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The Business of Trade

11.6.2018, , Zdroj: Verlag Dashöfer

501
The Business of Trade

Edward Thomas

1. THE BUSINESS OF TRADE

So far we've talked just a bit about finance - now we're going to talk a lot more about the financial markets, also known as stock exchanges.

First we'll expand or refresh our vocabulary a little bit. Find the synonyms for the words below. Remember they may not really be synonyms, but are sometimes used in similar ways.

 

A) Financial markets 1) Securities
B) Traders 2) Speculators
C) Shares 3) Footsie 100
D) Index 4) Equity holder
E) Bonds 5) Stocks
F) Investors 6) (First) sale of shares
G) Yields 7) Stock markets
H) Initial Public Offering 8) Capitalisation
I) Shareholder 9) Dealers
J) Value 10) Dividends

Correct answers are here1

If you have trouble with this, look at next exercise, where you will find sentences with one word missing which will require the use of one of the synonyms above. There are 20 sentences in all, so all the synonyms will be used, and you should be able to pair them more easily.

2. FINANCE PROGRAMME ON TV

The sentences below could come from a finance programme on TV. Can you fill the gaps with words from the business of trade? There are 20 gaps, so all the words are used.

1. Their shares have been giving healthy ………………………. of over € 1.50 each year for five years.

2. Government ………………………. are usually thought to be safe investments.

3. ………………………. are to meet to discuss the actions of their company's board.

4. The ………………………. have been falling rapidly today.

5. Share prices have been pushed higher by enthusiastic ……………………….

6. ………………………. don't have long careers - they usually move to safer jobs by the age of 35.

7. It's our ……………………….. As a partner in the company, I'm hoping to make a lot of money.

8. ………………………. in CET have fallen dramatically in value recently.

9. The ………………………. of our company of course changes when its shares fall.

10. The ………………………. of top 100 companies is still very positive today.

11. ………………………. will be very low this year- the company needs to invest in its business.

12. The Government is making ………………………. available to increase market liquidity.

13. ………………………. are very worried about the profit warning their company has given.

14. In general, ………………………. ………………………. are relaxed about the news and have not fallen.

15. The uncertainty in the market is not positive for ……………………….

16. ………………………. can be paid a lot but only if they have good results.

17. ………………………. ………………………. ………………………. in a poor market can actually lose money for a company.

18. ………………………. in CET improved after news of their good financial year was announced.

19. They believe their ………………………. ………………………. is about $ 4 bn.

20. The ………………………. is very positive today.

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bonds, yields, market capitalisation, FTSE 100, first share offer, shares, financial markets, dealers, traders, speculators, investors, stockmarkets, shareholders, equity holders, bonds, securities, dividends, yields, IPO, index.

Correct answers are here2

3. TERRY THE TRADER

Read what Terry has to say about his job. Then use the words which follow to fill the gaps in the text.

„Me? The name's Terry. Terry the Trader. Some people think that working in the world's markets is all about money - well, it is. If it wasn't all about money though it would still be an interesting business.

Look, there are so many types of market out there: if you become an expert in coffee and tea you'll be useful in the 1. ………………………. market. If you know a lot about national economies, maybe the 2. ………………………. market could be for you. This is not for nervous people though- sometimes some currency has what they call a „run” on it and it „falls through the floor!” In the UK they still remember George Soros, who made the pound leave the European Rate Exchange Mechanism (ERM) and forced it to devalue- I mean, to lower its value. They call the day that happened „Black Wednesday”! Soros made a billion, the UK lost a lot more!

If you're looking for something more stable than shares or currencies, there is always 3. ……………………….. These offer fixed term debts which companies or governments have to repay you over time. It's all carefully scheduled.

Similar stuff really, but more short term, happens on the 4. ………………………. ……………………….. There, short-term agreements are signed where the seller will pay the buyer a fixed amount in the near future, for example six months. They're used for getting working capital and they're often very safe investments- the financial system would fail without them.

Not satisfied yet? Well, the Greeks had the idea of 5. ……………………….. These are what they say they are - things for the future - agreements to buy actually – which mean that the buying party guarantees to buy the sellers product at a fixed future price. So, you offer to buy tea at €1.15, in three months. Then, if the price of tea rises, you can make an instant profit by selling it. Nice!

If you're into a more complex style of trading, 6. ………………………. could be for you. You can trade in these, as with other things, OTC (over the counter ie. directly and privately), or on derivatives exchanges. Futures are actually a kind of these, but there are also options and swaps (a swap is where the is no money involved, just an exchange; an option is where you get an opportunity at some time to buy something).

Basically the above types of trading are ways of ”7. ………………………..“ In England we have a saying- you have to „hedge your bets”. This means when you put money into some situation, you put some on one result, and some on another- so you can gain money even if some of your judgements are wrong. In betting for example this mean you put a little money on your horse coming 1st , and a little on him coming in the top 4. That way you can't lose so easily! It's the same with „hedging” in shares, and some of the biggest investors in the market today are groups of people who handle huge amounts of money in this way- they are called 8. ………………………. and they give me a lot of my work!

One last thing to talk about: the 9. ………………………. market. This has grown a lot because people need finance to cover more and more items. If something bad happens, they get paid. Well, such policies have a value (premiums) and can be part of