5. Listen to the monologue “The New York Stock Exchange”, give definitions of the words and expressions in bold print, answer the questions below.

A Stock Exchange, sometimes called a Stock market, is a place where people buy and sell stocks and shares. (It seems logical!). A stock (S-t-o-c-k) or a share (they’re the same thing ) is a partial ownership of a company. So, for example, if you are a company and you need money, and you need money to expand your business, you can sell part ownership in your company by selling something called a stock or a share. When people buy them they then become owners of a very small part of the company.

People buy stock because they hope that overtime the company will be successful and the value of their investment, of their stock will increase. They can then make money by selling their stock to someone else at a higher price than what the paid for it.

As you can guess by the name the NYSE is not in Los Angeles. It’s in New York City. NYSE actually is the world’s largest stock Exchange. In October of 2008 the value of all the companies listed or included in NYSE was about $ 10.3 trillion. At the center of the NYSE is what is called the trading floor. To trade stocks means to buy and sell them. The floor is a large open area where many traders (people who buy and sell stock for their clients) make agreements with each other. There’re technically 1366 seats on the trading floor. You can actually go and see them, meaning that there are about 1366 people who are allowed to buy and sell stocks on the trading floor. Many financial professionals want to be able to buy and sell stocks directly on the NYSE, they don’t want to hire one of the people who already have the seat – they want their own seat, so the seats are very expensive. In fact in 2005 a seat sold for $ 2.3 mln. It’s a very expensive chair.

In the past the trading floor used to be very noisy and chaotic, very disorganized place with mostly men shouting at each other to buy and sell stock. Today, however, most trade is electronic. There are large computer screens on the trading floor for traders to look at as they work.

In order to determine how well the Stock Exchange overall is doing there is something called NYSE Composite Index. This a measurement that let people know how well overall the market is doing. Its base value or the amount it is calculated from is 5000 points, equal to the amount that the NYSE stocks were worth at the end of 2002. So the 5000 points is in some ways arbitrary, it’s just the way of trying to measure weather things are getting better or worse.

If you listen to people talk about Stock Market in the US you’ll probably hear them say that “the Market is up” or “the Market is down” a certain number of points in which case they’re talking often about this NYSE Composite Index.

There are other indexes also: the Dow-Jones Industrial Average for example is the name of another index that lets you know how stocks in general are doing.

The NYSE is normally open for trading during the week from 9.30 in the morning until 4.30 in the afternoon Eastern Time that is NY Time. However when there is a large drop or decrease in the value of stocks the Stock Market can be closed temporarily. If stocks drop 10-20% the NYSE closes for a short period of time. If the overall index drops 30% it closes for the rest of the day. The reason for this is that they want to give traders time to calm down. Think, sometimes people get too involved and psychologically don’t always make the best decision. If everything is dropping in price, people begin to sell which of course causes the price to go lower even more. They are trying to prevent by closing the Market a panic, which is uncontrollable fear. A very terrible fear is a panic.

The NYSE also closes when there are other national events, for example it is closed for the funerals of the former US presidents. It has also observed Moments of Silence, a few minutes when trading stops and nobody says anything for perhaps the death or an explosion. When the Space Shuttle exploded (28.01.1986) there was a Moment of Silence, For American soldiers at war and others. Perhaps, most famously the NYSE closed for 4 days after the attacks on World Trade Center in September 11, 2001.

(Adapted from ESL English Café 224.)

• Is there any difference between stocks and shares for an American?

• What does owning a stock mean?

• Why do people buy stock?

• What is the position of NYSE among all other stock markets of the world?

• What is the trading floor?

• How many seats are there and how much is each seat?

• What has changed in the work of NYSE during the years?

• Which indexes show the overall state of business on the NYSE?

• What are the operating hours of the NYSE?

• What may the reasons for a break in the work or a closedown of the NYSE?

• What is the difference between the terms “effectiveness” and “efficiency”?