Unit 31. Raising finance

A B

Unit 30. Investment

Active Vocabulary

capital goods portfolio Unit Trust (BrE) Mutual Fund (AmE) fixed rate of interest derivate/derivate instrument futures options swaps

засоби виробництва, товари виробничого призначення портфель цінних паперів пайовий фонд/траст взаємний фонд фіксована процентна ставка похідний інструмент ф’ючерс опціон, угода з премією своп, обмін активами чи зобов’язання

When we speak about investments we mean the purchase by a business of a new capital or of capital goods such as new machinery. In the most general sense, the objective of investing is to earn money with money. When investor holds the collection of financial securities we say that he holders portfolio.

Unit Trust (BrE) or Mutual Fund (AmE) is a company that spreads its investor’s capital over a variety of securities. Investment in a unit trust/ mutual fund reduces the risk for small investor.

Apart from stocks and shares there are many types of investment opportunities available. When a company or government wishes to rise finance it can be issued bonds. There are securities offered at a fixed rate of interest.

Derivates or derivate instruments are financial products such as futures, options, and swaps. Futures are contracts that give the right to buy and sell currencies and commodities at an greeted time in the future at a price agreed at the time of the deal.

Options are contracts enabling the holder to buy a security at a fixed price for a limited period. Swaps allow the exchange of one asset for anther to suit both parties.

Exercise 1. Give for the English:

купівля товарів виробничого призначення, заробляти гроші, мета інвестування, взаємний фонд, зменшувати ризик, інвестор, залучати фінанси, випускати облігації, пропонувати цінні папери за фіксованою процентною ставкою, влаштовувати обидві сторони.

Exercise 2. Match words from list A with words from list B that have similar meaning:

objective obtainable

mutual fund possibility

reduce shareholder

deal target

buy purchase

investor decrease

opportunity transaction

Exercise 3. Put the necessary word in the sentences:

bond, investors, investment (2), derivates, futures, deal, unit trust, portfolio (2), shares, mutual funds.

1. … are easier to manage because a group of people do the trading for you and

your money is spread among a variety of different investments.

2. In an attempt to raise finance, the company issued … to public investors,

3. You should diversify your investment … because you have all your money іn

one stock.

4. Investing in a … reduces risk for small investors.

5. The … fell through, no agreement was reached.

6. Our … ranges from shares in food companies to share in the fashion world.

7. A … contract is an order that you place in advance to buy or sell an asset or

commodity.

8. More exotic financial products include … such as: options, futures and

swaps.

9. These oil shares were a good ….

10. People who own stocks and bonds are referred to as ….

11. A treasury … may be sold to any individual or corporation.

12. Government bonds are considered to be safe ….

Exercise 4. Answer the following questions:

1. What do we mean by «investment»?

2. What is the objective of investment?

3. What is the portfolio?

4. What are derivates?

5. What right do future contracts give investors?

6. What kind of contract enables the holder to buy a security at a fixed price for a limited period?

7. What do swaps allow?

Active vocabulary

raise finance run costs financial reserves extra capital expand premises working capital preserve cash flow time-leg retained profit borrowing grant loan tax distribute lender leasing hire purchase debt factoring share issue share flotation syn: share offering

діставити фінанси, залучати фінанси керувати, управляти витратами фінансові резерви додатковий капітал збільшувати приміщення; будинок з прилеглими будівлями і ділянкою оборотний капітал, оборотні фонди зберігати, підтримувати потік готівки відставання в часі, спізнення нерозділений прибуток позика (коштів); кредит дотація, субсидія, грошова допомога позика податок розподіляти, роздавати кредитор, позикодавець лізинг, довгострокова оренда купівля у розстрочку борговий факторинг розміщення, випуск нових цінних паперів на вільний ринок

All firms need capital to apply it in business. As well money for running costs such as wages, material and rent, they need to have financial reserves. Extra capital may be needed to expand by buying new premises or developing new products. Firms may also need working capital to preserve cash flow through the business, for instance if there is time-lag between producing goods and services and getting paid for them.

There are four main ways of obtaining capital:

§ retained profit;

§ borrowings;

§ share issues;

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