3. Look at the term in the left-hand column and find the correct definitions in the right-hand column:

1. 2.	bond common stock		a market intermediary who buys and sells securities for client
3. 4. 5.	stockbroker market order stock exchange		a contract of indebtedness issued by a corporation or governmental unit that promises payment of a principal amount at a specified future time plus interest
			an organization whose members can buy and sell securities to the public
			the most basic form of ownership of firms; it includes voting rights and dividends, if dividends are offered by the firm
			instruction to a broker to buy stock at the best price obtainable in the market now

4. Find the English equivalents.

зобов'язання	угода
фондова біржа	посередник
кількість	закупка
процес	цінне джерело інформації
біржовий маклер	цінні папери

Unit 14. The language of stock

1. Read and memorize the following words and word combinations:

• stock – акція

• share – акція, доля

• stock certificate – свідоцтвозапасу(акції)

• evidence – очевидність, доказ, свідчення

• specify – точно визначати

• par value – цінністьпаритету

• assign – призначати, асигнувати, доручити

• corporation’s charter – чартер корпорації

• shareholders – акціонери

• advantages – переваги

• disadvantages – недоліки

• securities market – ринок цінних паперів

• equity financing – фінансуванняакції(активів)

• to raise long-term funds – щобпіднятидовгостроковіфонди

• available – наявний

• acquire – набувати, одержувати

• asset – актив

• obligation – зобов’язання

• stockholder – акціонер

• income – прибуток

• retained earnings – збережений доход

• balance sheet – баланс, балансовий звіт, рахунок

• debt – борг

• incur – підпадати, наробити (боргів)

• vote – голосувати, вибирати

• the board of stock – Рада Директорів

• alter – змінювати, переробляти

• the sale of stock – продаж заготівки

• tax – податок

• temper – стримувати

• demand – попит, вимога

• profitable – прибутковий

2. Read, translate and retell the text:

Stocks are shares of ownership in a company. A stock certificate is evidence of ownership. It usually is a piece of paper that specifies the name of the company, the number of shares it represents, and the type of stock it is. Certificates sometimes indicate a par value, which is a dollar amount assigned to shares of stock by the corporation’s charter. The par value of a share of stock may be nowhere near the stock’s market value (the actual price at which the stock could be sold). The major use of par value today is in assigning the dollar value upon which dividends on preferred stock are paid. Dividends are the part of a firm’s profits that is distributed to shareholders. Dividends could be distributed in the form of cash or more shares of stock.

Securities markets contain the name of almost every large company in the United States. Evidently, companies must feel that equity financing is a good way to raise long-term funds. Some of the advantages of issuing stock are the following:

• Because stockholders are owners of the business, their investment never has to be repaid. Therefore, funds are available long term for acquiring land, buildings, machinery, and other assets.

• There is no legal obligation to pay dividends to stockholders. Income can be invested back into the firm for additional investment or growth. Remember, this is called “retained earnings”.

• Selling stock can actually improve the condition of the firm’s balance sheet. How? No debt is incurred, and the company is stronger financially.

Nonetheless, as the saying goes, there is no such thing as a free lunch. As you might suspect, there are disadvantages to selling equity in a firm as well. The disadvantages include the following:

• As owners of the firm, stockholders have the right to vote for the board of directors. As you may remember, the board of directors decides who will manage the firm and what the firm’s policies will be. Hence, the direction of the firm can be altered significantly through the sale of stock.

• Dividends are paid out of profit after taxes. Thus, paying dividends is more costly than paying interest, which is tax deductible.

• Management decision making is often tempered by the need to keep the firm’s stockholders happy. In fact, many institutional shareholders are becoming increasingly vocal in their demands that stockholders have more say in how companies are run. This often forces managers to use short-term tactics to keep earnings up rather than strategies to keep the firm profitable in the long run. Thus, the cost of equity financing may be much higher than the figures shown in accounting records.