Lyubimtseva_S_N__Koreneva_V_N_L_93_Kurs_angli
.PDFholdings predominate and new equity issues are avoided for fear... losing control. Words you may need:
common stock обычные акции dramatically adv резко
ranking n ранжирование, классификация relative to относительно
holding n владение (акциям) predominate v преобладать
Ex. 10. a) Open the brackets putting the verbs in the correct form.
b) Describe the changes on the London Stock Exchange brought about by Big Bang.
The London Stock Exchange (LSE) (to be) the principal market for the trading of equities, other corporate securities and government debt in the UK.
The London equity market (to have) the third largest turnover in the world, after Tokyo and New York. Organized dealing in stocks and shares in London (to start) at the end of the 17th century, when much of it (to take) place in the coffee houses in the City of London. At the beginning of the 19th century the London Stock Exchange (to obtain) its constitution and a building of its own.
Now it is a dealership market: the great majority of customer orders (to transact) with a market maker who quotes prices at all times at which he stands ready to buy or sell. In this respect it (to differ) sharply from the more common public auction markets such as New York, Tokyo or Paris where the bulk of customer trades cross directly with each other. The market (to undergo) substantial change at the time of Big Bang in 1986, and its current structure is modelled in part on that of NASDAQ, the US over-the-counter market.
Prior to 1986, membership of the stock exchange (to restrict) to partnerships. Member firms (to be) either brokers or jobbers. Brokers were not allowed to trade on their own account: they (to act) as agents for their customers, and transacted their orders with jobbers. The commission structure was fixed. Jobbers were obliged to make a two-way market in securities, and (to deal) with brokers as principals. They were prohibited from dealing directly with customers. Dealing (to take) place on the floor of the exchange.
The changes which were instituted in the period up to October 1986 were designed to liberalize the activities on the stock exchange: the rule restricting membership of the exchange to partnerships (to remove); fixed commissions were scrapped; the separation between broking and jobbing (to end); member firms became broker-dealers, free to act as agents and as principals. Those who wished to do so could register as market makers in specified stocks. At the same time, the opportunity (to take) to modernize the trading and quote dissemination system. A computerized system (to install) which showed the price quotes of all market makers in all stocks. Trades had to be reported electronically within five minutes.
The effects of Big Bang (to be) generally beneficial for customers dealing in size in liquid stocks.
The stock exchange (to be) the competent listing authority for the UK. The main requirements for having a listing in London are a 3-year-audited track record, a capitalization in excess of £700,000, at least 25 per cent of which must be in public hands, and the submission of appropriate listing particulars. In addition the company (to require) to release all necessary information for shareholders and to the public to appraise the position of the company at all times. Companies have to pay to the exchange a fee on listing and an annual fee thereafter. The stock exchange (to be) a private limited company owned by its individual members. The London Stock Exchange increasingly (to affect) by the legislation of the European Community. This
process has the aim of creating a single European securities market. Words you may need:
dealership market рынок, на котором работают дилеры order n (зд.) приказ
the bulk n большая часть
Big Bang – реорганизация Лондонской фондовой биржи 27 октября 1986 г.: отмена минимальных фиксированных комиссий, допуск на биржу банков и иностранных учреждений, разрешение членам биржи совмещать функции брокера и джоббера
NASDAQ = National Association of Securities Dealers Automated Quotations – автоматические котировки Национальной ассоциации дилеров по ценным бумагам.
prior to prep до, ранее
two-way market рынок, на котором постоянно котируются цена покупателя и цена продавца prohibit v запрещать
principal n принципал
institute v вводить, устанавливать scrap v выбрасывать за ненадобностью
dissemination n распространение (информации, знаний)
market maker «делатель рынка», брокерская фирма, постоянно котирующая ценные бумаги track record информация о деятельности фирмы (банка и др.)
capitalization n капитализация in excess of сверх
appraise v оценивать fee n (зд.) взнос
Ex. 11. a) Fill each gap with a suitable word from the box below.
b)Sum up the text in 5-7 sentences and present your summary in class.
c)Say what you have learned about trading on the New York Stock exchange. stockholdersstartexchangeconducttraded (2)meetsassignedtransactionsdatatypesworkmembershipfundsfoundationputtingsecuritiessellerstradingfreefo undedexchanges
The New York Stock Exchange
The New York Stock Exchange (NYSE) is the oldest and largest of the_______. It is a universal symbol of economic freedom. Three out of five Americans through this institution share in the strength and growth of the_______enterprise system. On a typical day about $6 billion worth of shares are________on the NYSE. Trades between buyers and________of securities are arranged by brokers. Brokers act as agents,________buyers in touch with sellers but not taking title to the securities. They represent on the floor different customers: mutual funds, investment funds, pension _______and small investors. Brokers' day is a non-stop gathering of information.
The NYSE has 1366 members. A broker can join the exchange only by buying a_______or "seat", that costs as much as half a million dollars. There are different_______of members. Commission brokers are partners in brokerage firms who carry out trades for the firm's clients. Besides, there are specialists, who are_______to a specific stock or bond and assist commission brokers in trading that stock or bond.
Specialists buy stock for their capital, they ensure that a buyer meets a seller and a seller________a buyer. Today, some 2200 stocks and more than 100 bond issues are________ on the Exchange. Each stock is traded in one individual spot which brings all orders together in one place.
The New York Stock Exchange was _______ in 1792, when merchants met to formalize rules and hours for_______. Business flourished. Trading three times a day gave way to an all-day auction market. At first each post auctioned only a handful of_______ .
Then a handful grew into a hundred. But the underlying principles have never changed. The unique structure of the auction system has been its strength and cornerstone since its_______.
New sophisticated technology has altered the stock exchange _______. The army of clerks was replaced by highspeed computers, which allows to keep track of all ________, to report the transactions to customers immediately, to bring orders to the trading posts electronically and to execute them. Computers are used for what they can do best: to move data around, to store________ , and provide information to people. All trades are performed electronically.
To prevent the system from the abuse the exchange has enforced rules governing ethical ________ and established a "stock-watch" electronic system, allowing to control and analyse instantly all trade on the_______.
Governors, who are appointed from the rank of brokers and specialists, watch the market and see to it that all buyers interested in a particular security could_______from an equal footing, only in that case they open the stock trade. All this makes people trust the exchange. 50 million Americans have become________. The NYSE is not just a place, it's a way of doing business.
Words you may need:
universal adj всеобщий, всемирный
to take title (to) получать право собственности (на что-л.) commission broker комиссионный брокер
specialist n специалист (член фондовой биржи, специализирующийся по одному или нескольким видам ценных бумаг)
flourish v процветать to give way (to) уступать
post n «пост», место в торговом зале биржи cornerstone n краеугольный камень
to keep track отслеживать abuse n злоупотребление instantly adv мгновенно from the rank of... из рядов ...
equal footing (зд.) равные условия
DISCUSSION
Ex. 12. a) Read the texts and do the tasks below.
b) Describe the chief varieties of speculators on the stock exchange. a) Bulls, Bears and Stags
The buying of something cheap at one time for the purpose of selling the same thing dearer at another time is speculation. Whilst in a sense all deals are speculations, the term is generally limited to circumstances
where profit is made because the same thing has different prices at different times. Anyone who does so is said to be a speculator. A speculator on the stock exchange is a person who backs the judgments he makes about likely developments by buying or selling shares. The chief varieties of speculators on the stock exchange are known as "bulls", "bears" and "stags".
A speculator may buy shares, for which he cannot or does not wish to pay at the time, in the hope that "during the account", i.e. before the date of payment, the price will have risen and he can then sell them at a profit. A buyer who buys like this in the hope of a rise in prices is a "bull".
Bears are pessimistic speculators who expect a fall in share prices. They therefore sell any shares they have now, and even shares they do not have, because, if prices fall as expected, the shares will be available in a few hours or a few days at lower prices than at present.
In both cases the success of the speculation depends both on a correct forecast of the security price movement and on a sufficiently long time interval before payment or delivery must be made. It quite often happens that "bulls" or "bears" are wrong in their anticipations, or that they are convinced that by holding out even beyond settlement day they could still make a profit.
To meet this case a delaying procedure has been evolved which allows the speculators to let their bargains stand over until the following settlement day. This is known as "contango" or "continuation". Arrangements for such "carry-overs" are made on the first day of the new account which is known as "Contango Day".
Stags are speculators who operate in the "new issues" market rather than on the Stock Exchange, although they must use the Stock Exchange before they can realize any profit. What a stag does is to apply for shares that are just being issued and are likely to be oversubscribed. He does not want to keep the shares, or invest in the company that is issuing them, but simply to make a profit out of the issue. The stag expects that the stock, upon issue, will quickly rise to a premium in the market, and he will then sell his stock at a profit. The activities of "stags" have been greatly reduced in recent years.
Words you may need:
bull n «бык», покупатель ценной бумаги, играющий на повышение bear n «медведь», продавец ценной бумаги, играющий на понижение
stag n спекулянт, покупающий новые ценные бумаги при объявлении подписки в надежде продать их с прибылью после начала торговли на вторичном рынке
speculation n спекуляция, купля-продажа ценных бумаг для получения прибыли speculator n лицо, занимающееся спекуляцией
account n операционный период на фондовой бирже anticipation n ожидание
contango n отсрочка расчета по сделке carry-over n отсрочка сделки
new issue новый выпуск (ценных бумаг)
shares that... are likely to be over-subscribed акции, подписка на которые, по ожиданиям, превысит предложение
premium n премия (сумма, на которую цена, заплаченная за акцию, превышает ее номинальную стоимость)
с) Explain how trading in options differs from buying and selling stocks: b) Options and Short Selling
Not all stock market speculation takes the form of buying and selling stocks whose prices are likely to change. Options and short selling allow a speculator to profit from movements in a stock's price without holding the stock itself.
An option is a security that gives its holder the right, but not the obligation, to buy or sell an asset at a set price during a specified time period. Options are classifed as either call or put options. A "call" is an option to buy a particular asset whereas a "put" is an option to sell it. Examples of options include calls and puts on common stock, warrants, and convertible securities.
An investor anticipating a rise in a share can buy a "call" option which, for a specified period, gives him the right to buy this share at an agreed price. If he expects a fall he will buy a "put" option which entitles him to sell. A premium called "option money" is payable for the privilege. If the rise (or fall) in the share is greater than the premium, he will exercise his option and make a profit; if not, he will let the option lapse. In either case his risk is limited to the premium. In a "bull" market most options will be for the "call", in a "bear" market most will be for the "put".
Short selling is a third way to profit from an expected drop in the price of a stock. A short sale is a sale of borrowed shares.
Words you may need: option n опцион
short selling «короткая продажа» warrant n варрант
convertible security конвертируемая ценная бумага anticipate v ожидать, предвидеть
option money опционная премия
to exercise an option исполнить опцион lapse v (зд.) терять силу
d) Explain what can help shareholders make decisions about selling or buying shares:
c) Events on the Stock Market raise a lot of questions for anyone holding or thinking of buying shares: "Is it all just a gamble?" "Is this a good time to buy?" "What experts can we turn to for reliable advice about when and what shares to buy?" More and more people nowadays ask the question: "How is the Market?"
Normally, the results of trading on any stock market are widely reported. The financial sections of newspapers around the world carry the complete results of each day's trading. In the US, on each business day the Wall Street Journal containts price quotations. Prices are traditionally calibrated in eighths of a dollar, so:
1/8 = $.125 1/4 = $.25 3/8 = $.375 1/2 = $.50 5/8 = $.625 3/4 = $.75 7/8 = $.875
Changes in quotations can be expressed in per cent and in basis points.
Along with stock price quotations, in the practical world of finance, there are other indications that help to
summarize stock market performance, to understand the motion of prices. There are two types of stock price indications – averages and indices.
The averages are based on small samples of key stocks and comprise the industrial average, transportation average, utilities average and the composite average. The indices draw on a large representative sample of stocks and comprise a set of sectoral, industry and subindustry indices together with a composite equity market index.
There are literally hundreds of stock market indices in use around the world. They differ primarily by the mode of weighting and computation. The bulk of these are weighted by the capitalization of the company's common stock.
In the US the most frequently quoted stock market index is the Dow Jones Industrial Average (DJIA), which is based on the stock prices of thirty large, well-established industrial corporations. Another frequently quoted stock market index in the US is the Standard and Poor's 500 Stock Price Index (S & P 500). It is significantly broader than the DJIA. Many stock market watchers prefer broader averages, in particular, the New York Stock Exchange composite average, which covers all stocks traded on that exchange. In the UK, investors watch the FT-SE 100 Share Index, popularly known as "Footsie". It is an index of 100 leading UK shares listed on the International Stock Exchange and provides a minute by minute picture of how share prices are moving. It started on 3rd January 1984 with the base number of 1,000.
FT index refers to the Financial Times Industrial Ordinary Share Index, also known as the "30 Share Index". This started in 1935 at 100, and is based on the prices of 30 leading industrial and commercial shares. They are chosen to be representative of British industry, rather than of the Exchange. The Institute of Actuaries in London and the Faculty of Actuaries in Edinburgh had compiled a broadly-based Actuaries Investment Index each month since 1929. But the advent of computerization paved the way for the daily computation of a greatly expanded index, known as the FT-Actuaries All-Share (FT-A) Index, from 1962.
Words у аи may need: gamble n азартная игра calibrate v (зд.) выражать basis point базовый пункт motion n движение
average n индекс курсов ценных бумаг
index n (pl indexes or indices) фондовый синтетический индекс sample n проба, образец
sectoral adj отраслевой weighting взвешивание (стат.)
computation и вычисление(я), подсчеты composite average составной индекс
Financial Times (FT) Actuaries All Share Index (FTА) Фондовый индекс всех акций (публикуется газетой «Файнэншл Таймc», Институтом актуариев в Англии и Факультетом актуариев в Шотландии)
Ex. 13. Read the dialogue, sum up its content and act it out:
Russian Company Breaks Onto the New York Stock Exchange
Correspondent: VimpelCom's appearance on NYSE is an historic event for Russia, as it marks this country's
crossing the border to join the world market. This is real evidence that Russia is progressing toward a market economy. Is it a great event for the Exchange, too?
Executive Vice-President: Sure. The New York Stock Exchange has always encouraged the listing of foreign companies. And the first company from the former USSR – which only a few years ago was the antithesis of a free market economy – is a symbol of a new world economy, the economy of the third millennium. It is a great event not only for Russia and our Exchange, but for all free market economies on earth.
Cor.: New York City has two stock exchanges; there are another seven elsewhere in America, and hundreds across the world. Why has NYSE been unquestionably the leading one for such a long time in such a competitive industry as securities? Your answer will be valuable to the organizers of new stock exchanges in Russia.
EVP: The most important part of our name is "New York". This town is a financial capital of the world. But the location of the Exchange is only part of the answer to your question. The Exchange itself was largely responsible for creating the financial leadership of the city. When NYSE was established in 1792, the Federal Government and our central bank were situated in Philadelphia. But during the following decades, New York gradually surpassed Philadelphia as the commercial and financial center of America. The brokers of the New York Stock Exchange helped to bring about that change.
Cor.: Is it possible that Russia's "NYSE" may eventually be located in St. Petersburg or Yekaterinburg rather than Moscow?
EVP: Why not? The most successful exchange will be created by the people who have the best strategic approach and the most flexibility.
Cor.: Resistance to change is part of the human condition, and Wall Street is no different, is it? EVP: Yes, a good example is the advent of financial futures, which Wall Street initially opposed but
Chicago embraced. Today, the synergy between the Chicago derivative markets and the New York Stock Exchange (NYSE) is a significant contributor to the strength of the US financial system. But the most dramatic evidence can be seen from the ending of fixed commissions for brokers in 1975. Average trading volume that year was under 20 million shares per day. Today, the average daily volume is 430 million shares per day.
Cor.: Many believe that the primacy of the New York Stock Exchange is due not only to the accident of its location, but also to an accident of history.
EVP: Yes, undoubtedly. NYSE is an auction/agency market, the most economically efficient for trading stocks because customers can trade with each other directly.
Cor.: Is NYSE involved in politics?
EVP.: In our Statement of Buiness Conduct and Ethics, we have a rule that no funds or assets of the Exchange can be contributed to any political party or organization, or to any candidate for public office. Our business is securities, not politics.
Words you may need:
antithesis n полная противоположность millennium n тысячелетие
surpass v превосходить advent n приход, появление
financial futures финансовые фьючерсы
synergy n синергия, бóльшая эффективность в результате слияния derivative market рынок производных ценных бумаг
primacy n первенство
Ex. 14. Give extensive answers to these discussion questions:
What type of market is the stock exchange?
What services does the stock exchange render to the investor?
Is the stock exchange a highly organized market? Why?
Do the dealings on the stock exchange affect the prosperity of a working man?
Is the stock market/stock exchange important to industry and the government?
What does the broker do? How does he earn his living?
What part does the speculator play on the stock exchange?
Who would normally deal with the issue of new shares?
Is there ever a time when no one is buying and selling?
How long does business continue before every deal is settled up?
What are the functions of an issuing house?
How are securities traded on the OTC?
How can you explain numerous exchanges that sprung up in this country?
How can you account for internationalization of the stock market?
Will Europe have a single European Securities Market?
In order to get prepared for participation in the class discussion of the questions, write a short essay on the following:
a)People engaged at the stock exchange: market makers, bulls, bears, stags, speculators, specialists.
b)Existing types of stock market.
c)Stock market indices.
Ex. 15. Prepare a short talk on the following:
a)The connection between the riskiness of securities and their rates of return. How can risk be reduced through diversification?
b)A profile of a profitable Russian company covering in detail buying, selling and issuing securities.
c)Classification of markets (draw on the information from the exercises of this unit).
d)Do you own any shares? If so, say why. If not, explain your decision. (Is it because the Russian market is still thin or because investors are not properly protected against losses caused by decline in stock prices?) Ex. 16. Go to the library and study regulations (constitutions and rules) that govern securities markets.
Present your findings in class. READING PRACTICE
Ex. 17. a) Look through the text below and say what the figures in the text stand for.
b)Reread the text carefully and explain what the Fourth Market implies and what prompted its emergence. Third and Fourth Markets
Until the 1970s the New York Stock Exchange required its member firms to trade all NYSE-listed stocks at the exchange and to charge fixed commissions. For large institutions this was expensive. In particular, the existence of a required minimum commission rate created a serious problem since it exceeded the marginal
cost of arranging large trades. Brokerage firms that were not members of the exchange faced no restrictions on the commissions they could charge and thus could compete effectively for large trades in NYSE-listed stocks. Such transactions were said to take place in the third market. More generally, the term "third market" now refers to the trading of any exchange-listed security in the over-the-counter market. The existence of such a market is enhanced today by the fact that its trading hours are not fixed (unlike exchanges), and that it can continue to trade securities even when trading is halted on an exchange. On average 18 million shares were traded in the third market during each day of 1992.
Until 1976 NYSE member firms were prohibited by Rule 394 from either acting as dealers in the third market or executing orders involving NYSE-listed securities for their customers in the third market. In 1976, Rule 394 was replaced by Rule 390, which permits the execution of these orders in the third market but still prohibits member firms from acting as dealers in the third market. However, the Securities and Exchange Commission has issued a rule that permits member firms to act as dealers in securities that became listed on the NYSE after April 26, 1979. Controversy still exists over Rule 390, as some people argue that it should be abolished completely to spur competition between the NYSE and the over-the-counter market, whereas others argue that having all orders funnelled to the NYSE will lead to the most competitive marketplace possible.
Many institutions have dispensed with brokers and exchanges altogether for transactions in exchange-listed stocks and other securities. Trades of this type, where the buyer and seller deal directly with each other, are sometimes said to take place in the fourth market. In the United States some of these transactions are facilitated by an automated computer/communications system called Instinet, which provides quotations and execution automatically. A subscriber can enter a limit order in the computerized "book", where it can be seen by other subscribers who can, in turn, signal their desire to take it. Whenever two orders are matched, the system automatically records the transaction and sets up the paperwork for its completion. Subscribers can also use the system to find likely partners for a trade, then conduct negotiations by telephone. In recent years automated electronic facilities have been developed to permit institutional investors to trade portfolios of stocks directly with each other.
Words you may need:
third market «третий рынок» (торговля ценными бумагами, зарегистрированными на фондовой бирже или на внебиржевом рынке брокерами, не являющимися членами биржи, и другими инвесторами) fourth market «четвертый рынок» (торговля ценными бумагами между инвесторами без участия брокера/дилера)
funnel v (зд.) направлять, пропускать dispense (with) v обходиться (без чего-л.)
limit order лимитный приказ (приказ клиента брокеру с ограничительным условием, например,
максимальной или минимальной ценой)
Ex. 18. a) Read the text below quickly and name organizations involved in the issues,
b) Reread the text more carefully to find the answer to the question: What can guarantee the success of the issue?
The New Issue Market
The mere buying of securites traded on the Stock Exchange does not create new capital. The stock exchange does not itself issue new shares to the public. Fresh capital is provided through the mechanism known as the
New Issue Market.
The Market has no outward formal organization or fixed place of business. Nevertheless it functions efficiently on the basis of a number of institutions working together: issuing houses, joint-stock banks, merchant bankers, insurance companies, stockbrokers, underwriters and others.
Issuing houses have become very active in the New Issue Market recently. An issuing house is a financial firm specializing in the issuing or floating of new securities for governments, municipalities and companies. Although this activity is not directly connected with the Stock Exchange, the Exchange is vitally interested in the activities of issuing houses; and the people who own and operate issuing houses have often been members of stock exchanges. The issuing house undertakes that the whole of a new issue of securities should be sold and makes all necessary arrangements for it.
It is charged with the entire "handling" procedure of the issue: this includes the arrangements for banks, other financial houses to share in the underwriting (only in a few cases do issuing houses underwrite the entire amount themselves); arrangements for the drawing up and publication of the prospectus.
Yet, even the most careful and competent handling will not guarantee the success of an issue. This depends on the attitude of the investing public, who will be guided very much by the reputation of the issuing house itself.
Issuing houses make arrangements with underwriters, who guarantee, for a commission, that if the public does not subscribe fully to the new issue the underwriters take up the remaining shares or stock. Underwriting is a process whereby a group of investment bankers agree to purchase a new security issue at a set price and then offer it for sale to the general public.
Words you may need:
new issue market рынок новых эмиссий mere adj простой
outward adj внешний
issuing house эмиссионный дом
underwriter n гарант размещения ценных бумаг floating n выпуск (акций через биржу)
"handling" procedure (зд.) выполнение всех формальностей
Ex. 19. Study the financial section from a newspaper, which includes information about the stock prices of listed companies, and explain how to read stock quotations:
UNIT 10. INVESTMENT ACTIVITY
A. TEXT
INVESTMENTS
In economic science, investment is capital expenditure on physical productive assets, e.g. machinery, factory buildings, roads, bridges, houses, and stocks.
Real investments generally involve some kind of tangible asset.
As a financial term investment embraces purchases of stock exchange securities or deposits of money in banks, building societies, or other financial institutions, with a view to income and, in appropriate cases, capital gains.
Users of capital, from governments to every kind of industrial or commercial joint-stock company, all depend for the supply of their financial resources on those who are willing to invest their funds, on investors.