A. Read the text below and get ready to answer some questions about its content.

You know a little bit more now about how the stock exchange works but you don’t know answers
to the questions below. Find somebody who can help you

Stock and shares are the same thing. They mean the ownership of part of a company. In Britain, we normally say
shares, but in North America they use both.'
You can only buy stocks and shares on the stock market of public limited companies. These are generally big
companies which allow anybody to buy shares in them. In fact, only companies which are public limited companies
are on the stock market. The majority of companies in the world are private limited companies, which don't sell
their shares on the stock market.'
If you want to buy or sell shares, you have to set up an account with a stockbroker.'
A stockbroker is licenced/registered to trade stocks and shares (which means to buy or sell stocks and shares) on
stock exchanges. 'The stock market means anywhere where stocks and shares are traded, but a stock exchange
means an actual location/organisation where they are traded. For example, the actual place/organisation in London
where stocks and shares are traded for some companies is called the London Stock Exchange. In New York, you have
the New York Stock Exchange and the Nasdaq Stock Exchange. All three stock exchanges are part of the stock
market.'
'There are actually more than two in New York. Each stock exchange has different companies listed on them. So, if
you want to buy shares in Google your stockbroker has to use the Nasdaq Stock Exchange, because that's where
Google is listed and their shares are traded. But if you want to buy shares in Ford, your stockbroker has to use the
New York Stock Exchange, because that's the stock exchange where Ford is listed.'
You should get advice from a stockbroker or look at how a company's shares are performing. Check to see if the
share value has increased or decreased. When you own shares in a company you will become a shareholder which
means you are a part owner of the company and can vote on who manages or directs the company. You will also
receive a dividend on each share you own, which is an extra payment. If the company is making a profit they
normally give some of this profit to their shareholders as a dividend. So your return with be a combination of the
dividend and the increase or decrease in the share price.'
'It's safer to put your money in a bank, but you may make more money with stocks and shares. If you want to see
how much money you earn on each dollar or pound you have invested, you have to look at the yield. For example, if
a banks pays you an interest rate of 2%, you earn 2% on every $1 and this 2% is called the yield. For dividends you
have to divide the yearly dividend per share by the amount you paid for the share. So, if a share cost you $2.50 and
the yearly dividend is 15 cents, you divide 15 by 250. So the yield for the share is 6%. So this shows you would make
a higher return on your money from investing in this company's shares than by putting your money in the the bank.'

WHO CAN HELP ME TO ANSWER THESE QUESTIONS??

1. 'I'm a little worried about investing in the stock market. It isn't doing well at the moment. Do you think I'll
lose money if I buy shares at the moment?'
2. 'So how would I know if the stock market is a bear market or bull market?'
3. 'What happens if I buy shares in a company and it files for bankruptcy? It doesn't have enough money to pay its
debts and to continuing operating?'
4. 'Is a takeover the same thing as a merger?'
5. 'So I need to do some research on companies before I decide which shares to buy. With the stock market
performing so badly at the moment, it seems like a big risk to invest money in stocks and shares at the moment

6. 'What does preferred stocks mean?'

7. 'Apart from buying preferred stock, are there any other ways to reduce the risk of losing your money.
B. Read the text below and get ready to answer some questions about its content.
You know a little bit more now about how the stock exchange works but you don’t know answers
to the questions below. Find somebody who can help you.

The overall or average value of stocks and shares is falling at the moment. People who work in the stock market call
this a bear market, when overall share prices are falling. When overall share prices are increasing, they call it a bull
market.'
'People who buy and sell stocks and shares look at share indices to see how well the stock market in general is
performing. A share index, measures the average performance of the share prices of a group of different companies.
A share index will tell if the average share price of all the companies in that group is increasing or decreasing. For
example, one of the most famous share indices is called the Dow Jones 30 index. This share index measures the
average combined performance of the share prices of the 30 largest public limited companies in America. In the last
6 months, the value of the Dow Jones 30 index has fallen from 13,160 to 12,101. But share indices only measure the
average performance. So although the majority of companies' share prices are falling, there will be some companies
whose share prices are actually increasing. So even in a bear market where average share prices are falling, if you
buy shares in the right company, you can still make money.'
'Once a company has filed for bankruptcy, all trading (buying and selling) of its shares is stopped/suspended on the
stock exchange. If the company has to close down, then you'll probably lose all the money you spent on the
company's shares. But sometimes, another company will take it over, which means to buy the company. If that
happens, then you'll receive some money for your shares.'
With a takeover, one company buys another company. With a merger, two companies combine. Normally, with a
merger the two companies are of a similar size. With a takeover, it's normally a big company buying a smaller
company.'
Although most stock/share indices are showing that on average the share prices of companies are falling, it is only an
average and some companies' share prices are actually increasing. But if you want to reduce the risk of losing
money, you could buy preferred stocks or shares in a company.'
'There are two types of stocks/shares you can buy in a company. The first type is called a preferred stock/share. With
this type, the owner of them is paid a fixed dividend (extra payment) by the company. So you're guaranteed a
dividend unless the company has very bad financial problems. The second type is called a common stock, which is
also called an ordinary share. With this type, the dividend you receive can change depending on the company's
performance or how much of the profits that the management of a company wants to keep and not give in
dividends. The amount of profit which a company keeps and doesn't give to its shareholders as a dividend, is called
retained earnings.'
'Choose shares in companies which are stable and buy shares in many different companies. Your stock portfolio,
which means what shares or stock you own, should be a mixture of shares from different companies in different
sectors and industries. This will spread you risk, so you won't lose all your money if one of the companies you have
shares in goes bankrupt. Also, after you have bought shares in a company, you should decide at what price you will
sell or unload the shares if their price changes. This is called an exit point. So, if you bought shares in a company for
$20, you can set an exit point at $15, which means you will sell your shares in the company if they reach that price.
Exit points are used to minimise loss.'
WHO CAN HELP ME TO ANSWER THESE QUESTIONS??
1. 'Any more advice on what stock/shares I should or shouldn't buy?'
2. 'What can I do if the price of the shares I have in a company falls a lot in a single day. Should I sell them even if
it's a lot below the exit point I previously decided that I would sell them at?'
3. 'There seems to be a lot of risk in buying stocks and shares. Maybe, I should buy financial securities instead?'
4. 'To be honest, I don't know what financial securities mean.'
5. 'I've read something about stock split, where a company reduced the value and price of their shares. Does that
mean that the people who own shares in that company will lose money?'
6. 'So the company increases the number of shares it has, but the value of the total number of shares doesn't
change. But isn't that the same thing as a rights issue?'
7. 'So what is a secondary offering?'
8. 'I thought that the name for all the shares of a company that could be bought by the public on the stock market
was outstanding shares? But you said they were called the public float.'
9. 'One of my friends from university works in a multinational military manufacturer and he told me they have just
won a $2 billion contract, but nobody outside the company knows about it. Should I buy shares in the company?'
C. Read the text below and get ready to answer some questions about its content.
You know a little bit more now about how the stock exchange works but you don’t know answers
to the questions below. Find somebody who can help you.

'From my experience, I would say you shouldn't try to buy shares or stock in companies when they first go
public, when they first start to sell their shares on the stock market. This is called an IPO which stands for
Initial Public Offering. Normally, the price of the shares in these companies will decrease a few days after
they have started being traded (bought and sold) on the stock market.'
'You can't do a lot apart from selling them or keeping them. Often, if the share price of a company falls a
lot during one day, the company will ask the stock exchange to suspend trading its shares. This means that
no one can buy or sell the company's shares, so the price of the shares won't change or fall further. Stocks
and shares are a type of financial securities?'
'Financial securities are normally just called securities. Bank notes, stocks and shares, bonds etc... are all
different types of securities. Securities are financial contracts which can be bought and sold by different
people. So, with a share, it is a financial contract where the company says you are a part owner of the
company. You can buy the share and then sell it to anybody you like.'
When companies think that their stock or share price is too expensive for people/investors to buy (for
example, $120 a share), they may decide to reduce the price of the shares by 50%, so they are easier for
people to buy. But the shareholders who own that company's shares will be given double the amount of
shares that they had before, so they don't lose any money.'
A rights issue is when a company decides to create completely new shares in the company and then offers
them to its existing shareholders to buy at a reduced/discounted price. The company does this to directly
make/raise money to invest in the company. The result will be that the average share price will fall, but
anybody who bought the shares will have made a profit because they bought them at a reduced price.'
'A secondary offering is when some shareholders (normally part-owners of the company before it went
public) who own a large stake in the company (e.g. their stake in a company is 10% of the company's
shares), decide to sell a large amount of their existing shares (not newly created ones) to the public on the
stock market. When a company goes public, normally the majority of shares are kept by these original part
owners. And only a part of the ownership of the company is sold to public investors on the stock market
(for example, 30% of the ownership of the company). This percentage/amount of shares of a company
which are traded (bought and sold) on the stock market is called the public float, shares that anybody can
buy. The rest of the shares are normally still kept by the original owners and the company's employees or
by very large investors who have some control over the company. So with a secondary offering, the
percentage of the company's shares which are part of the public float increases (for example, from 30% to
45%).'
'Outstanding shares, is different. As I said before, the public float is the shares owned by the public and
that are traded on the stock market. But there are other shares which are owned by employees of the
company and owners of the company before it went public. These shares have restrictions on when or how
they can be sold to other people and are called restrictive shares. So, the outstanding shares is a
combination of both all the shares in the public float and all the shares which are restrictive.'
'If nobody outside the company knows about this contract, then it is illegal to use this information to buy
shares, because you know that the price of the shares will increase. This is called insider trading and if the
authorities or police find out, you can go to prison.'
WHO CAN HELP ME TO ANSWER THESE QUESTIONS??
1. 'I'm thinking about investing my money in the stock market and buying some shares. The problem is
that I have no idea about it. For example, what's the difference between stocks and shares?'
2. 'Can I buy shares of any company in the world on the stock market?'
3. 'So, how do I buy stocks or shares in these public limited companies? Can I do it myself by calling the
companies?'
4. 'Ok. So what's the difference between a stock exchange and the stock market?'
5. 'So why does New York have two stock exchanges?'
6.'More complicated than I thought. I would like get a good return from the shares, I want to make a lot
of money. Do you have any recommendations on what company's shares I should buy?'
7. 'But can I get a higher return on my money if I put my money in the bank from the interest than from
the dividend in stocks and shares.'