14. Insurance for a private company.

Every firm insures itself against loss or damage to its property. Blanked insurance means insurance which covers everything. The premium is a percentage of the total value of goods.

The underwriters employ adjusters, assessing the loss or damage. This sum usually less than the full insured value of the property.

Often companies and persons insures the goods or property against almost anything that could happen. But most insurance companies put in some exceptions, like war or Act of God.

When an accident or robbery takes place the injured party puts in a claim to the insurance company. If the insurance company agrees to pay it is said to meet the claim.

First you take out a policy, then you put in a claim, and the insurance company, you hope, agrees to meet the claim.

15. Types of securities.

Securities are financial instruments that represent some amount of financial value. They generally take the form of a certificate that grants the holder the rights to participate in the profit distributions of a business. Common types of securities are stocks, bonds, and options. The places where the stocks and shares are bought and sold are called stock markets or stock exchanges.

Shares are certificates representing part ownership of the company.

For public companies the shares or stocks can be resold on the stock exchange to anyone prepared to pay. Even the largest company occasionally needs to issue additional new shares to raise money for especially large projects.

To buy into the company, a shareholder must purchase shares on the stock exchange. Shareholders earn return in two ways: the company makes regular dividend payments, the shareholders may take capital gains (or losses).If the company suffers a loss or goes bankrupt then the shareholders can lose only the value of their stocks.

There are ordinary shares, and preference shares or preferred stock. Holders of preference shares receive a fixed dividend that must be paid before holders of ordinary shares receive a dividend. Holders of preference shares have more chance of getting some of their capital back in the case of bankruptcy.

Security indicates either an ownership position in a corporation (a stock), or a creditor relationship with a corporation or a governmental body (a bond), or rights to ownership, represented by option, subscription right or warrant.

The market price depends on supply and demand and can change every minute during trading hours. Trades in stocks quote buying and selling prices. The difference between these prices is their profit.

Another type of securities is option – it’s a contract giving the holder a right to buy a designated security or sell it at a certain period of time at a specified price.

16. Mergers, takeovers & acquisitions

Companies are bought and sold on a daily basis. There are some types of sale agreements:

mergers - two companies come together, blending their assets, staff, facilities and so on to form a new firm.

Takeover – acquisition of controlling interest in firm. So, the purchasing company owns all of the target company’s assets and takeover its management.

The acquisition happens when a company offers to buy all the shares of the company with cash, with stock or a combination of the two. This is called a takeover bid.

If a Board of Directors of target company agrees to a takeover, it becomes a friendly takeover. Takeover which is carried out against wishes of the board is a hostile takeover.

Companies have various ways of defending themselves against a hostile bid. For instance, they can try to find another company that they preferred to be bought by.

Sometimes the companies choose issuing new shares at a big discount, which reduces the holding of the company attempting the takeover, and makes the takeover much more costly.