Finance English practice: Unit 29 — Stock and Shares 1

Biz English

Apr 18, 2016

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Complete the sentences below. Use the key words if necessary.
- Stocks, shares and equities
  
  key words
  Stocks      ○      shares      ○      stockholders      ○      shareholders      ○      equity      ○      equities      ○      listed      ○      quoted      ○      stock markets      ○      stock exchanges
  
  and are certificates representing part ownership of a company. The people who own them are called and . In Britain, stock is also used to refer to all kinds of securities, including government bonds. The word or is also used to describe stocks and shares. The places where the stocks and shares of or companies are bought and sold are called or .
  
  Going public
  
  key words
  go public      ○      due diligence      ○      prospectus      ○      financial results      ○      flotation      ○      underwrites
  
  A successful existing company wants to expand, and decides to — to change from a private company to a public limited company (PLC) by selling shares to outside investors for the first time (with a flotation).
        ↓
  The company gets advice from an investment bank about how many shares to offer and at what price.
        ↓
  The company gets independent accountants to produce a report — a detailed examination of a company and its financial situation.
        ↓
  The company produces a — a document inviting the public to buy shares, stating the terms of sale and giving information about the company — which explains its financial position, and gives details about the senior managers and the — details about sales, costs, debts, profits, losses, etc. — from previous years.
        ↓
  The company makes a — an offer of a company’s shares to investors — or IPO (initial public offering).
        ↓
  An investment bank the stock issue — guarantees to buy the shares if there are not enough other buyers.
  
  Ordinary and preference shares
  
  key words
  ordinary shares      ○      preference shares      ○      fixed dividend      ○      goes bankrupt      ○      goes into      ○      liquidation
  
  If a company has only one type of share these are . Some companies also have whose holders receive a (e.g. 5% of the shares’ nominal value) 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 if a company — stops trading because it is unable to pay its debts. If the company — has to sell all its assets to repay part of its debts — holders of preference shares are repaid before other shareholders, but after owners of bonds and other debts. If shareholders expect a company to grow, however, they generally prefer ordinary shares to preference shares, because the dividend is likely to increase over time.
British English or American English?
- ordinary shares
  - American English
  - British English
- common stock
  - British English
  - American English
Match the definitions with the words below.
- a document describing a company and offering stocks for sale — . . .
  prospectus
  - booklet
  - prospectus
  - business plan
- a market on which companies’ stocks are traded — . . .
  stock exchange
  - housing market
  - bond market
  - stock exchange
- buyers of stocks — . . .
  investors
  - dealers
  - angels
  - investors
- changing from a private company to a public one, quoted on a stock exchange — . . .
  going public
  - liquidation
  - going public
  - flotation
- the first sale of a company’s stocks to the public — . . .
  flotation
  - introduction
  - going public
  - flotation
- to guarantee to buy newly issued shares if no one else does — . . .
  to underwrite
  - to accept
  - to underwrite
  - to finance
- share that pay a guaranteed dividend — . . .
  preference shares
  - stock exchange
  - preference shares
  - ordinary shares
- the most common form of shares — . . .
  ordinary shares
  - prospectus
  - ordinary shares
  - preference shares
- insolvent, unable to pay debts — . . .
  bankrupt
  - wanting
  - broken
  - bankrupt
- the sale of the assets of a failed company — . . .
  liquidation
  - liquidation
  - going public
  - flotation
Are the following statements true or false?
- New companies can apply to join a stock exchange. clue
  — Only successful existing companies can go public.
  - false
  - true
- Investment banks sometimes have to buy some of the stocks in an IPO. clue
  — An investment bank underwrites the stock issue:: guarantees to buy the shares if there are not enough other buyers.
  - true
  - false
- The due diligence report is produces by the company’s own accountants. clue
  — The company gets independent accountants to produce a due diligence report.
  - false
  - true
- The dividend paid on preference shares is variable. clue
  — Preference shares holders receive a fixed dividend.
  - true
  - false
- If a company goes bankrupt, the first investors to get any money back are the holders of preference shares. clue
  — Holders of preference shares are repaid before other shareholders, but after owners of bonds and other debts.
  - true
  - false
Use the correct forms of the word from the box to complete the sentences below.
- box
  go public offering shares produced prospectus underwriting issue
  
  After three very profitable years, the company is planning to . . .
  
  and we’re 100,000 for sale. We’ve a very attractive , and although a leading investment bank is the , we don’t think they’ll have to buy any of the shares.

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