Exercises

Ex. 1. Answer these questions:

A. 1. What is investment?

2. Define the difference between real investment and financial investment.

3. In what ways can financial resources be raised?

4. Why does FDI take place?

5. What institutions handle investment in stocks and shares?

6. What role do institutional investors play?

7. How do investors make their choice of investment possibilities?

B. 1. How does the foreigner characterize the investment climate in his country?

2. What country heads the list of the major investors?

3. Why are foreign investors willing to invest in the country?

4. What are the local points of the country's investment policy?

Ex. 2. Give derivatives of:

investment n	finance	deposit	advance
channe	manager	control	share
own	contribute	application	risk
allocate	government	security	adjustment
assess	policy	borrow

Ex. 3. Say in a few words what the main text is about.

Ex. 4. Sum up the content of the dialogue.

Ex. 5. Work on vocabulary and grammar.

a) Study the key words of the unit in the dictionary at the back of this book:

investor, investment, assets, capital, risk, call options, put options.

2. Think of word combinations with these nouns:

investor, investment, accounts, securities, yield.

2. Think of the verbs most commonly used with:

portfolio, intermediary, risk, loans, purchase, contributions, funds, money.

d) Match the verbs from (a) with the nouns from (b) below:

a) to make b) exchange control

to invest in management

to remove investments

to expand securities

to minimize capital flows

to assess risks

to stimulate competition

to share in return

to receive techniques

to apply situation

Ex.6.

a) Supply the articles where necessary.

2. Write down 3-5 questions about the text.

2. Say what advantages individuals have when they invest in investment companies.

Investment Companies

Investment companies are ... type of financial intermediary. They obtain money from investors and use it to purchase financial assets such as stocks and bonds. In return, the investors receive certain rights regarding ... financial assets that the investment company has bought and any earnings that it may generate. In ... simplest and most common situation, the investment company has only one type of investor - stockholders.

For an individual there are two advantages of investing in such … companies instead of investing directly in the financial asset that these companies own. Specifically, the advantages arise from (1) economies of scale and (2) professional management. In describing these benefits, let's consider ... individual with moderate financial resources who wishes to invest in ... stock market.

In terms of economies of scale, the individual could buy stocks in odd lots and thus have ... diversified portfolio. However, the brokerage commissions on odd lot transactions are relatively high. Alternatively, the individual could purchase round lots, but would only be able to afford ... few different securities. Unfortunately, the individual would then be giving up ... benefits of owning a well-diversified portfolio. In order to receive the benefits of both diversification and substantially reduced brokerage commission, the individual could invest in the shares of... investment company. This is because economies of scale make it possible for an investment company to provide ... diversification at ... lower cost per dollar of investment than would be incurred by a small individual investor.

In terms of professional management, the individual investing directly in the stock market would have to go through all... details of investing, including making all buying and selling decisions as well as keeping records of all transactions for tax purposes. In doing so, the individual would have to be continually on the lookout for mispriced securities in ... attempt to find undervalued ones for purchase, while selling any that were found to be overvalued. Simultaneously, the individual would have to keep track of ... overall risk level of the portfolio that did not deviate from some desired level. However, by purchasing stock of an investment company, the individual can turn over all of these details to ... professional money manager.

Investment companies have ... problems but potential advantages to be gained from ... investing in an investment company still outweigh any disadvantages, particularly for smaller investors.

Words you may need:

Англійський варіант generate v (зд.) economies of scale odd lot round lot incur v to keep records to be on the lookout mispriced securities to keep track (of) deviate v money manager

Російський варіант изыскивать, получать экономия, обусловленная ростом масштаба производства неполный лот полный лот (партия ценных бумаг) терпеть убытки, принимать на себя расходы регистрировать, вести запись быть настороже ценные бумаги по заниженной или завышенной цене отслеживать отклоняться менеджер, занимающийся покупкой и продажей ценных бумаг

Український варіант знаходити, одержувати економія, обумовлена зростанням масштабу виробництва неповний лот повний лот (партія цінних паперів) терпіти збитки, приймати на себе витрати реєструвати, вести запис бути насторожі цінні папери за заниженою або завищеною ціною відстежувати відхилятися менеджер, що займається покупкою і продажом цінних паперів

Ex. 7.

a) Supply the prepositions where necessary.