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PART 1: VOCABUlARY PRAcneE
1.1 Choose the best deftnltlon for each tenn.
1. Index
A. a sign or number that shows how something is changing or performing.
B. a share of the value of a company which can be bought, sold, or traded as an
investment.
C. a list of the financial institutions.
D. a certificate representing part ownership of the company.
2. Recession
A. a market in which share prices are rising.
B. a period of time in which there is a decrease in economic activities and many
people do not have jobs.
C. a period during which prices in a financial market are going down and a lot of
people are selling shares.
D. a situation in which a company offers shares for sale on a stock market for the
first time.
3. Underwrite
A. falling suddenly straight down especially from a very high place.
B. using money to earn more money.
C. making someone strong, healthy, or active again.
D. giving money to support something, such as a new business, and agree to be
responsible for any losses if it fails.
4. Bailout
A. the returns that an asset achieves over a certain period of time.
B. the possibility that something bad or unpleasant will happen.
C. the act of rescuing something (such as a business) from financial problems.
D. the aggregation of buyers and sellers of stocks.
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5. Bear market
A. the quality in a situation of being likely to change suddenly.
B. a period of time in which there is a decrease in economic activity and many
people do not have jobs.
C. a period when the economy of a country is not successful and conditions for
business are bad.
D. a condition in which securities prices fall.

1.2 Match these tenns with their corresponding meanings.

1 Blue chip 2 Flotation 3 Derivative

4 Nominal value 5 Bull market

A. a market in which share prices are increasing, encouraging more investors.

B. stock in a corporation with a national reputation for quality, reliability, and the
ability to operate profitably in good times and bad.
C. the price of a share, bond, or security when it was issued, rather than its current
market value.
D. a situation in which a company offers shares for sale on a stock market for the
first time.
E. an arrangement or product (such as a future, option, or warrant) whose value
derives from and is dependent on the value of an underlying asset, such as a
commodity, currency, or security.

PART 2: CLOZE PASSAGES

2.1 Passage 1. Complete the passage with the words in the box.
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corporation public limited private creditor liquidation underwrite

company company

certificates stocks shares investment flotation primary

market

Successful companies can issue (1) __ (B.E.) or (2) (A.E.), which are
(3) representing part ownership of a company, to raise capital to expand their
operations. If these shares are offered for sale to financial institutions and the general
public, this operation is called going public, and the business will change from a private
company to a public company (called a (4) __ or PLC in Britain and a (5) in
the US).
Offering shares to outside investors is generally called a (6) __ in Britain, and
an IPO or initial public offering in the US. Companies usually get advice from an
investment bank about how many shares to offer and at what price. The (7) bank
helps to find buyers, and will probably (8) __ the share issue, meaning that it
guarantees to buy the shares if there are not enough other buyers/purchasers.

2•2 Passage
'-e' 2 • Complete the passage with the words In the box•
due diligence equity debt shareholders common ordinary

report financing financing stock shares

bonds prospectus corporation liabilities secondary exchange

The company will commission a (1) : a detailed examination of its financial

situation from an auditing firm, and then issue a (2) __ explaining its financial
position, and giving details about the senior managers and the financial results from
previous years.
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Shares are also known as equity or equities. (3) __ is not the same as (4)
__ (borrowing money) as money raised from equities never needs to be paid back;
instead, the holder owns part of the business.
The most common forms of equities are called (5) in Britain and (6) in the
US. (In Britain, stock means securities such as government (7) ) The people who
buy equities are called (8) --

PART 3. READING COMPREHENSION

3.1 Reading passage 1: Read the passage carefully and brlefty answer the
following questions.
WHY STOCK MARKET MATTERS FOR YOU

Stefan Armbruster, BBe News online

The saying goes: 'DonOt invest what you canOt afford to lose.
But as stock markets fall, it is not just people who own shares who lose out. When
the bears replace the bulls - in other words, when the market falls - it affects almost
everyone because stocks and shares have become an integral part of almost all our
financial lives.
There are a variety of ways in which stock market movements impact on our lives.
The upbeat side of the growth in share ownership is that when the stock market goes up,
consumers with shares feel richer, they borrow more and they spend more. But just as
the stock market can go up, it can also go down. Usually, the first to react to this are the
institutional investors who are involved in the financial markets on a daily basis.
The internet boom is an example. Many personal investors felt they were burnt
by the popping of the dot.com bubble. By the time they got around to selling shares in
any number of failing internet-based companies, the big City investors had already
pulled out of the market. The institutional investors did not escape unharmed either. And
the hits that they took also have an indirect, but potentially serious, effect on many
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people Ds financial health. Any pain suffered by thesenstitutional investors impacts on

the returns paid on pensions, savings accounts or the interest charged on mortgages.
For individuals with a more direct interest - say day traders attracted by the tech
boom - share holding can be used as collateral to borrow money. But if the value and
income from shares evaporate and the bank calls in the loan, the result can be big losses
or personal bankruptcy. Meanwhile pensions linked to the stock market, like the ones
being promoted by the UK government, are not immune. Unlike the state pension which
is paid out at a rate set by the government, investing in a private pension indexed to the
stock market can increase the value of the contributions dramatically, but they can also
be erased.
Your job can also depend on the markets as companies use their valuation and
the issue of new shares to raise capital to expand. If they are unable to do this then they
have to find ways of increasing the companyD s value to attract investors. The key tool
they use is to cut jobs.
Questions:

1. Who suffers the consequences when share prices go down?

2. What will be affected when the institutional investors made a loss in their
investments?

3. How can companies raise funds to expand?

4. What do companies do to increase the company's value?

3.2 Reading passage 2: Read the passage carefully and brlefty answer the
following questions.
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Individuals and groups of people doing business as a partnership have unlimited

liability for debts, unless they form a limited company. If the business does badly and
cannot pay its debts, any creditor can have it declared bankrupt. The unsuccessful
business people may have to sell nearly all the possessions in order to pay their debts.
This is why most people doing business form limited companies. A limited company is
a legal entity separate from its owners, and is only liable for the amount of capital that
has been invested in it. If a limited company goes bankrupt, it is wound up and its assets
are liquidated to pay the debts. If the assets don't cover the liabilities or the debts, they
remain unpaid. The creditors simply do not get all their money back.
Most companies begin as private limited companies. Their owners had to put up
the capital themselves, or borrow from the friends of a bank, perhaps a bank specializing
in venture capital. The founders had to write a Memorandum of Association or a
Certificate ofIncorporation which states the company's name, its purpose, its registered
office or premises, and the amount of authorized shares capital. They also write Articles
of Association or Bylaws, which set out the duties of directors and the right of
shareholders or stockholders. They send these documents to the registrar of companies.
Successful, growing company can apply to a stock change to become a public
limited company or a listed company. Newer and smaller companies usually join "over-
the -counter" market such as the Alternative Investment Market in London or NASDAQ
in New York. Very successful businesses can apply to be quoted or listed on major stock
exchanges. Publicly quoted companies have to fulfill a large number of requirements,
including sending their shareholders an independently audit report every year,
containing the year's trading results and a statement of their financial position.
Questions
1. Why do most people doing business form of limited company?

2. What are the risk of the creditors?

3. What is an "over-the-counter" market?

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4. What are the obligations of companies whose shares are traded on the stock
exchanges?

PART 4. TRANSlATION
4.1 EnlPlsh • VletnaJlle8e translation: Translate the following sentences Into
VletnaJlle8e.
1. Companies use an investment bank to find buyers and to underwrite the stock issue.

2. Companies either distribute part of their profits to shareholders as an annual dividend.

3. How can you make money from a falling stock market?

4. After the strong gains of last week, Asian shares slipped on fears of a looming
recession.

5. Most shares were a little stronger in Madrid this morning when the exchange
reopened after yesterday's public holiday.

4.2 VletnaJlle8e • English translation: Translate the following sentences Into

English.
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1. Cac cong ty dai cluing duoc giao dich cong khai tren thi tnrong mo voi c6 phieu
duoc mua boi nhieu nha d~u tu.

2. H~u h~t cac cong ty dai cluing ban d~u la nhirng cong ty tu nhan dil dap irng duoc
h~u h~t t~t ca cac quy dinh v~ phap ly.

3. Cong ty dai cluing c6 nhirng loi th~ c6 hiru nh~t dinh so voi cong ty tu nhan, bao
g6m kha nang ban c6 phan trong tirong lai va tang kha nang tiep can thi tnrong no.

4. C6 dong la chu cua cong ty, boi vay ho mong muon cong ty hoat dong mot each hieu
qua.

5. Cac cong ty khoi nghiep se kh6 duoc niem y~t tren b~t ky san giao dich clnrng khoan
nao vi ho yeu c~u cong ty phai c6 lili moi duoc niem y~t c6 phieu,

PART 5: WRmNG
Make meaningful sentences by adding between 8 and 15 words to the given
phrases.
1. After shares have been issued, .
2. The rise and fall of stocks prices .
3. Blue chips are .
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4. A private company can go public by .

5. Hedge funds can "short" shares by .