Apr 18, 2016
- Complete the sentences below. Use the key words if necessary.
- Buying and selling shares
key words
After newly issued shares have been sold (usually by investment banks) for the first time — this is called the — they can be repeatedly traded at the stock exchange on which the company is listed, on what is called the .
Major stock exchanges, such as New York and London, have a lot of requirements about publishing financial information for shareholders. Most companies use (OTC) markets, such as NASDAQ in New York and the Alternative Investment Market (AIM) in London, which have fewer regulations.
The of a share — the price written on it — is rarely the same as its — the price it is currently being traded at on the stock exchange. This can change every minute during trading hours, because it depends on — how many sellers and buyers there are.
Some stock exchanges have computerized that match up buyers and sellers. Other markets have : traders in stocks who quote (buying) and (selling) prices. The or difference between these prices is their profit or . Most customers place their buying and selling orders with a : someone who trades with the market makers.
New share issues
key words
Companies that require further capital can issue new shares. If these are offered to existing shareholders first this is known as a — because the current shareholders have the first right to buy them. Companies can also choose part of their profit or retained earnings. This means turning their profits into capital by issuing new shares to existing shareholders instead of paying them a dividend. There are various names for this process, including , and . Companies with surplus cash can also choose to buy back some of their shares on the secondary market. There are then called .
Categories of stocks and shares
key words
Investors tend to classify the stocks and shares available in the in different categories.
• : Stocks in large companies with a reputation for quality, reliability and profitability. More than two-thirds of all blue chips in industrialized countries are owned by institutional investors such as insurance companies and pension funds.
• : Stocks that are expected to regularly rise in value. Most technology companies are growth stocks, and don’t pay dividends, so the shareholders’ equity or owners’ equity increases. This causes the stock price to rise.
• : Stocks that have a history of paying consistently high dividends.
• : Stocks that provide a regular dividend and stable earnings, but whose value is not expected to rise or fall very much.
• : Stocks that investors believe are currently trading for less than they are worth — when compared with the companies’ assets. - British English or American English?
- own shares
- British English
- American English
- treasure stock
- American English
- British English
- Match the definitions with the words below.
- new shares offered to existing shareholders — . . .
- nominal value
- rights issue
- secondary market
- primary market
- own shares
- market price
- to capitalize
- the price written on a share, which never changes — . . .
- own shares
- market price
- secondary market
- nominal value
- rights issue
- to capitalize
- primary market
- to turn profits into stocks or shares — . . .
- rights issue
- to capitalize
- secondary market
- own shares
- nominal value
- primary market
- market price
- the market on which shares can be re-sold — . . .
- rights issue
- secondary market
- primary market
- nominal value
- market price
- to capitalize
- own shares
- the price at which a share is currently being traded — . . .
- to capitalize
- nominal value
- market price
- secondary market
- rights issue
- own shares
- primary market
- shares that companies have bought back from their owners — . . .
- to capitalize
- primary market
- secondary market
- own shares
- rights issue
- nominal value
- market price
- the market on which new shares are sold — . . .
- own shares
- primary market
- market price
- rights issue
- nominal value
- secondary market
- to capitalize
- Are the following statements true or false?
- Stocks that have already been bought at least once are traded on the primary market. clue
- false
- true
- NASDAQ and AIM have more regulations than the New York Stock Exchange and the London Stock Exchange. clue
- true
- false
- The market price of stocks depends on how many buyers and sellers there are. clue
- true
- false
- Automatic trading systems do not require market makers. clue
- true
- false
- Market makers make a profit from the difference between their bid and offer prices. clue
- true
- false
- Complete the sentences.
- A stock whose price has suddenly fallen a lot after a company had bad news could be a . . . , as it will probably rise again.
- income stock
- defensive stock
- value stock
- The stocks of food, tobacco and oil companies are usually . . . , as demand doesn’t rise or fall very much in periods of economic expansion or contraction.
- blue ships
- defensive stocks
- value stocks
- Pension funds and insurance companies, which can’t take risks, usually only invest in . . . .
- blue ships
- value stocks
- income stocks
- The best way to make a profit in the long term is to invest in . . . .
- value stocks
- growth stocks
- income stocks
- This stock used to be considered an . . . , but several years ago the company started to cut its dividend and reinvest its cash in the business.
- blue ship
- growth stock
- income stock
- The financial director announced a forthcoming . . . of new shares to existing shareholders.
- scrip issue
- rights issue
- bonus issue
- The company is planning a . . . of one additional share for every three existing shares.
- capitalization issue
- rights issue
- own shares
- We have bought back 200,000 ordinary shares, which increases the value of your . . . to €1,723,000.
- own shares
- bonus issue
- scrip issue
- Buying and selling shares
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