Unit 15.2: Could you compare different possible investments? Points to cover: profit and risks

Nowadays if you want to invest, you can go to bank investment. Their specialists will provide you with financial advice, offer management services to corporate and individual clients.

Choosing where to invest, you should estimate how much risk you’re ready to take on, how much profit do you expect to get and how soon do you want to get a return.

If you don’t want to invest in risky projects, choose venture capitals. For instance, they are mutual funds, pension fund and insurance company. As a result, you will have not high, but regular profit. In theory, 1/3 of investors get high profit, 1/3 – small percentage and 1/3 no profit. So, on average it will be small profit.

If you are wealthy investor, you can choose hedge funds. You should be ready to risk a lot and soon you will get a high return.

Unit 16: What are the advantages and disadvantages of bonds for companies and investors? Give us your take on a mortgage loans on your country and how easy it is to get them and why. Do banks tend to lend to people who might not be able to repay? Why? Why not?

There are two ways of companies to raise their capital. First is equity finance or emitting stocks and shares. Second is debt finance or issuing bonds.

	Advantages	Disadvantages
Company	bond interest is tax deductive	debt finance increases a company’s financial risk: bond interest has to be paid even without any profit
Investors	bonds are safer and less risky than stocks bondholders get back their principal on a fixed date and receive payments (the coupon) at regular intervals if company goes bankrupt investors get no return from stocks and shares, but bondholders are among creditors of the insolvent company and they might get their money back when it sells their assets	bonds give less profit than stocks

Everybody remembers “credit crunch” in 2008 when banks gave lots of loans and as a result got too much bad debts. Many subprime borrowers stopped paying their mortgages, as their debt was greater than the value of their house. It leaded to global economic crisis. So, nowadays banks accurately check customer creditworthiness and credit rating.

Microfinance schemes distribute very small loans to poor people, often without financial collateral. But banks use social collateral, so they create a group of people which help each other to repay the loan. It’s not as risky as it sounds, because we are talking about a large number of people, with a very small amount of money and it actually provides a unique risk-management tool. Moreover, nowadays banks are developing different microfinancing and microcredit products in developing countries such as Bangladesh, Latin America and Africa too. That’s why it raises the bank’s profile which can regain public trust.

Unit 20: Imagine you have been invited by the government to advise them about economic development. Explain what actions they (government) could take to increase the chances of a successful cluster developing.

First of all, it’s necessary to mention that industrial clusters are groups of companies in the same industry that establish themselves in the same area. Clustering is one of the most exciting areas for governments as well as for companies to address. They hope that clusters of business will develop a competitive advantage over other countries or regions. Today there’re many examples of clusters such as Silicon Valley, Cambridge, Oxford or Detroit(auto). There’re several ways how governments can increase the chances of a successful cluster developing

Firstly, governments should concern about skilled workforce that meets the needs of the industry, good infrastructure and educational system, already-existing companies in a growing industry

Secondly, it’s important to provide cluster with the information and supporting services such as the lawyers, accountants, patent attorneys, headhunters and recruiters. It helps you to get the vast circle of activity around the cluster.

Finally, government should provide clusters with a good business environment including reasonable tax rates, no barriers to entry for new companies and simple procedures for starting new business.

In conclusion, all these factors are generally important in the developing successful clusters.