Болсуновская Л.М., Абрамова Р.Н., Матвеенко И.А. (ред.) Petroleum engineering. Teachers book. Нефтегазовое дело. Книга для учителя
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money out of their commercial bank accounts and give it to the
government.
So what does the government have to sell? Well, it sells securities.
Securities are a way to lend money to the government. When you buy a
security, the government promises to pay you back after a certain time,
perhaps a year, and with an agreed rate of interest.
The selling and buying of government securities are called 'open market
operations'. As a result of these open market operations, the money supply
will decrease, and the banks will have less money in their reserve
accounts. In other words, they will have a shortage of cash and they will
have to borrow from the central bank.
Exercise 19. Put the verb in brackets into the correct form
1. Our company (established) an effective system for recording financial
transactions last year.
2. The financial manager (obtained) the needed funds for the next year
yesterday.
3. The financial officer (found) sources of the funds for his company last
week.
4. The corporation (determined) its overall needs for the next period of
time this morning.
5. The Board of Directors (worked out) a system of financial control to
back up the company yesterday.
6. Last year most successful firms (used) new promising steps in planning
and controlling their finances.
7. I though that you (arrived) at some decision.
8. I believed that a long term loan (was) absolutely necessary for that
program.
9. They said they (worked) seven hours a day.
10. Did he say that there (were) a lot of problems with this agreement?
11. Did he find out that a commercial loan (was) for a smaller amount that
his business (had wanted)?
12. I was sure that the bank (had arranged) a line of credit for our
corporation.
13. She discovered that LTC corporation (used) both loans and bonds for
long term financing.
14. The manager said that we (needed) to reduce the amount of corporate
income tax.
15. I hoped that the bond (was) backed up by some collateral.
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Exercise 20. Substitute.
Statement: When the company wants to borrow a large amount of money
or has an unsatisfactory credit rating, it pledges collateral to
back up the loan.
Example: When the firm wants to borrow a large amount of money or
has an unsatisfactory credit rating, it pledges collateral to back
up the loan.
sum
needs
is known for
bad
some of its
cash
credit
if
financial
support
puts up
obtain
big
reputation
capital
Possible variant:
If the firm needs to get financial support or it has bad reputation, it
pledges collateral to back up the loan.
Exercise 21. Study the following and fulfill the exercise.
1. Direct speech:
Indirect speech:
2. Direct speech:
Indirect speech:
3. Direct speech:
Indirect speech:
4. Direct speech:
Indirect speech:
The customer said, "My business is
running out of cash."
The customer said that his business was
running out of cash.
The manager said, "We usually sell on
credit."
The manager said that they usually sold
on credit.
The banker said, "We have just signed a
contract."
The banker said that they had just signed
a contract.
The buyer said, "I bought a large amount
from you but it didn't work."
The buyer said that he had bought a large
amount from me but it hadn't worked.
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Change the direct speech into indirect speech.
1. The manager said that they hadn't made the necessary arrangements
yet.
2. The retailer said that you could buy machinery and tools on an open
account.
3. The customer said that he had bought a new car at the shop and that it
needed repair.
4. The banker said that he was opening a credit account for us.
5. The businessman said that as a rule, they sold their goods abroad.
6. The manager said that they hadn't raised enough money to expand.
7. The wholesaler said that he had sold a large amount of tools to retailer'
shops but they were not paying him in due time.
Exercise 22. Read the dialogue.
A. Before reading the dialogue study Words and phrases. Ask Ss how
they recommend to solve the problem which is covered in the dialogue.
A company is about to launch an expensive program while its revenues
are too small to cover the expenses. The manager is consulting with his
financial adviser.
B. Read the dialogue in pairs.
Exercise 23. Make up dialogues of your own.
Work in group and make up dialogues according to the following topics:
1. Your company is planning to construct a new building that would
take up lots of money.
2. A bondholder is talking to the manager of the company about the
advantages of bonds.
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UNIT 3
STOCK
Lead-in. T. elicits the ideas from the students as they suggest things connected
with the Stock Market and make collective mind map (spidergram) on the board
as the ideas are suggested, so that they can see how T. draws out the aspects of
the topic. The reasoning behind mind map is that Ss do not think in an ordered
or linear way, but rather explore a topic by moving between its various aspects.
The next stage in this procedure is discussing the questions connected with
stock, bonds and securities.
This activity will prepare Ss to work with the topic of the Unit 3.
Exercise 1. Read and learn the pronunciation.
Exercise 2. Pay attention to the stress in the following words.
T. comments on pronunciation of the words. Pay special attention to the
word stresses and elicit all the mistakes connected with mispronunciation
of the sounds by reading the words aloud.
Exercise 4. Answer the following questions.
1. Where are securities bought and sold? – Securities are bought and sold
at two types of securities markets: primary markets and secondary
markets.
2. What is the difference between primary markets and secondary
markets? – Primary markets issue new securities, and secondary
markets buy and sell previously issued securities.
3. Who does a company negotiate with if it wants to issue stock? – It
usually negotiates with an investment bank, or underwriter, who sells
the securities for it.
4. What does an underwriter usually do? – The underwriter buys the
securities from the corporation and resells then to individual investors
through the secondary market.
5. What is the main purpose of securities exchanges? – Securities
exchanges have been developed to make the buying and selling of
securities easier.
6. Who are the participants of securities exchanges? – The securities
exchanges consist of the individual investors, brokers, and
intermediaries who deal in the purchase and sale of securities.
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7. Do the exchanges buy or sell securities? – Securities exchanges do not
buy or sell securities; they simply provide the location and services for
the brokers who buy and sell.
8. Who are stock transactions handled by? – Stock transactions are
handled by a stockbroker.
9. What do stockbrokers receive from clients? – Securities and fee for
successful transaction.
10. What is the first thing you do to become a broker? – You should
purchase a “seat” which is a membership in the securities exchange.
11. What does the member do when a stockbroker calls in an order to
sell? – The member representing the broker looks for a buyer at the
price requested.
12. What is the largest stock exchange in the USA? – New York Stock
Exchange (NYSE) or "Big Board".
13. How many seats are there on the "Big Board"? – There are 1,300 seats.
14. What requirements does a firm have to meet in order to be on the
NYSE?
– Pretax earnings of at least $2.5 million in the previous year.
– Tangible assets of at least $16 million.
– At least 1 million shares of stock publicly held, and others.
15. What are the major differences between the NYSE and AMEX? –
AMEX operates in much the same way as NYSE, but smaller
companies may qualify for listing.
16. What is OTC and how many brokers participate in it? – The over the
counter market. About 5,000 brokers.
17. Where are options bought and sold in the USA? – Options are traded
on the major stock exchanges, but also on a special market for options,
the Chicago Bond Options Exchange (СВОЕ).
Exercise 5. Substitute.
Statement: Exchanges are simply auctions where investors get together
to bid for stocks and bonds.
Example: Exchanges are simply places where investors get together to
bid for stocks and bonds.
security markets gather
trade securities
just businessmen
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Possible variant:
Security markets are just trades where businessmen gather to bid for
securities.
Exercise 6. Transform the sentences according to the model.
Model: Securities exchanges provide the location for the brokers.
The location for the brokers is provided by securities exchanges.
1. Securities markets buy and sell securities. – The securities are bought
and sold at the securities markets.
2. The company issues new stock through an underwriter. – New stock is
issued by the company through an underwriter.
3. The exchanges trade listed corporation securities only. – Corporation
securities are only listed by the exchanges trade.
4. Several underwriters form an underwriting syndicate. – An
underwriting syndicate is formed by several underwriters.
5. The underwriter buys securities from the corporations. – Securities are
bought from the corporations by the underwriter.
6. The individual used to sell stocks over the counter originally. – Stocks
are originally used to be sold over the counter by the individual.
7. The National Association of Security Dealers developed the
computerized communications system NASDAQ (National
Association of Securities Dealers Automated Quotations) in the early
1970s. – The computerized communications system NASDAQ was
developed in the early 1970s by the National Association of Security
Dealers.
8. NASDAQ ties the OTC market together in one vast electronic stock
market. – OTC market is tied together in one vast electronic stock
market by NASDAQ.
9. The individuals trade the majority of stocks in a true bid auction. –
Stocks are traded in a true bid auction by the individuals.
Exercise 7. Read the dialogue.
John Simpson is talking to his friend, Martin Walker, about his progress in
business.
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Before reading the dialogue, study Words and expressions. Read the
dialogue in pairs.
Exercise 8. Make up dialogues of your own.
Work in group and make up dialogues according to the following topics:
1. You employ a broker to commit business transactions for you.
2. Your firm doesn't meet either NYSE or AMEX requirements so you
come into contact with one of the OTC brokers to discuss the
possibilities of cooperation.
3. Your computer is out of order. Contact your broker and discuss the
situation.
Exercise 9. Transform the following sentences according to the model.
Model: – We can do it.
– It can be done.
1. They must introduce telecommunication on the OTC market. –
Telecommunication on the OTC market must be introduced.
2. We can't trade unlisted securities. – Unlisted securities can’t be traded.
3. We should buy and sell unlisted stocks and bonds by phone. – Unlisted
stocks and bonds should be bought and sold by phone.
4. I have to pay special attention to the major security markets of the
world. – Major security markets of the world have to be paid special
attention.
5. They ought to close trading at the Tokyo exchange. – Trading at the
Tokyo exchange ought to be closed.
6. We must replace face to face buying and selling of securities by
telecommunication. – Face to face buying and selling of securities
must be replaced by telecommunication.
7. We must watch the foreign exchange closely. – The foreign exchange
must be watched closely.
8. We should keep customers up to date on the latest prices. – Customers
should be kept up to date on the latest prices.
9. We have to look through the NASDAQ national market quotations in
the daily stock sections of national newspapers. – The NASDAQ
national market quotations have to be looked through in the daily stock
sections of national newspapers.
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10. I should have my stock listed on regional and national exchanges. –
My stock should have been listed on regional and national exchanges.
Exercise 10. Translate into English.
1. Securities are bought and sold at primary and secondary markets. 2. If a
company wants to issue new stock, it usually negotiates with an
investment bank, or underwriter. 3. The underwriter buys the securities
from the corporation and resells then to individual investors through the
secondary market. 4. Securities exchanges make the buying and selling of
securities easier. 5. The securities exchanges consist of the individual
investors, brokers, and intermediaries who deal in the purchase and sale of
securities. 6. Stock transactions are handled by a stockbroker.
7. Stockbrokers receive a fee. 8. Stockbrokers act on the clients' orders.
9. To trade on the exchange, a "seat" must be purchased by the broker.
10. The members represent stockbrokers. 11. The largest and best known
exchange in the USA is the New York Stock Exchange (the "Big Board").
12. In order to be listed on the exchange, a firm has to meet some
requirements. 13. American Stock Exchange has about 500 full members
and 400 associate members. 14. The over the counter market sells and
buys unlisted securities. 15. The prices of the securities are established by
supply and demand. 16. Options are traded on the major stock exchanges,
but also on a special market for options in Chicago.
Exercise 11. Read the following text.
Before reading the text, study Words and expressions below.
While reading, help Ss with difficult extracts explaining and translating
some words, if necessary. Ask different Ss to read and translate.
Exercise 12. Answer the following questions.
1. How does the trading of stocks begin? – Trading stock begins with an
investor placing an order, that is informing the stockbroker as to what
stock and how much he wants the broker to buy or sell.
2. What is a market order? – An order to buy or sell stock at the best
possible price at the present time is called a market order.
3. Who does the broker convey the market order to? – The broker
conveys the order to an exchange member on the trading floor, who
attempts to get a better price for the buyer by offering a little less.
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4. What is a limit order? – Limit order specifies the highest or lowest
price at which the broker may buy or sell.
5. What is an open order? – Open order instructs the broker to leave the
order on the books until it is executed or canceled.
6. What is a discretionary order? – Discretionary order allows the broker
to exercise judgment in making money.
7. What is an odd lot and how does it differ from a round lot? – An odd
lot is any number of shares less than 100. One hundred shares
comprises a round lot.
8. What is a block sale? – A purchase of 10,000 shares is sometimes
called a block sale.
9. What is margin trading and how is the margin trading regulated? –
Sometimes investors pay less than the full amount when they buy
stock. This is called margin trading. The FRS determines the minimum
margin required.
10. What does a broker do to protect his interests in case the stock falls
down in price? – If the stocks were to plummet, the broker would call
the investor and request that he put up more money or have the stock
sold.
11. What is a bull market? – Active buyers of stock are called bulls. They
believe that the prices of stocks are going to rise. During the mid
1980s, the US witnessed a very long bull market.
12. What is a bear market? – A bear is an investor who makes a profit
when the prices are going to fall.
13. What is the selling short procedure? – Selling short is a high risk
strategy which bears use in order to do that. They sell borrowed stock
in the hope of later buying it on the open market at a lower price.
14. What is a put option? – A put option grants the owner the right to sell a
security.
15. What is a call option? – A call option grants its owner the right to buy
a certain amount of stock at a predetermined price within a fixed
period of time.
Exercise 13. Change the following sentences according to the example.
Example: If an investor wants to keep the order on the books, she can
issue an open order.
If an investor wanted to keep the order on the books, she could
issue an open order.
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1. If the investor wants to sell or buy at the current price, he can issue a
market order. – If the investor wanted to sell or buy at the current
price, he could issue a market order.
2. If someone sells at the offered price, the broker will settle the
transaction. – If someone sold at the offered price, the broker would
settle the transaction.
3. If the investor specifies the highest price at which the broker may buy,
the broker will commit to the deal. – If the investor specified the
highest price at which the broker may buy, the broker would commit to
the deal.
4. If the investor pays the ten percent commission, the broker will work
harder. – If the investor paid the ten percent commission, the broker
would work harder.
5. If the investor absconds with the funds, the broker will go bankrupt. –
If the investor absconded with the funds, the broker would go
bankrupt.
Exercise 14. Translate into English.
1. Trading stock begins with an investor placing an order that is informing
the stockbroker as to what stock and how much he wants the broker to buy
or sell. 2. The broker conveys the order to buy or sell to an exchange
member on the trading floor, who attempts to get a better price for the
buyer. 3. The final sale will then be relayed to the broker who placed the
order. 4. The investor relays the order to the broker limited the highest at
which the broker may buy a stock. 5. Sometimes the investor might give a
discretionary order which allows the broker to exercise judgment in
making money. 6. The FRS determines the minimum margin required.
7. Fearing that the investor might abscond with the funds, the broker
keeps stock certificates. 8. Active buyers of stock are called “bulls”, active
sellers – “bears”. 9. Options are contracts that allow an investor to either
buy or sell a security at a predetermined price within a certain time.
Exercise 15.
Listening.
You’re going to hear someone talking about the foreign exchange
markets. As you listen, complete the notes:
Other names: (1)………… (2)…………
Main trading centres: (3)………… (4)………… (5)…………
Most traded currencies: (6)………... (7)………… (8)…………