Dialogue. Choose the necessary word and put it in the sentence

Choose the necessary word and put it in the sentence.

Vocabulary Practice

1. … funding is a financing formed by borrowing. 1 equity

2. They have borrowed much money and they have

to pay a big.... 2 negotiable

3. Financing by shares is called … funding. 3 interest

4. That is a very profitable deal, for that purpose we

need extra.... 4 inventory

5. You can sell your shares and.... 5 funding

They are... 6 inflow

6. The current assets of a company usually include

cash and …. 7 bond

7. As a result of this deal we'll have greater … than

outflow. 8 debt

Mary It’s so nice to see you, Frank. Sorry, I couldn't come to your office today.

Frank Never mind. Have a seat. Let’s start by having some coffee. Later.

Mary So Frank. I guess it might be right time for me to invest in that computer company. As my stockbroker, what can you suggest?

Frank I am sure they are doing extremely well and they would welcome your investment.

Mary But why do they need my investment if they are doing so well?

Frank O.K. I think I should explain you a little about a corporate finance.

Mary Go ahead. If it concerns my money I am always interested.

Frank If a corporate enterprise wants to expand it needs financing.

Mary You are right.

Frank So there are two basic types of financing: equity and debt.

Mary What's the difference between them?

Frank If the money is supplied by the owners of a business it is called equity funding. And the use of money supplied by loans is called debt funding.

Mary So as investor, what am I?

Frank Well, as an investor you become a partial owner of a business and receive equity. You get shares or certificates of common stock which represent your portion of ownership.

Mary You did right buying the stock for me. By the way, are there any documents which show the financial state of the company?

Frank Oh yes. You've just reminded me. I’ve brought a copy of the company's Annual Report for you to look over. You should read it very carefully. And if you have something to ask do it, please.

Mary Thanks a. lot, Frank. I will. Does this company pay dividends on its stock?

Frank Yes. In fact, I studied their Annual Report and I can tell that they have good management. Their business is doing very well, the value of their stock has been rising. It can be an excellent long-term investment, I am sure.

Mary But if I want to sell my shares very soon?

Frank No problem. Undoubtedly you can make a profit on the sale. But it seems to me you'll want to keep this company in your portfolio.

Mary Thank you for your advice. You are wise as usual.

Frank Well, my advice now is to study the company's Annual Report. You need several days for that. Then we'll meet and talk again.

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