise (intransitive verb)
Up side
The boss Raises my pay.
My pay rises.
My Pay rises 15%.
VOCABULARY
Find words in the text that mean the following:
1 the money a company receives minus the money it spends during a
certain period
2 part ownership of a company in the form of stocks or shares
3 funds operated by investment companies that invest people's money in
various assets
4 funds that invest money that will be paid to people after they retire
from work
5 the amount of capital making up a bond or other loan
6 the length of time for which a bond is issued (until it is repaid)
7 the amount of interest that a bond pays
8 unable to pay debts
9 people or institutions to whom money is owed
10 payments by companies to their shareholders
11 businesses that buy and sell securities
12 the price at which a buyer is prepared to buy a security at a particular
time
13 the price at which a seller is prepared to sell a security at a particular
time
14 the rate of income an investor receives from a security
NOTES
Coupon: /ˈkuːpɒn/ a small piece of printed paper that you can exchange for
something or that gives you the right to buy something at a cheaper price than
normal
money-off coupons
clothing coupons
an international reply coupon
2 Match up the verbs on the left with the nouns on the right to make
common verb-noun combinations found in the text. Some of the verbs
and nouns are used more than once.
VERBS
borrow
deduct
finance
issue
pay
NOUNS
(a rate of) interest
a return
activities
assets
bonds
Dividends
raise
receive
repay
sell
interest payments
money
principal
shares
tax
3. What other verb-noun combinations can you make with
these words?
Collocation money
TRANSLATE THE READING TEXT (PAGE 81) INTO VIETNAMESE
Discussion
• How easy is it to get a mortgage in your country?
• Do banks tend to lend to people who might not be able to repay?
• Did the banks in your country buy American subprime bonds? If so, why?
Reading: How to profit from bonds
Read the three extracts from newspaper articles on the
next page, and answer these questions.
1 What are the three classes of bonds mentioned?
2 What, according to the journalists and the experts quoted, is
happening that makes each type of bond a good investment
opportunity?
3 Why is the government buying back billions of pounds worth of
bonds?
4 What kind of companies issue high-yield bonds?
5 What is the risk involved with buying high-yield bonds, and how can it
be reduced?
Highest interest bonds/poor credit rating companies/are likely
NOTES
be involved with: be responsible for
reduce: decrease
Rush to buy government bonds
UK government bonds soared for a second day yesterday after the Bank of
England unveiled plans to buy billions of pounds of assets to kickstart the
economy. Fund managers and speculators rushed to buy government bonds,
known as gilts, driving up prices. Benchmark 10-year gilt prices saw their
biggest one-day jump in 17 years yesterday. The central bank will create new
money to buy £ 75 bn of assets, mainly gilts, at a series of auctions over the
next three months. Another £ 75 bn could follow. Many economists believe the
unprecedented measures should be enough eventually to lift the economy out
of its world slump since the 1930s. John Wraith of RBC Capital Markets expects
the rally in the gilt market to continue for some time. A lot of people will now
want to own gilts on the assumption that prices will keep on rising,' he said.
unveiled : show at the first time
Drive up prices: make sth rise quickly
The central bank: the official bank of a country,
The Guardian
whose responsibilities typically include making moneyavailable and controlling
interest rates:
Gilt: government bond
Eventually: finally
Assumption: something that you accept as true without question or proof:
Corporate bonds: the only 'hot' story in town
Good news is thin/thick on the ground for investors. Only brave hearts
would look at getting back into the stock market at the moment, as it is still
unclear whether we are headed for a worldwide recession or depression.
So any area of investment that promises growth is going to spark more
than a little interest. And it's the unglamorous world of corporate bonds
that is catching the attention of those in the know. These bonds, it seems,
are the one potentially 'hot' investment of 2009.
'They represent the opportunity of a generation, offering both capital growth
and relatively high income,' says Meera Patel, senior analyst at independent
financial adviser Hargreaves Lansdown. With the world economy speeding
downwards, companies that were once thought ultra-safe are now being
forced to offer higher returns to investors.
Sum up
Accept/expect
Downturn/crisis
Be Headed for : be responsible for
ultra-safe: extremely safe
The Independent
Why high-yield bonds are only for the brave
For UK investors, opportunities are currently on offer within high-yield bonds.
Having been generally overlooked by most investors over the past decade,
this asset class has started to grow in popularity, partly due to the
staggeringly high yields they have offered since the world plunged into
recession last year.
Patrick McCullagh, head of European and UK credit research at Schroders,
expects high-yield bonds to be offering more attractive opportunities than the
investment-grade corporate bonds that are currently in favour.
High-yield bonds are investments in the debt of companies that are deemed –
(by a ratings agency such as Standard & Poor’s )- to have a greater chance
of defaulting on their loans.
The lower a company's rating, the more likely they are to go bust, but the more
investors will be paid for accepting that increased risk. It means that fund
managers who choose wisely can make decent money from this area.
By V+ING
The Independent
DISCUSSION
• What has happened to bond prices since the predictions on
page 84 were made during the recession in 2008/9? Were the
journalists and experts
Find words in the articles that mean the following:
1 rose quickly
2 to revive or stimulate something
3 a standard used when comparing other things
4 a period when the economy is contracting (three different
words)
5 an improvement or increase in prices
6 failing to repay a loan
7 another word for going bankrupt
Nominal value, also known as face value or par value, is the stated price
written on front of a security, usually a bond or stock. For a bond or
preferred stock, this is the redemption price or the amount of money that
the bondholder will receive at maturity.
UNIT 17 STOCKS AND SHARES
q Consider the uses of stocks and shares and ways of talking about
price changes
q Discuss different possible investments
DISCUSSION
If you have money to invest, what are the advantages
and disadvantages of:
§
§
§
§
§
§
§
§
§
§
§
putting it under the mattress
buying lottery tickets
taking it all to Las Vegas or Monte Carlo
depositing it in a bank
buying gold
buying a painting (Matisse, Van Gogh, etc.)
investing in property or real estate
buying bonds
buying stocks or shares
investing in a hedge fund
giving it away? /charity/giving pledge
QUESTIONS
1. Why do companies issue stocks and shares?
2. How are stocks and shares traded?
3. What do “bull market”, “bear market” mean?
To raise capital to expand their business
operation
Government issues bonds when …………
Tax revenues/
READING: STOCKS AND SHARES
Match up the half-sentences below, which make up a text about stocks and shares.
1. Successful companies can issue stocks or shares (certificates representing part ownership of the
company)
2. Offering these stocks for sale to financial institutions and the general public changes the business
3. Selling stocks for the first time is called an IPO or initial public offering in the US
4. Companies use an investment bank to find buyers, and to underwrite the stock issue,
5. Stocks and shares are also known as equity or equities; the most common form
6. After shares have been issued they can be traded on the secondary market at
7. Some stock exchanges have automatic computerized trading systems that match up buyers and sellers;
others have market makers 8. Stock prices rise and fall depending on supply and demand,
9. Consequently the nominal value of a share – the price written on it - is rarely the same as its market price
10. Companies either distribute part of their profits to hareholders as an annual dividend,
11. Stock markets are measured by stock indexes (or indices),
12. A period during which most stocks (and the stock index) are rising is called a bull market,
A. and a flotation or an IPO in Britain.
B. and one in which most of them fall in value is a bear market.
C. the stock exchange on which the company is listed or quoted.
D. from a private to a public company, and is called going public.
E. i.e. how many sellers and buyers there are.
F. i.e. to guarantee to buy the stocks if there are not enough other buyers,
G. is called common stock in the US, and ordinary shares in Britain.
H. or keep the profits in the company, which also causes the value of the stocks to
rise.
I. the price it is currently being traded at on the stock exchange.
J. to raise capital to expand their operations.
K. traders in stocks who quote bid (buying) and offer (selling) prices.
L. which show changes in the average prices of a selected group of important stocks.
SUMMARIZE
Sum-up main points of stocks and shares
VOCABULARY
Rather than endlessly repeating the words 'rose' and 'fell', financial journalists use a large number of verbs and
phrases to describe the movements of security prices. Classify the following sentences, according to whether you think
the verb or expression means:
1.
Volkswagen shares rocketed after the revelation that Porsche has upped its stake in the company to 74%.
2.
The Sensex index of the Bombay Stock Exchange crashed on Monday on fears of a recession in the US.
3.
Visa shot up yesterday on the NYSE on its first trading day, rising as high as $69 a share.
4.
The Footsie revived a little in London in the afternoon, gaining 30 points in late trading.
5.
After the strong gains of last week, Asian shares slipped on fears of a looming recession.
6.
In Milan, the S&P/MIB index plummeted, after the unions called for a three-day general
strike next week.
7.
Leading shares were slightly weaker in Switzerland, the Swiss Market Index losing 20 points.
8.
Share prices recovered in Hong Kong today, the Hang Seng finishing up ten points.
9.
On the Sao Paulo exchange, the Bovespa Index advanced a little, up 12 points.
10. Chinese shares jumped after a two-thirds cut in a securities trading tax.
11. Even after the government bailout, Citigroup is continuing to plunge, now down to $1.95.
12. Most shares were a little stronger in Madrid this morning, when the exchange reopened after yesterday's public
holiday.
A to rise after previously falling
B.to rise a little
C to rise a lot
D to fall a little
E. to fall a lot
READING: HEDGE FUNDS
Hedge funds are private investment funds for wealthy investors that trade in securities and
derivatives, and try to get high returns whether markets move up or down.
Read the following extract from Geraint Anderson's book Cityboy, which explains one of
the major strategies of hedge funds, and answer the questions.
1 What does 'the bursting of the tech bubble' mean?
2 Anderson calls the people working in the financial industry 'Cityboys'. What implied
meanings does this word convey?
3 What is Anderson implying by 'their never-ending mission to confuse the general public”?
4 Explain in your own words how hedge funds make money by shorting shares.
Paraphrase/transformation/state sth in different way but keep the same ideas
5 Why did 'investment banks [have] no choice but to prioritize' hedge funds?
Refer
Imply/refer to: mention sth
Prioritize sth/sb: consider sth/sb more important than others:
Prefer sth/sb to sth/sb
READING: HEDGE FUNDS
The rise of hedge funds began in earnest around 2001. By then stock markets had been in decline
for around a year after the bursting of the tech bubble. With no end to the bear market in sight
investors wanted to make returns that were not geared to the performance of the stock market. They
wished to make an absolute return even if stock markets fell. They demanded what Cityboys, in their
never-ending mission to confuse the general public, like to call 'Alpha' not 'Beta'. Hence, hedge
funds became increasingly popular since, unlike conventional 'long-only' funds, they can 'short'
shares. That is to say, they can sell shares they don't own by borrowing them off a conventional fund
so that when the share price falls they make a profit by buying them back at a cheaper price. As the
bear market continued cash began pouring into these funds. [...] As these hedge funds multiplied and
grew, investment banks had no choice but to prioritize them relative to their old, traditional long-only
clients because some of these crazy guys really like trading shares. Whilst your typical pension fund
might, on average, hold on to a share for a year or more I've seen certain hedge funds buy in the
morning and sell in the afternoon. Hell, I've even seen buy and sell orders in the same stock within
an hour! On certain days, one of the biggest hedge funds, GLG, has been said to be behind five per
cent of all the trades in the FTSE 100.
Popular: know and like in favour
A Long-Only Absolute Return Fund is a fund that
takes only long positions, seeks undervalued securities,
and reduces volatility and downside risk by holding
cash, fixed income or other basic asset classes. ...
Exposure may also be gained through investment funds
that are not hedge funds.
READING: HEDGE FUNDS
As the bear market continued cash began pouring into these funds. [...]
As these hedge funds multiplied and grew, investment banks had no
choice but to prioritize them relative to their old, traditional long-only
clients because some of these crazy guys really like trading shares.
Whilst your typical pension fund might, on average, hold on to a share
for a year or more I've seen certain hedge funds buy in the morning and
sell in the afternoon. Hell, I've even seen buy and sell orders in the same
stock within an hour! On certain days, one of the biggest hedge funds,
GLG, has been said to be behind five per cent of all the trades in the
FTSE 100.
VOCABULARY
decline 2 noun [ countable, uncountable ]
in decline
1 when sales, profits, production etc become less : • Exports had collapsed,
causing a sharp decline in national income.
• The increase in profit came despite a decline in sales.
2 when an industry or country becomes less profitable, productive, wealthy
etc : • The decline in the province's manufacturing sector is worrying.
• a false and damaging picture of a nation in decline
Short shares: short selling is the sale of a security that is not owned by
the seller, or that the seller has borrowed. Short selling is motivated by the
belief that a security’s price will decline, enabling it to be bought back at a
lower price to make a profit .
UNIT 19
VOCABULARY
liability noun plural liabilities 1 [ countable usually plural ]
ACCOUNTING FINANCE an amount of money owed by a business to a
supplier, lender etc :
current liabilities [ plural ] ACCOUNTING FINANCE debts that must be
paid within one year, for example to suppliers and the tax authorities : •
The company had long-term debt of $1.71 billion and current liabilities of
$1.38 billion.
long-term liability/ fixed liabilities
Tax liability
deferred liabilities [ plural ] ACCOUNTING FINANCE debts relating to
activity in one period of time that will or may be paid in a later period of
time :
deposit liabilities [ plural ] BANKING FINANCE money that people and
companies have put into banks, and that the banks will have to pay back
at some time in the future
external liabilities [ plural ] ACCOUNTING FINANCE debts to lenders
and suppliers, as compared to money owed to shareholders : • The
balance sheet should summarize the sources of finance which are the
external liabilities of the business.
Debit: substract
Credit: add
Debit card :
Credit card
Credit limit
Debt balance
Bill:
Invoice: (n)Receipt:
VOCABULARY
Current assets: petty cash (cash used to pay everyday office needs), supplies
(for example, office supplies), prepaid insurance
Non-current assets: tangible assets: vehicles owned and used by the company
(cars, trucks, delivery vans), furniture, machinery, land and land improvements
intangible assets: goodwill (the value of intangible assets such as a good brand
name, good customer or employee relations, patents, etc.), mail lists, trade
names and trademarks (phrases or logs used to identify companies or brands)
Current liabilities: notes payable (a debt which needs to be paid in the next 12
months), current portion of long-term debt (instalments due in the next 12
months), wages payable, interest payable
Non-current (or long-term) liabilities: bonds payable (debts that will mature
after the next 12 months), leases (long-term leasing agreements for buildings or
machinery)
Reading 2 Look at the cash flow statement in 1 again and match 1-9
to definitions a-i.
Part 1
a) The company has more cash on hand because the customers have paid
their debts
b) The company has more cash on hand because they are waiting to pay their
taxes till a later date
c) All the expenses are subtracted, resulting in this final figure
d) The company has more cash on hand because they are waiting to pay
suppliers till a later date
e) Here we see all the cash the company generated by doing business
Parts 2 and 3
f) This expense was caused by buying equipment for the factory. —
g) This money came from a bank
h) This final figure resulted from all cash movements
i) This figure is a result of finding people to invest in company stock
Electronics and More Ltd - Cash flow statement
Part 1 Cash flow from operations
(1) Profit after tax
(2) Decrease in accounts receivable
(3) Increase in taxes payable
(4) Increase in accounts payable
(5) Net cash from operations
Part 2 Cash flow from investing
(6) Plant and equipment
Part 3 Cash flow from financing
(7) Issuing new shares
(8) Bank loans
(9) Net increase In cash
€300,000
€48,000
€43,000
€52,000
€443,000
(€137,500)
€65,000
€202,000
€572,500
V. WRITING. Build a complete sentence with the given words. (2 pts)
1. Bonds/safe/ than/ shares /investors/ they/ generally/ pay/lower return/./
2. Clustering/perhaps/one the//most/exciting/areas/governments/companies/address/. /
3. Competition investigation authority/role /look at/markets/ in general/again/see/
competition/work/effective/benefit/consumer/./
4. entrepreneur/new idea/disrupt/address/tackle/compete/exist/wellestablished/industries/structure/but/ it/evolution/./
III. READING . Read the text carefully and then
briefly answer the following questions. (2 pts)
1. What do staff at Halma spend most of their time for?
2. Why is demand for Halma’s products growing worldwide?
3. What causes many engineering companies financial
difficulties ?
4. How does Mr O’Shea describe real markets?
TRANSLATION
1. Inefficiency is part of the deal. Only you are deliberately creating these
inefficiencies with the view of becoming even more efficient than otherwise
possible.
2. The investment comes in the form of protection, which makes, for the moment,
your local consumer use expensive and inferior domestic products. But unless you
do that, these industries are not going to grow, you accept that you will use inferior
products from inefficient producers for the time being.
3. In the meantime, you do certain things to make sure that these firms grow up, i.e.
they increase their productivity and eventually give you cheaper domestic goods,
create jobs and stimulate other activities. In the end, you are better off that way.
4. The analogy is: When you are trying to get into a more difficult and thereby higherreturn activity, developing countries have to invest in it.
VOCABULARY
1. Otherwise: used to state what the result would be if sth did not
happen or if the situation were different
2. for the time being: for a short period of time but not permanently
3. for the moment: for now or for a short period of time
4. In the meantime: in the period of time between two times or two
events
5. Be better off: in a more excellent or pleasant way not as badly
6. Be better off: (doing sth) used to say that Sb would be happier or
more satisfied if they were in a particular position
TRANSLATION
1. Many economists favour free trade, and some governments see the problems with free
trade, under certain circumstances.
2. We all know that economics is based on simplified models.
3. Sometimes those simplified models are not useful in explaining the way the real world
works, or sometimes there are exceptions to those models.
TRANSLATION
Let's take into account (consider sth before making decision) the standard argument
for free trade. Everybody gets better off, more efficiency, we can consume more
goods and services.
That may be the case, but there may be some people who lose out. Take the very
simple argument, we often have two economies with two goods, OK, we simplify
and then we extend. So say we've got two economies with two goods. We've got a
developed country producing computers and cloth, and we have an underdeveloped
country that's trying to produce computers and cloth. OK, and then we say, well
actually with free trade you should specialize in what you're best at, or least worst
at. OK, so under that situation we say, right, to the developed country, you produce
computers, and sell some computers to the developing country, and the developing
country, you focus on cloth, and buy the computers from the developed country, and
so on. That's our standard model, OK. And we can see that there's efficiency gains,
ultimately we should be able to get, consume more computers and cloth through that
process.
TRANSLATION
But let's think what happens there. I'm working in a cloth factory in a
developed country. We move from going from no trade to free trade.
My country specializes just in computers. What's going to happen, I'm
going to lose my job. OK. Now that may be a big concern,
governments may be concerned about workers losing jobs in certain
sectors. Now we could argue in theory I just need to reallocate my job
and become working in computing. It may be very difficult for me to
do that. I may be in the wrong part of the country, I may not have the
right skills and so on. Basically what happens with free trade is that
many many people gain and a few people may lose and they may lose
big time, and if we're concerned about those people we may want to
have some transition process, we may be concerned about unfettered
free trade.
SENTENCE BUILDING
1. We/go/sort/sine waves/bell curves/industry/disrupter/ move/be/dominant/ player/
potentially/other/ strong/player/ but/ over time/position/ become/ more/ vulnerable/and/
they/find/ themselves/competed/younger/newer/fresher/exciting/new/ ideas/./
2. entrepreneur/new idea/disrupt/address/tackle/compete/exist/wellestablished/industries/structure/but/ it/evolution/./
SENTENCE BUILDING
1. How /float/ exchange rate/ determine/?/
2. Bonds/safe/ than/ shares /investors/ they/ generally/ pay/lower return/./
3. If/company/ go bankrupt/ bondholders/ along with/other/creditors/get/some/ money/ back/./
4. Clustering/perhaps/ one /the most/ exciting /areas /governments/companies /address.
5. Competition investigation authority/role /look at/markets/ in general/again/ see /
competition/work/ effectively/benefit/consumer/./
6. Similar/ shops/restaurants/situate themselves/ right/ next/ each other/they/ know /this/
attract/ pool/potential/ customers/they / probably/ get /custom/ this Way/ than/choose/ a
location/other /similar/ businesses/./
THE FIRST EUROPE BANK: A COMPLETE SERVICE FOR OUR CUSTOMERS
We offer all types of banking products:
Accounts, loans and services
• Customers can have both current accounts and deposit accounts with us.
• We pay interest on current accounts but pay more on deposit accounts.
• If you want to save money for longer, choose a long-term deposit account. These pay the
most interest.
• We also offer mortgages and loans.
• In addition, you can rent safety deposit boxes at your local branch.
Convenience
• Our bank has many branches at convenient locations in the city.
• If you don’t want to come in to the bank, why not try online banking? It’s easy and takes less
time.
Personal service
You are welcome to visit us in any branch. Our customer advisers will be happy to help and to
answer your questions.
READING . Read the text carefully and then briefly
answer the following questions. (2pts)
1. Why does the First Europe Bank provide a complete service?
2. Which account pays the highest rate of interest?
3. Which three products or services can you have in addition to
current and deposit accounts?
4. Why do some customers choose online banking?
DEFINITIONS
A. All the money received from business activities during a given period
B. a sum of money reserved to pay a company’s retired employees
C. The difference between the purchase price of acquired companies and their net tangible assets
D. The total amount of money owed that the company will have to pay out
E. a market for a product or service, perhaps an expensive or unusual one, that does not have many
buyers, but that may make good profits for companies that sell it
F. a group of customers that share similar characteristics, such as age, income, interests, and a social
class
G. A statement giving details of money coming into and leaving the business, devided into day-to-day
operations, investing and financing
H. A statement showing the difference between the revenues and expenses of a period
I.
A statement showing the value of a business’s assets, its liabilities, and its capital or
shareholders’Equity (money the business has that belongs to its owners)
J.
All the money belonging to the company’s owners
1. Cash flow statement
2. pension fund
3. Shareholders’equity
4. Total liabilities
5. market segment
6. Income statement
7. Income
8. Goodwill
9. Balance sheet
10. niche market
II. GRAMMAR Choose the best answer to complete each sentence. (2pts)
1. They can either issue new shares on the stock market _________ borrow
money, usually by issuing bonds.
A. nor
B. or
C. and
D. but
2. Companies can also acquire businesses involved in _________parts of their
supply chain (vertical integration) to achieve cost savings.
A. other
B. another
C. the other
D. others
3. One way to acquire part-ownership of a company is a raid, _________simply
involves buying as many of a company’s stocks as possible on the stock market.
A. who B. that
C. which
D. whom
4. Groceries market means food and other everyday products _________in
supermarkets.
A. bought B. buy
C. to buy
D. buying
5. Bonds are generally _________ than stocks or shares.
A.safest
B. the safest
C. safer
D. the safer
6. If an insolvent or bankrupt company sells its assets, bondholders ________
among the creditors who might get some of their money back.
A. are B. will be
C. would be
D. would have been
7. A firm, a listed firm has two routes to_________ capital: one is through debt
and one's through equity.
A. raised
. raising
C. raise
D. to raise
8. Tax accounting requires a thorough knowledge of tax laws and accounting
combined _________ a desire to help clients reduce their tax liabilities.
A. To
B. by
C. in
D. with
9. If your assets comprise research and _________ , or people for that matter,
then it's in principle very difficult to put a value on those things.
A. develop
B. development C. developing
D. developed
10. Companies can _________10% of their turnover for price-fixing or forming
a cartel.
A. be fined B. fine
C. be fine
D. be fining
IV.
TRANSLATION.
Translate
the
following
sentences
into
Vietnamese.
1. Only about 5% of the world's currency transactions are related to trade individuals or organizations buying foreign currencies because they want to buy
goods and services from abroad - and foreign travel; the remaining 95% are
purely speculative.
2. Although it is possible to some extent to hedge against currency fluctuations by
way of futures contracts, forward planning is difficult when the price of raw
materials bought from abroad, or the price of your products in export markets,
can rise or fall rapidly.
V. WRITING. Build a complete sentence with the given words. (2pts)
1. Bonds/safe/ than/ shares /investors/ they/ generally/ pay/lower return/./
2. Clustering/perhaps/one /the most/exciting/areas/governments/companies/address/. /
Reference book: Accounting and Finance: Market Leader,
Pearson, 2010 Unit 7-8-9-13-14-15 (Vocabulary and translation)
Students are most likely to get part-time jobs while they are studying at
universities.
Gather pace: to start to happen more quickly and have more success
Desperate: (1) feeling or showing that you have little hope and are ready to do
anything without worrying about danger to yourself or others
(2) giving little hope of success; tried when everything else has failed
Merger/takeover
Inbound
outbound
Entrepreneur:
Sell out: sell all to
Sell off: sell unwanted products with
lower price
NOTES
Finance (n)
Venture (n)
Start-up (n)
Banks just lend you money if you prove that you do not
need money.
Lack of cash
Ability to pay debt
Angels: extremely rich people who are willing to accept high risks to gain high
returns
OVER TO YOU
INVESTMENT GRADE
Municipal bond: a bond that is sold by a town or city government in the US (trái phiếu
đô thị) eg. You don't need to pay a commission when buying or selling a municipal
bond.
When a company is unable to pay its debts and goes out of
business, we often say that it has gone bankrupt. Officially, in
a strict legal sense, this term only applies to individuals in the
UK, whereas in the US it can apply to both individuals and
companies.
READING -Understanding the main points
Read the article on the opposite page and answer these
questions.
1 What sort of business does the director in this article run?
2 Why is his business experiencing financial difficulties?
3 Which particular problems is he concerned about in relation to
his company's current situation?
4 Who is held responsible if a business trades when insolvent?
5 If a company looks like it is going insolvent, who should the
directors protect as a first priority?
6 Who should the company directors get advice from if they think
they might be going insolvent?
7 What important feature of the company should they also
protect?
8 In this situation, what should they also do on a regular basis?
Understanding details
Read the article again and answer these questions.
1 What three penalties, or 'remedies', could company directors
encounter if they trade while insolvent?
2 Which two documents provide information on how company
directors should conduct their business?
3 Which financial documents do company directors use to assess the
financial health of their company?
4 Besides the company itself, who should company directors take
advice for?
5 If they feel that that the company will be unable to repay future
debts, which two things must company
directors not do?
6 Who should company directors make sure they don't show
preference to when experiencing financial
difficulties?
7 What specific actions should company directors take during
meetings if their company is experiencing
financial difficulties?
Evidence triggered Crosby's departure
by Jane Croft
A When Sir James Crosby, CEO, left Halifax Bank of Scotland (HBOS), one of
the world's largest banks, in 2006, many were surprised that he had chosen to
leave a top job in British banking so young. The bank's shares had hit an alltime peak, and its financial results appeared to be excellent.
B Today, however, his exit from the bank at only 50 years old looks more like a
fortunate piece of timing. After the 'credit crunch', which later developed
into a full-blown recession, hit in 2008, HBOS was on the point of
collapse.
C Paul Moore, Head of Regulatory Risk at HBOS between 2002 and 2005, made
a statement to UK Members of Parliament in mid-February 2009. This started
the chain of events that ended in Sir James's resignation as Deputy Chairman
of the Financial Services Authority (FSA) an appointment made by the UK
government treasury under Gordon Brown. He said that under Sir James's
leadership, HBOS was 'going too fast‘ and was a 'serious risk to financial
stability'.,
Evidence triggered Crosby's departure
D The origins of the bank's aggressive approach to doing business can
be found in the merger of Halifax and Bank of Scotland in 2001. The
logic of putting the two businesses together was this: Bank of Scotland,
which relied on wholesale (borrowed) funding to finance at least half
its lending, could utilise Halifax's larger balance sheet and retail
deposits (made by savers) to increase corporate lending.
E HBOS adopted Bank of Scotland's aggressive funding model. Halifax,
as a former building society, had been around 80-per-cent funded by
retail deposits. But as the new entity grew, it relied more on
wholesale funding than retail deposits to finance growth. It grew
very speedily on the back of the consumer lending boom in the
early 2000s.
Evidence triggered Crosby's departure
F Sir James also hired Mr Hornby, a former supermarket
executive, to develop the retail bank, and HBOS became an
aggressive competitor, offering supermarket-style 'pile them
high, sell them cheap' products, in line with their sales-driven
business culture.
G Mr Moore said in evidence, 'I told the board they should slow
down, but was prevented from having this properly minuted
by the Chief Financial Officer. I told them their sales culture was
significantly out of balance with their systems and controls,'
allegations which HBOS denied.
Evidence triggered Crosby's departure
H As far back as 2003, however, some analysts had expressed concerns
that HBOS was expanding too quickly and taking on too much risk,
particularly in financing various retail and real-estate entrepreneurs. It
added to the group's bet on UK property through private equitystyle deals to buy into builders, hotels and restaurants as the market
neared its peak.
I One analyst wrote in 2003, 'HBOS has grown its [corporate] loan
book significantly faster than other large banks. As long as the
economy is robust, HBOS has great revenue potential, but there
are risks if we face a slowdown.' In 2002 alone. HBOS lent £5.5bn to
commercial property – more than the entire loan exposure to
commercial property of rival Lioyds TSB.
J Although the crisis in wholesale markets hit all banks. HBOS's
wholesale funding policy and exposure to the UK property market left
it more vulnerable than other banks. Mr Moore's claims provide some
ideas as to why the bank came so close to collapse in 2008. FT