Exercise 7. Put the right tense and voice forms of the verbs in brackets.

Last week (1)_____(mark) a milestone in the history of Europe’s single currency. On January 14^th the value of the euro (2)_____(slip) to $1.17, the rate at which it (3)______(introduce) on January 1^st 1999. Back then, the currency (4)_____(weaken) fast and (5)_____(hit) parity with the dollar in early 2000, plunging to $0.83 by October of the same year. The slump in the euro’s value (6)_____(suit) no one. So the world’s big central banks (7) _____(undertake) a program of coordinated intervention to stem the euro’s fall.

All this time the euro’s slide (8)______(be) more gradual, but more persistent. Both politics and economics (9)______(undermine) the currency now. Deflation (10)_____(set in): prices across the single-currency area (11)_____(fall) the previous year. The region’s growth prospects (12)_____(look) ever feebler.

 

Exercise 8. Here is one of many dialogues that is taking place in a foreign exchange office. Make up your own dialogue speaking about any other official currencies.

Customer: Could you change dollars into English pounds sterling?

Cashier: Certainly, sir. I’ll just check the exchange rates. How much would you

like to change?

Customer: One thousand dollars. And what is the rate of exchange today?

Cashier: One dollar to seventy five pence.

Customer: And what rate can you offer for two thousand dollars?

Cashier: One dollar to ninety pence.

Customer: Oh, the difference is not very big. Change one thousand, please. Here is

the money.

Cashier: Thank you. May I have your passport for a moment, please? We are

always to write down the number of the customer’s passport if we

change one thousand dollars or more.

Customer: Here it is. No problem.

Cashier: Here is your passport. How would you like the money, sir?

Customer: Oh, give it to me in hundred pounds notes, please.

Cashier: Good. One hundred, two hundred … seventy pounds, seventy five

pounds.

Customer: Thank you. Good morning.

Cashier: Good morning, sir.

 

Exercise 9. Sum up everything you came to know about:

a) Foreign exchange market and its participants;

b) Currency trading;

c) Exchange rates;

d) Currency wars.

 

UNIT VIII

STOCKS and SHARES

Warm up

Crashes in stock market create a state panic

among the economic growth of the country.

The media love to quote experts saying we are about

to fall into recession. They said that through 2012 but,

as we know, their predictions didn’t come true.

So, is the crash imminent?

 

Section A

Reading 1

 

What are Stocks?

Stock is a share in the ownership of a company. As you acquire more stock, your ownership stake in the company becomes greater. The stock of a company is sold in units called shares. A share is a unit of ownership, or equity, in a company or corporation. Shares are one of the most traded financial instruments. If you buy a share of a company, you are buying a piece of the company. When you own more than one share in a company or several companies, these are called stocks, because “stock” generally refers to a portfolio of shares. Whether you say shares, equity, or stock, it all means the same thing.

Being a shareholder of a public company does not mean you have a say in the day-to-day running of the business. Instead, one vote per share to elect the board of directors at annual meetings is the extent to which you have a say in the company. Individual investors do not own enough shares to have a material influence on the company. It is really the big boys like institutional investors and billionaire entrepreneurs who make the decisions. The importance of being a shareholder is that you are entitled to a portion of the company’s profits and have a claim on assets. Profits are sometimes paid out in the form of dividends. Your claim on assets is only relevant if a company goes bankrupt. In case of liquidation, you will receive what is left after all the creditors have been paid.

Another extremely important feature of stock is its limited liability, which means that, as an owner of a stock, you are not personally liable if the company is not able to pay its debts. Other companies such as partnerships are set up so that if the partnership goes bankrupt the creditors can come after the partners (shareholders) personally and sell off their house, car, furniture, etc. Owning stock means that, no matter what, the maximum value you can lose is the value of your investment.

Why does a company issue stock? The reason is that at some point every company needs to raise money. To do this, companies can either borrow it from somebody or raise it by selling part of the company, which is known as issuing stock. A company can borrow by taking a loan from a bank or by issuing bonds. Both methods are kinds of debt financing. On the other hand, issuing stock is called equity financing. Issuing stock is advantageous for the company because it does not require the company to pay back the money or make interest payments along the way. All that the shareholders get in return for their money is the hope that the shares will someday be worth more than what they paid for them. The first sale of a stock, which is issued by the private company itself, is called the initial public offering (IPO).

Whether you work through a broker or decide to invest on your own, understanding stock market terminology will help you to better understand stock market investing.

Thus, a common stock is a security issued by a company that represents partial ownership in the company. Common stock is the most frequently issued kind of stock. It offers a variable return to the stock owner along with the possibility that the stock could lose value. Common stock owners also hold a voting right in the company that is used to vote on company issues.

A preferred stock pays the owner a fixed dividend that is not affected by company gains or losses. The stock represents ownership in the company, but it does not carry with it voting rights on company issues. The risk with preferred stock is if the company experiences a significant rise in revenue, the preferred stock owner receives the fixed dividend rate.

Blue chip stocks are common stocks of high quality that have a long record of earnings and dividend payments. They are often viewed as long-term investment instruments. They have low risk and provide modest but dependable return. They sell at a high price because of public confidence in their long record of steady earnings. Blue chip stocks are offered by well-known companies that have a reputation for offering quality products. Blue chip companies are Coca, Disney, Intel, IBM, Yahoo! (The name “blue chip” came about because in the game of poker the blue chips have the highest value).

 

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