Lesson 11

This lesson informs us about the different types

of shares; it is also about the capital of a business
entity which represents the original capital paid
into or invested in the business by its founders.

STOCKS AND SHARES

Stock is distinct from the property and the assets of a business which
may fluctuate in quantity and value. The stock exchange is the centre of the
capital market, where large quantities of capital are raised for companies and
the government. This capital is raised in two ways: by selling shares to
investors, by obtaining loans from investors, in the form of government
stocks and debentures.
Stock is obtained through a stock broker. Let's say you wish to own a
piece of Coca-Cola. You would call a stock broker and he would tell you
how much a share in the company would be. He would then place an order
for the stock for you. When the stock is purchased, the broker will keep a
stock certificate that shows that you are the legal owner of the stock until
you choose to sell it. One of the advantages of owning a stock is that it
allows the stock owner to share in the profits of a company. These profits
come in the form of dividends, which are allocated according to how many
stocks one holds in the company. Of course one of the disadvantages is that
one can lose money if a stock's price goes down. There are many reasons
that make prices go up and down, e.g. how much profit or loss a company
has, the time of the year, good or bad publicity about the company, how the
economy is doing in general, etc.
Shares or stocks, bonds, notes and mortgages are collectively known as
securities. In Britain government stocks are known as gilt-edged securities
(gilts) because they are such a safe form of investment.
A bond is a certificate of debt issued by a government or corporation
guaranteeing payment of the original investment plus interest by a specified
future date.
There is a number of different types of shares:
Ordinary shares: These are the most common shares, also known as
equities. Ordinary shareholders bear the largest part of the risk, but the
returns can be much higher than with other forms of investment. Ordinary
shareholders are entitled to one vote per share, which gives them more say in
the running of the company; but the amount of dividend they receive is
determined by the company depending on how much profit has been made.

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 Preference shares: These shares have a fixed dividend which must be
paid before the ordinary shareholders can receive their dividend, which
guarantees a return on investment as long as the company is making a profit.
Unlike the ordinary shareholder, the preference shareholder is not entitled to
vote in company matters.
Cumulative shares: This is a special class of preference shares which
offers a safer return on investment. This is because if the company cannot
pay the dividend one year, the outstanding amount is carried over to the
following years.
Convertible preference shares: This is another type of preference shares
which pays a fixed rate of interest until a certain time. After this time, it is
converted into an ordinary share on which the holder receives a dividend
rather than interest.
People buying and selling shares on the stock market are known as
speculators and fall into three categories:
* Bulls buy shares expecting prices to rise.
* Bears sell shares expecting prices to fall.
* Stags buy newly issued shares in the expectation that prices will rise,
then sell them in the hope of making a quick profit.

Vocabulary Notes

stock 1.³ñÅ»ÃÕûñ, µ³ÅÝ»ïáÙë»ñ, µ³ÅÝ»ïÇñ³-

Ï³Ý Ï³åÇï³É 2. å³ß³ñ
share µ³ÅÝ»ïáÙë
to share=to share in ÏÇë»É, µ³Å³Ý»É
to fluctuate ï³ï³Ýí»É, ³ÝϳÛáõÝ Ï³Ù ³Ýí×é³Ï³Ý
ÉÇÝ»É
entity 1. ¿áõÃÛáõÝ, 2. ïÝï»ë³·ÇïáõÃÛ³Ý Ù»ç`
ïÝï»ë³Ï³Ý Ùdzíáñ
assets (ѳßí»ÏßéÇ) ³ÏïÇíÝ»ñ, áõÝ»óí³Íù, ϳåÇ-
ï³É, ýáݹ»ñ
~ and liabilities ѳßí»ÏßéÇ ³ÏïÇíÝ»ñ ¨ å³ëÇíÝ»ñ
to raise capital Ó»éù µ»ñ»É ϳåÇï³É
security ³Ýíï³Ý·áõÃÛáõÝ, ³å³ÑáíáõÃÛáõÝ
securities ³ñÅ»ÃÕûñ
gilt-edged securities ϳé³í³ñáõÃÛ³Ý »ñ³ß˳íáñáõÃÛ³Ùµ
å»ï³Ï³Ý ³ñÅ»ÃÕûñ
bond 1. å³ñï³ïáÙë, 2. ϳå, ѳñ³µ»ñáõÃÛáõÝ
note 1. ÙáõñÑ³Ï (Am.E), 2. ÃÕó¹ñ³Ù (Br.E),
3. »ñÏïáÕ, ÝßáõÙ

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mortgage ÑÇ÷áûù, ·ñ³í, ·ñ³í³¹ñáõÃÛáõÝ
to guarantee »ñ³ß˳íáñ»É
to allocate µ³ßË»É, µ³Å³Ý»É, ¹³ë³íáñ»É
debenture å³ñïùÇ Ñ³ÝÓݳéáõÃÛáõÝ` ¹»µ»Ýïáõñ³,
å³ñï³·Çñ
dividend ß³Ñáõóµ³ÅÇÝ
publicity 1. ·áí³½¹, 2. Ññ³å³ñ³Ï³ÛÝáõÃÛáõÝ
ordinary shares = ëáíáñ³Ï³Ý, ѳë³ñ³Ï µ³ÅÝ»ïáÙë»ñ
common shares
equity 1. ³ñ¹³ñáõÃÛáõÝ, 2. ïÝï»ë³·ÇïáõÃÛ³Ý
Ù»ç` ë»÷³Ï³Ý ÙÇçáóÝ»ñ` ÁÝÏ»ñáõÃÛ³Ý
ëáíáñ³Ï³Ý ÙÇçáóÝ»ñÇ ³ÙµáÕçáõÃÛáõÝÁ
preference 1. ݳ˳å³ïíáõÃÛáõÝ, ·»ñ³¹³ëáõÃÛáõÝ,
2. ݳ˳å³ïíáõÃÛ³Ý Çñ³íáõÝù
preference share ³ñïáÝÛ³É µ³ÅÝ»ïáÙë
entitled Édz½áñí³Í
vote ùí»
cumulative Ïáõï³Ï³ÛÇÝ, ÁݹѳÝáõñ, ÙdzëݳϳÝ
return »Ï³Ùáõï, ѳëáõÛÃ, ß³ÑáõÛÃ
outstanding ³Ïݳéáõ, ãѳïáõóí³Í, ãí׳ñí³Í
to convert ÷áË»É, ÷á˳ϻñå»É, ÷á˳Ýó»É
convertible ÷á˳ñÏ»ÉÇ
speculator í»ñ³í³×³éáÕ
to expect ³ÏÝϳɻÉ, ëå³ë»É
expectation ëå³ëáõÙ, ³ÏÝϳÉÇù, ÑáõÛë
stag ³ñáõ »ÕÝÇÏ, µáñë³ÛÇÝ ã³ñ³ß³ÑáÕ
e.g. (exempli ɳï.` ûñÇݳÏ
gratia)=for example

Exercise 1. Answer the following questions.

1. What does owning a stock mean?

__________________________________________________________
________________________________________________________
2. How does one get to own stock?
__________________________________________________________
________________________________________________________
3. What are the advantages of owning a stock?
__________________________________________________________
________________________________________________________

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4. What makes stock prices go up and down?
__________________________________________________________
________________________________________________________
5. What kinds of stocks can you mention?
__________________________________________________________
________________________________________________________

Exercise 2. Find synonymous pairs.

1. property a) unpaid
2. to diversify b) cause
3. to allow c) share
4. outstanding d) to amass
5. reason e) to manage
6. to keep f) ownership
7. stock g) to vary
8. to accumulate h) to permit
9. to run i) to involve
10. to include j) to maintain

Exercise 3. Identify whether these statements are true or false.

Correct the false ones.

1. Stock exchange owns most of securities.

_________________________________________________________

2. Stock may be obtained only through a broker.

_________________________________________________________

3. The ordinary shares bear the largest part of the risk, but the returns
can‘t be higher.
_________________________________________________________

4. Shares and loans are known as stocks.

_________________________________________________________

5. Preference shares have a fixed dividend which must be paid after the
ordinary shareholder receives his/her dividend.
_________________________________________________________

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 6. Like the ordinary shareholder, the preference shareholder is entitled to
vote in company matters.
_________________________________________________________

7. Cumulative share is a type of preference shares which offers a fixed

rate of interest until a certain time.
_________________________________________________________

8. Bears buy shares expecting prices to rise.

_________________________________________________________

9. Bulls buy newly issued shares in the expectation that prices will rise,
then sell them in the hope of making a profit.
_________________________________________________________

10. Stock is distinct from the property and assets.

_________________________________________________________

Exercise 4. Match the terms with their definitions.

1. Common stock a) an amount of profits that a company pays to

people who own shares in the company.
2. Stock b) documents proving that somebody is the owner
of shares in a particular company.
3. Bond c) a share that somebody has bought in a company
or business.
4. Dividend d) a document showing the sum of money that is
lent.
5. Securities e) something that carries voting rights that can be
exercised in corporate decisions.

Exercise 5. How do these words change? Give the missing forms of

the words below.

Verb Noun Adjective

converter
accumulative
to differ
fixation
payable

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to represent
legality
publicity
to invest

Exercise 6. Fill in the blanks using the words below. Make necessary
changes.
entitle, fluctuate, investment, bond, diversify

1. Prices currently seem to ____________from day to day.

2. The culture of the country has been ________________ with the
arrival of immigrants.
3. We had to take out a second _______________ on the property.
4. This ticket does not _________________ you to travel first class.
5. This project demands considerable _______________ of time and
efforts.

Exercise 7. Translate from Armenian into English and match two

parts to get complete sentences.

1. In case of necessity_______________________________________
_______________________________________________________
telling him to put an order for the stock.

2. These profits come in the form of dividends ____________________

________________________________________________________

3. Preference share is a type of stock

_____________________________
________________________________________________________

4. A mutual fund is an investment ______________________________

________________________________________________________

5. Different stocks have various _______________________________

_______________________________________________________.

a) Áëï áñÇ µ³ÅÝ»ï»ñÁ ³Ù»Ý ï³ñÇ ëï³ÝáõÙ ¿ ß³Ñáõóµ³ÅÝÇ

áñáß³ÏÇ ïáÏáë
b) ß³Ñáõóµ³ÅÝÇ Ïáõï³ÏÙ³Ý ³é³ÝÓݳѳïÏáõÃÛáõÝÝ»ñ

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c) ϳñ»ÉÇ ¿ ¹ÇÙ»É µáñë³ÛÇ ÙÇçÝáñ¹ÇÝ
d) áñáÝù µ³ßËíáõÙ »Ý Áëï ÁÝÏ»ñáõÃÛáõÝáõÙ áõÝ»ó³Í µ³ÅÝ»ïáÙ-
ë»ñÇ
e) áñÝ ³é³ç³ñÏáõÙ ¿ Ýáñ µ³ÅÝ»ïáÙë»ñ ¨ µ³ÅÝ»ïÇñáç ³é³ç³ñ-
Ïáí Ñ»ï ¿ ·ÝáõÙ µ³ÅÝ»ïáÙë»ñÁ

Exercise 8. Most lines contain an odd word. Write out these words
and tick any lines that are correct.

1. I have been read the article about Dominic _________________

2. York several times. However, I feel that it _________________
3. raises up many questions which I cannot _________________
4. find answers to them. How could he deceive _________________
5. people despite of his lack of medical ________________
6. qualifications? It seems as very strange that ________________
7. nobody questioned him and asked for proof ________________
8. that he was a real doctor. It seems like _________________
9. impossible that nobody asked him what he _________________
10. was doing even though there were many of _________________
11. people in the hospital. Also, how could he _________________
12. keep coming back day after a day without _________________
13. someone stopping him and making him to _________________
14. show proof that he was really a doctor? I also ________________
15. wonder me how he could have been allowed ________________
16. to help to a surgeon. I must say that I can‘t ________________
17. help it thinking that this is not a true story. ________________

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