STOCKS/SHARES /EQUITIES
&
BONDS
A few things to remember ...
 Individuals and groups of people doing business as a
partnership, have ........... liability for debts, unless they
form a limited company. If the business cannot pay its
..........., any creditor can have it declared ............ In
order not to lose their personal ..........., most people
doing business form ........... companies, i.e. legal
........... separate from their owners and only ........... for
the amount of capital that has been ........... in it. If a
limited company goes ..........., it is wound up and its
assets are ........... (i.e. sold) to pay the debts. If the
........... do not cover the liabilities or the debts, they
remain unpaid and ........... simply do not get all their
money back.
STOCKS/SHARES /EQUITIES
Selling
 Who?
 Why?
Buying
 Who?
 Why?
Trading (selling and buying)
 Where? How?
COMPANIES
 issuing shares – raising funds for expansion
public limited companies (Plc)
publicly-held companies
public companies
(Attention!Public corporation*)
to list shares at a stock exchange
listing / quotation
listed companies / quoted companies
going public (e.g. They went public last year.)
flotation / IPO (Initial Public Offering)
to float a company
underwriting new share issues
rights issue
bonus issue
INA IPO starts today
13 November 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.
SHAREHOLDERS/STOCKHOLDERS
investors
purchasing shares - taking part of the ownership
small shareholders, major shareholder
retail shareholders / 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
Stock market, stock exchange
Traders
Dealers
Brokers, brokerage
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.
STOCK MARKET
See more at http://www.investopedia.com/articles/basics/03/103103.asp
The Stock Exchange
e.g. The NYSE, the LSE
The OTC market
e.g. The NASDAQ
-successful companies
-new companies
-second-tier shares*
(but also Dell, MS,
Intel...)
-strict requirements
e.g. quarterly reports
annual report
-physical exchange
-virtual exchange
(no trading floor)
Stock table
Chart (R.p.46)
 What ratios are important for analysing
a company’s financial management?
 What are cashflow problems due to?
 Find words describing the financial
controller’s interest in past, present and
future activities.
 Responsibilities of a CAO?
 Treasurer’s responsibilities?
 Two major sources of finance
(incl.subdivision)?
What? Who? Why?
 borrowing/lending:
principal (the amount borrowed, the face
value, par value)
interest (coupon)
 bond issuers:
governments (government bonds)
companies
(corporate bonds)
 bondholders:
selling or holding until maturity
BONDS
vocabulary





Tax deductible, tax deduction
Debt/equity ratio
VAT
Gilt-edged securities
Treasury bonds
Bonds (MacKenzie)
 Pg.1 make 5 questions
 Pg.2 explain: credit worthiness
 Pg.3 explain: bearer certificate,
primary/secondary market,
bonds are liquid, above/below
par, coupon, yield
 Pg.4:debt financing /equity financing
(advantages and disadvantages)
 Pg.5: government bonds –
types and reasons for issue
The Financing of Corporate Activity
McConnell/Brue, McGraw-Hill Inc.
 Corporate finance
 Stocks vs. Bonds
 Bond risks
*Features of clear (well-structured) writing
CORPORATE FINANCE
 Full text: Generally speaking, ......
three different ways... First, ...,
Second, ..., For example, ...Third,...
 Notes:
THREE WAYS OF CORPORATE FINANCE:
1.
2. .... (e.g. ...)
3.
STOCKS
VS.
BONDS
 Full text: In contrast, ..., For example, ...
This means
that...
There are clearly important differences between...,
First,... Second,..., On the one hand,..., On the other, ....
 Notes:
STOCKS
-ownership
vs.
BONDS
-lending
-less risky:
1.
2.
Bond risks
 Full text:
clear paragraphing & topic sentences
 Notes:
CORPORATE BOND RISKS
1.
2.
3.