6. Match the following words and definitions.

blue chip defensive stock growth stock insider share-dealing institutional investors mutual fund market-maker portfolio stockbroker

1 a company that spreads investors' capital over a variety of securities

2 an investor's selection of securities

3 a person who can advise investors and buy and sell shares for them

4 a stock in a large company or corporation that is considered to be a secure investment

5 a stock - in an industry not much affected by cyclical trends - that offers a good return but only a limited chance of a rise or decline in price

6 a stock - which usually has a high purchasing price and a low current rate of return - that is expected to appreciate in capital value

7 a wholesaler in stocks and shares who deals with brokers

8 financial organizations such as pension funds and insurance companies which own most of the shares of all leading companies (over 60%, and rising)

9 the use of information not known to the public to make a profit out of buying or selling shares

7. There is a logical connection among three of the four words in each of the following groups. Which is the odd one out, and why?

1 annual report - external auditors - financial statements - stockbroker

2 blue chip - defensive stock - growth stock - rights issue

3 bonus issue - dividend - over-the-counter - shareholder

4 creditor - market-maker - shareholder - stockbroker

5 debt - equity - share - stock

6 face value - market value - nominal value - par value

7 float - liquidation - share issue - underwriter

8 institutional investor - insurance company - liabilities - pension fund

9 mutual fund - portfolio - risk - underwriter

8. Speak on companies. Unit 4. Bonds

1. In Tom Wolfe's novel, The Bonfire of the Vanities, Sherman McCoy is a bond dealer in New York. One weekend his six-year-old daughter comes up with a question.

'Daddy . , . what do you do?'

'Well, I deal in bonds, sweetheart. I buy them, I sell them, I —

'What are bonds? What is deal?"

'Well, honey, bonds are - a bond is - well, let me see. What's the best way to explain it to you ... A bond is a way of loaning people money. Let's say you want to build a road, and it's not a little road but a big highway, like the highway we took up to Maine last summer. Or you want to build a big hospital. Well, that requires a lot of money, more money than you could ever get just by going to a bank. So what you do is, you issue what are called bonds.'

'You build roads and hospitals. Daddy? That's what you do?'

No, I don't actually build them, sweetheart. I handle the bonds, and the bonds are what make it possible —'

You help build them?"

'Well, in a way.'

'Which ones?'

'Which ones?

'You said roads and hospitals."

'Well not any one specifically.'

'The road to Maine?'

(Tom Wolfe: The Bonfire of the Vanities)

2. Can you explain what bonds are - to an adult rather than a six-year-old? If not, listen to Richard Mahoney, a Vice-President with j.P. Morgan and Co. In New York.

T 3 Listen to the interview, and answer the following questions.

1. What is the difference between bonds and stocks, in terms of income and repayment?

2. What are the three types of investor clients mentioned?

3. Mahoney gives examples of types of investments that generally carry very low, moderate, and higher risk. What are they?