VI. Reading and comprehension.

Exercise 14. Read the text B for 10 minutes.

Notes:

Income stocks – компанії, акції яких купують заради отримання дивідендів;

Growth stocks – перспективні компанії, що розвиваються;

blue chips – «блакитні фішки» - найбільші та найстабільніші компанії на фондових ринках;

Secondary issues – стабільні компанії середнього рівня;

Penny stocks – маленькі нестабільні компанії, часто створені для спекулятивних цілей.

Stocks

As a shareholder, you stand to profit when the company profits. As a rule, the better a company does and the higher its profits, the more money its stockholders make. Investors buy stock to make money in one or both of two ways:

• Trough dividend payments while they own the stock.

• By selling the stock for more than they paid.

Many companies parcel out portions of their annual profits to stockholders in the form of dividend payments. Dividend payments vary from stock to stock. Stocks of companies with consistent histories of paying high dividends are known as income stocks because investors often buy them for the current dividends rather than for the company`s future prospects. Some companies, however, reinvest most of their profits back into the business in order to expand and strengthen it. As a result, stocks of companies that pay little or no dividends are called growth stocks because investors expect the company to grow – and the stock price to grow with it.

How do you judge a company`s prospects? By current or anticipated earnings, the desirability of its product or service, the competition, availability of new markets, management strength and many other considerations.

Unofficially there are four tires of stocks in the market:

Foremost are the blue chips, the older generation, the elite of industry, the companies of unquestioned strength, like IBM and AT&T. The term blue chips was introduced in 1904 to mean the stocks of the largest, most profitable corporations. The term comes from the blue chips used in poker – always the most valuable chips.

Secondary issues are the solid, well-established businesses which receive a little less investor confidence than the blue chips. Both blue chips and secondary issues are income stocks.

Growth stocks generally are relatively young companies with growth potential but no assurance of success.

Penny stocks are small companies with virtually no value other than their speculative potential.

Exercise 15. Define the terms by definitions:

1. portions of a company`s annual profits distributed to shareholders.

2. stocks of companies with consistent histories of paying high dividends.

3. stocks of companies that pay little or no dividends.

4. the companies of unquestioned strength.

5. solid, well-established businesses which receive a little less investor confidence than the blue chips.

6. young companies with growth potential but no assurance of success.

7. small companies with virtually no value other than their speculative potential.

Exercise 16. Explain how investors raise money buying stocks. What wat do you consider more risky and why?

Exercise 17. Match types of stocks with advantages and disadvantages of investing in them.

Advantages	Types of stocks	Disadvantages
a). The price of stocks can quickly rise at a very high rate;		j).The price of stock is usually very high.
b) your profit is always stable;		k). the high level of risk; stocks can loose their value
c). your investment risk is minimized;	Income stocks	l).it is impossible to sell your stock for much more money. The price is normally stable.
d). you can sell your shares for much more money than you bought them		m). you receive no periodic payments
e). owning such stocks is very prestigious;		n) you can loose all your money in the case of a company`s bancruptcy.
f). the initial price of stock is fairly low	Growth stocks	o). you can`t participate directly in the management of a company
g). such investing gives you good analytic experience.
h). you have limited liability
i). such investing is a long-term commitment of capital.

Exercise 18. Read the text for 8 minutes. Fill in the table while reading and give short summaries of the greatest Stock Exchanges.

Name	Location	Place in the world and capitalization	Year of opening	Operating company	Distinctive feature