Exercises

Ex.3. Find where in the text it is said about the points given below.

1. the meaning of investing.

2. three steps in any investment program.

3. five criteria of selecting an investment option.

4. two conflicting aims of the investment policy of a bank.

5. two things a bank should do to make its investment safe.

Ex.4. Find the terms in the text which designate the following:

1. committing capital with an expectation of making a profit;

2. increase in the value of an investment;

3. action of depositors concerning with taking their money back from bank`s assets;

4. the period of time for which assets are commited.

5. the ease with which an asset or investment can be converted to cash;

6. economic resources owned by a legal entity.

Ex.5. Say if the following statements are true or false:

1. The first step in any investment program is to select general investment options.

2. The chance that an investment and all its accumulated yields will be worth less at some future time than when the investment is made is often referred to as investment risk.

3. There exist six main criteria of selecting an investment option.

4. A bank must keep a proportion of its assets in the form of cash to meet demands of its depositors.

5. Advances by a bank to its customers are the most liquid of its assets.

6. Banks are willing to provide mostly fixed capital.

Ex. 6. Find the answers to the questions in the text. Put down the number of the paragraph:

1. What does the term “investing” mean?

2. What does the analysis of an investment situation contain?

3. What should investors decide when choosing an investment option?

4. What are five criteria of its selecting?

5. What two conflicting aims should a bank reconcile?

6. What must a bank do to lessen the risk of investing?

7. What are the most profitable of a bank`s assets?

8. Do banks lend to industry for long periods of time or for investment projects? Why?

Ex. 7. Make up a plan covering the main ideas.

Text 2.The company versus the sole proprietor

Ex. 8 Read and memorize the following words, words combinations and word-groups:

Sole proprietor – одноосібний власник

Qwnership - власність

Savings - заощадження

Salaried manager – менеджер, який отримує зарплату

To be restricted – бути обмеженим

Utilize - використовувати

in favour –на користь

Raise finance – збирати кошти

Go public – ставати державною (комунальною) компанією з обмеженою відповідальністю

Appeal - привабливість

Expansion - розширення

limited liability – обмежена відповідальність

encouragement - заохочення

Invest in – інвестувати у

Legal device – законний засіб

Rely on – покладатися на

Bear losses – нести збитки

Be liable for debts – бути відповідальним за борги

To the full extent – повною мірою

continuity of existence – тривалість існуваання

permanently - постійно

Irredimable – який не підлягає обміну на гроші

Have money tied up somewhere – мати гроші, інвестовані у

Quote shares – визначати ціну за акції

Stock Exchange – фондова біржа

Be freely negotiable – бути у вільній продажі

Estate duties – податок на нерухоме майно

Exercise 9. Read and translate the whole text with a dictionary orally. Translate paragraphs 1,2, 3 in writing. Do exercises after the text.

1. The sole proprietor type of firm, which contrasts most strongly with the company, indicates that ownership lies in the hands of an individual, who will normally provide the basic finance for the operation of the business out of his own savings. However, this should not be taken to imply that he will always be responsible for the day-to-day control of the business and that there will be no finance obtained from other sources. Control could to a large extent be left in the hands of a salaried manager and, as a sole proprietor business grows, it will become increasingly necessary to obtain assistance in the management of the business. Also, the sole proprietor is not restricted to his own financial resources, and he may well utilize funds provided by others, for example personal loans and bank loans.

2. In the UK economy the company and the sole proprietor are both common types of firm. However, the fact that they exist side by side implies that neither has in itself any predominant advantages over the other, nor disadvantages: there are, however, definite points in favour of and against each type. Thus, companies tend to be very much larger than sole proprietor, because they are in a position to raise more finance, but it must be remembered that small companies and large sole proprietor businesses do exist and that the advantages and disadvantages of size are not related to the form of firm.

3. The primary reason for the companies being able to raise larger quantities of finance is their ability to issue shares and thus raise money from a large number of people. The public company is in an even stronger position than the private one in this connection, in that it can appeal to general public. In fact, private companies often go public (become a public limited company) in order to obtain further finance for expansion. Also, the existence of limited liability (i. e. responsibility of each shareholder limited to the amount that they have contributed) is a definite encouragement to invest in shares, and companies could never have developed to their present size without this legal device. The sole proprietor must rely much more heavily on its own financial resources, and consequently his ability to expand tends to be very limited. He must also bear fully any losses arising from his business operations and is liable for debts to the full extent of his resources, business or personal.

4. For various reasons the company is also more likely to achieve a greater continuity of existence. Once shares have been purchased in a company, they are normally irredeemable that is can`t be converted into cash, and the company thus has the use of such finance for as long as it continues to exist. On the other hand shareholders are not forced as a result to have their money permanently tired up in a particular company, because shares can be resold to other persons. In this connection the public company whose shares are quoted on the Stock Exchange has the greater advantage because its shares are freely negotiable, that is can be easily sold to another investor at any time. A company can thus continue to operate and expand without the fear that it may lose its basic finance, unless a situation arises where cash must be raised from the sale of an individual`s existing shareholding, but where no one is willing or able to buy. This might arise on the death of shareholder in a private company, the shares of which will not of course be quoted. Estate duties may be payable and if the other shareholders are unable to afford to purchase the shares, the sale of at least some of the assets of the business may be required to raise the necessary cash.