Name : Polina Nalistia Irawan

NIM : 20103132200110

Chapter 6.
Stocks and Shares
1. Issuing Stock and Shares
Task 1A. Discussion
• Putting it under the mattress
- The risk of losing your money is high (disadvantage)
• Puying a lottery ticket
- If you win it gives you the best return on your money (advantage). The odds of
winning it are small (disadvantage)
• Taking it all to Las Vegas or Monte Carlo
- The chances of losing money is more high than the chances to gain your money
(disadvantage)
• Putting it in a bank
- The most safe place to safe money, it can give you a feedback from the interest
rates (advantage)
• Buying gold
- The price of gold can rises higher (advantage). You should pay more cost to
store the gold safety (disadvantage)
• Buying a Van Gogh painting
- You need to give more attention to protect it from damage and thieves
(disadvantages)
• Investing in property or real estate
- You need to be good and had a lot of experienced at reading market condition
(disadvantage)
• Buying bonds
- It can be the safe investment but it also can lose a lot of value if the interest rates
rise sharply (disadvantage)
• Buying shares
- Had higher risk than bonds because their value can fluctuate wildly
(disadvantage)

Task 1B. Reading

1) Why do people form limited companies?
Answer: People form a limited company because its 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 sold,
liquidated in order to pay the debts. If the assets don’t cover the liabilities or
 the debts, they remain unpaid. But it doesn’t affects the owner’s personal
assets.
2) Why do companies issue shares?
Answer: Companies issue shares in order to raise more money to expand their
business and gain more capital.
3) Why do people buy the shares?
Answer: People buy the shares because it gives holder part of the ownership of a
company, and a profits as a dividend.

Task 1C. Comprehension

a. What are the obligations of the company that are traded their shares on the stock
exchanges?
Answer: They have to send their shareholders a report at the endof every financial
year, including independently-audited financial statements, and hold an
annual general meeting.
b. What is an over the counter market ?
Answer: A market for young or small companies which do not want to have their
shares tradded on the major stock exchanges.
c. What does the company do if they want to raise the capital?
Answer: It issues new shares, offering them to existing shareholders first.
d. What is a bonus issue ?
Asnwer: It’s when a company chooses to issue new shares to existing shareholders
rather than pay them a dividend.
e. What rights does the shareholders had ?
Answer: They are generally entitled to vote at companies’ General Mettings and to
receive a dividend if the company makes a profit.

Task 1d. Vocabulary

1. Liability
2. Creditor
3. Bankrupt
4. Assests
5. To liquidate
6. Liabilities
7. To put up capital
8. Venture capital
9. Founders
10. Premises
11. Underwrite
12. Dividend
2. Stock Markets
Task 2A. Vocabulary
1. Boeing stocks rocketed after rumours of a forthcoming merger with another leading
aircraft manufacturer (C. to rise a lot)
2. The Dow-Jones index crashed after continuing rumours about the President’s health
(E. to fall a lot)
3. Exxon stocks shot up after a new deal to pump Siberian natural gas was announced.
(C. to rise a lot)
4. The Footsie rallied in London in the afternoon, gaining 30 points in late trading. (A.
to rise after previously falling)
5. Grundig shares slipped after the news of boardroom changes. (D. to fall a little)
6. In Paris, the CAC-40 plummeted, after the unions called for a threeday general
strike next week. (E. to fall a lot)
7. Leading shares were slightly weaker in Tokyo, the Nikkei losing six points. (D. to
fall a little)
8. Most shares were a little stronger in Milan this morning, when the exchange
reopened after yesterday’s public holiday. (B. to rise a little)
9. On the Frankfurt exchange, the DAX index finished slightly firmer, up 12 points.
(B. to rise a little)
10. Philips shares jumped after the company revealed that it was negotiating a new
licensing deal with Sony. (C. to rise a lot)
11. Procter & Gamble stocks plunged after it was revealed that the company had lost
over $100 million as a result of a derivative deal. (E. to fall a lot)
12. Share prices recovered in Hong Kong today, the Hang Seng finishing up ten points.
(A. to rise after previously falling)

Task 2B. Vocabulary

a. A company that spreads investors’ capital over a variety of securities (mutual
fund)
b. An investor’s selection of securities (portofolio)
c. A person who can advise investors and buy and sell shares for them (stockbroker)
d. A stock in a large company or corporation that is considered to be a secure
investment (blue chip)
e. A stock – in an industry not much affected by cylical trends – that offers a good
return but only a limited chance of a rise or decline in price (defensive stock)
f. A stock – which usually has a high purchasing price and a low current rate of return
– that is expected to appreciate in capital value (growth stock)
g. A wholesaler in stocks and shares who deals with brokers (market-maker)
h. Financial organizations such as pension funds and insurance companies which own
most of the shares of all leading companies (over 60%, and rising) (institutional
investors)
i. The use of information not known to the public to make a profit out of buying or
selling shares. (insider share-dealing)

Task 2C. Vocabulary

1. annual report – external auditors – financial statements – stockbroker
2. blue chip – defensive stock – growth stock – right issue
3. bonus issue – dividend – over the counter – shareholder
4. creditor – market – maker – shareholder – stockbroker
5. debt – equity – share – stock
6. face value – market value – nominal value – par value
7. float – liquidation – share issue – underwriter
8. institutional investor – insurance company – liabilities – pension fund
9. mutual fund – portfolio – risk – underwriter
Answer:
1) A company's annual report contains financial statements checked by external
auditors. This has nothing to do with a stockbroker.
2) Right Issue, Because right issue is corporate action to stockholders and its not
connect with that groups.
3) When a company makes a bonus issue, it distributes new shares to shareholders
instead of a dividend. There is no necessary connection with over-the-counter
companies or markets here.
4) A shareholder places an order with a stockbroker, who buys shares from or sells
them to a market-maker. This has nothing to do with a creditor.
5) Stocks and shares are equities; unlike bonds which, for a company, are debt.
6) Face value, nominal value and par value all mean the same thing. This is rarely
the same as a security's market value.
7) When a company is floated for the first time it usually pays an underwriter to
guarantee to purchase any part of the share issue that remains unsold. This has
nothing to do with liquidation.
8) Pension funds and insurance companies are important institutional investors. This
has nothing to do with liabilities.
9) Mutual firnds are organizations that spread shareholders' money in a broad
portfolio, which generally reduces risk. This has nothing to do with an
underwriter.

Task 2D. Discussion

Should. As a friend, I had to tell him what situation he was going into. Then invite him to
find a solution to the problem so that he does not get stuck in the company
Task 2E. Case Study: Ethical Investment
• Emitting A Large Quantity of CO2 Into the atmosphere
• Making Donations To Political Parties
• Manufacturing Weapons
• Marketing powdered babi milk in countries without pure water supplies
• Not Recognizing trade unios
• Paying low wage levels in developing countries
• Selling Alcohol (Because Im Muslim)
• Testing cosmetic products on animals
• Trading with oppressive regimes