Financial Capital

B) Say what classes of shares are usually issued by companies and what rights they give their holders.

A) Supply the prepositions where necessary.

Investment Management

Investment management relates to the selection of assets in which funds will be invested by a firm. The assets which can be acquired fall into two broad groups: long-term assets and short-term, or current assets.

Nowadays investors face a lot of choices. Along with stocks and bonds of large companies and government debt securities, investors can now own stocks of small companies, the stocks and bonds of companies headquartered in foreign countries, high-yield bonds, collateralized mortgage obligations, floating-rate notes, swaps, puts, calls, and futures contracts. The list is seemingly endless and it contributes to grow. Furthermore, the ability to purchase these securities has become both less expensive and more convenient with the advent of advanced communications and computer networks. The challenge to investors is increasing because the investment environment is becoming more and more complex. With the rapid evolution that the investment industry is undergoing, new securities, markets, investment management techniques have appeared.

When making decisions with regard to what marketable securities to invest in, how big the investment should be, and when the investment should be made, the investor:

· sets investment policy and determines objectives,

· performs security analysis,

· constructs a portfolio,

· revises the portfolio,

· evaluates the performance of the portfolio.

For any type of security, the risk can by reduced by investing in more than one firm. This is called “diversification”. An investor with stocks and bonds issued by number of a firms is said to have a diversified portfolio.

Diversification does not eliminate all risks. Events like recession, high interest rates, and so on may depress profits and stock prices of all firms.

Words you may need:

collateralized mortgage obligation – облігація, що забезпечена пулом іпотек

floating-rate note – облігація із ставкою, що спливає

advent – прихід, поява

to construct a portfolio – створити портфель

to revise a portfolio – передивитись портфель

to depress the profits – знижувати прибуток

Financial capital includes the liquid assets of a company as opposed … physical assets. Companies can have a variety of types of capital. The principal distribution in … share capital and loan or debenture capital.

The most usual classes of share … which the capital of a company can be divided are preference, ordinary, and deferred shares.

Preference shares have a fixed rate … dividend. However large the profits of a company might be, the holders of preferences shares are not entitled … any additional dividends over and above the rate of dividend agreed when the shares are first issued. The holders of preference shares do not usually have any voting rights. This means that they cannot vote … the general meeting of the company. But they do have an advantage … the holders of all other types of shares in that the dividends due … preferences shares must be paid before any dividend is paid … the holders of ordinary or deferred shares.

Ordinary shares entitle their owners a vote at companies’ general meeting. They also have a right to elect company directors, and to receive a proportion of distributed profits … the form of dividend.

Issuance of shares is a source … capital for companies. If a company wishes to raise more money … expansion it can issue new shares. These are frequently offered … existing share holders … less thsn their market price: this is known as a rights issue.

Companies may also turn part of their profit … capital by issuing new shares to shareholders instead … paying dividends. This is known as a bonus issue or script issue or capitalization issue. The source of equity is the securities market.

Loan capital is a long-term debt. Companies can raise this type of capital … clearing banks, merchant banks and even pension funds.

The composition of a company’s capital is called capital structure.

Words you may need:

debenture capital – позиковий капітал

preference shares – привілейовані акції

ordinary shares – звичайні акції

deferred shares – відстрочені акції

voting right – право голосу

rights issue – випуск пільгових акцій, що пропонуються акціонерами компанії

bonus/scrip/capitalization issue – бонусна емісія, випуск пільгових акцій (або безкоштовних акцій)

Дата добавления: 2014-11-29