W: Let me recommend my brother to you. He’s really done well in the stock market over the last few years.
M: The real question is this: How have you dine by taking his advice Q: What does the man mean
2. Script
M: Many investors jump on IPOs, hoping to get rich by getting into a stock early before it goes up. W: But isn’t that a bit like buying a book without reading it I mean, what if it doesn’t go up Q: What is the woman’s opinion
3. Script
W: The Dow was down again today. It’s hard to make money when high fuel prices are killing the stock market.
M: There’s still money to be made. If you bought oil futures three months ago, you’d be smiling right now.
Q: What can we learn from the dialog
4. Script
M: I can’t wait to get back to my computer. Online share trading has totally changed the stock market and the lives of investors. Hook up to the Internet and be your own broker!
W: In other words you can cut out the middle man now. For about ＄500, you can open an account and begin buying and selling shares from your own home, 24 hours a day. Q: Which of the following is true if they want to trade shares on the Internet
5. Script
M: Hold onto your hat! We’ll be rich. I’m buying shares in a new company.
M: You can’t buy IPO shares unless you have a big active with a broker. The day of dot-com fortunes from IPOs are over.
Q: According to the conversation, what is the condition for buying IPO shares.
Listening In
Task 1: Tell me about the stock exchange.
Script
George: I’m supposed to give a presentation on the stock exchange, but I don’t yet know a thing
about it. Could you give me some tips
Diana: The problem with you is that you’ve skipped too many classes. Now, let me give you a few tips. First of all, you need to define the stock exchange. It’s an organization of brokers and investment bankers. In Europe it is often called a bourse.
George: Could you tell me more about it Like, how does it work
Diana: It provides facilities for the trading of company stocks, mainly the location and the
record-keeping devices.
George: Can I go and trade there
Diana: It depends. You have to be a member of the exchange before you can buy and sell shares
there. They call it having “a seat” on the exchange.
George: Something they use the term “stock market”.
Diana: Well, the trading of stock on stock exchanges is called the stock market. George: How can a company be listed on the stock exchange
Diana: It has to meet certain requirements. To be listed on the New York Stock Exchange last year, for example, a company had to have issued at least a million shares of stock worth＄16 and had to have had more than ＄ million net income.
George: Wow, that’s a huge sum! Small companies haven’t got a chance. Diana: Big companies have more influence on the stock prices after all. George: I see what you mean.
Stock exchange a thing some tips define investment bankers Europe a member stock market requirements a million shares net income
Task 2: Stockbroker helps Mr. Junkie to short
Script
ABC stock reached＄155. “＄155” for a stock that should be valued at＄100. Wow! “That’s it,” I said to myself. “It’s time I make a decision. I’m going to short that stock.” I thought to myself, “This stock is overvalued. It can’t remain at the present level for long. This means money in the bank.”
So I phoned my broker.
“I want to place a trade. I want to short 1,500 shares of ABC.
“I’m sorry, Mr. Junkie,” he said, “I can’t process that for you. Your account is cash account. You need a margin account to short a stock. I can send you the application form or you nearest financial institution to fill out the forms.”
The minute I got of the phone, I heard out the door because time is money. I ran to the financial institution to fill out the form and sent it to the broker by express mail service. Next morning I called him.
“Hello, it’s Mr. Junkie. Did you get my application
“Yes.”
“Great, I would like to short ABC then.”
“One minute please…I’m sorry, Mr. Junkie, but you now need a shorter’s account.” “What! You mean the margin account isn’t enough”
“No, you also need a shorter’s account. Any financial institution nearby has the forms.”
Off I ran again. I completed the form and had a taxi deliver to my broker. In the afternoon I called again.
“Hello, it’s Mr. Junkie. I want to short 1,500 shares of ABC at ＄155.”
A few moments later he answered, “Mr. Junkie, I am sorry, but I don’t think that is possible.” “Why not”
“Well, the last trade went through at ＄99.”
F 1. The broker did not believe ABC stock could remain at ＄155 for long. T 2. Mr. Junkie wanted to short 1,500 shares of ABC.
T . Junkie could get a margin account through either a financial institution or his broker. T 4. To short a stock, one needs both a margin account and a shorter’s account. F 5. Mr. Junkie asked a taxi driver the forms for a margin account to the broker.
Task 3: Who am I if I own stocks
Script
When a person buys stocks in a company, that person becomes a shareholder in that company. Stockholder is another name for shareholder. A shareholder can also be called an investor of the company. When that company makes money, which can also be called earned income or profit, the value of the company’s stock often increases. That’s because more people may become interested in investing in the company. Sometimes, shareholders receive a dividend, which is part of the company’s earned incomes, in the form of a cash payment.
Some people try to make money by buying and selling stocks. Stock prices can move up and down. Shareholders may make money or lose money by selling stocks that they own, depending on whether the price has gone up or down since they bought their shares. A company’s stock price may be affected by market or economic conditions. For example, let’s say that BCD Enterprises is a software company that has introduced a new video game into the market. If that game is a hit, sales of the video game could boost the company’s earnings. Because of the potential for BCD Enterprises to grow, its stock may be viewed as an attractive investment and its stock price may go up as more people buy its shares. On the other hand, let’s say the video game that BCD Enterprises introduced is a flop. Or, it could be a good time, but BCD introduced it at a time when people are spending less on leisure products, and hardly anyone is buying the game. So it’s reported that BCD is losing money because of this new product. Then the stock price for BCD Enterprises may go down if a number of shareholders decide to sell their shares.
1. What is the passage mainly concerned with
C) The influence of shareholders’ buying and selling on a company.
2. Which of the following is NOT the same as a shareholder B) A person selling shares on behalf of others.
3. What may affect a company’s stock price D) All of the above.
4. According to the passage, which of the following is true if a company’s product is good A) The company’s stock price may go up.
5. Why does the speaker mention BCD Enterprises
D) BCD is used as an example to illustrate the stock market principles
Speaking Out
MODEL 1 The stock market is driven by fear and greed.
Chris: Nora!
Nora: Hey Chris. Why the big grin You look like the cat that swallowed the canary.
Chris: Even better. An uncle I hardly knew passes away and left an inheritance of ＄100,000. So
now I’m thinking of making some investments.
Nora: Good idea, thouh it would be more fun if we spent it together. What sort of investment do you have in mind
Chris: The stock market is looking attractive. It’s been a bear market for several years now, and I
think stock prices are pretty depressed.
Nora: The decling market has investors depressed,too.
Chris: But all things work in cycles. A bear market will eventually be followed by a bull market. Nora: That’s sure. I’ve been reading that investors are coming back to the market, and that will drive up the value of stocks. Chris: I believe the market is picking up.
Nora: But there’s still a risk. Wars, weather problems—all these impact incestors’ confidence. Chris: I know what you mean. The stock market is driven by fear snd greed. When investors are cinfident od making of a fortune, they buy—that’s greed at work. Nora: But along comes something to shake their confidence…
Chris: Like a rise in interest rates, for example, and bingo, they become afraid that they might lose their shares, so they pull out of the market.
Now Your Turn
A: I’ve saved a lot of money over the past years, and now I’d like to invest it for a profit. B: What sort of investment do you have in mind
A: The stock market is looking attractive. It’s been a bear market for several years now, and I think stock prices are pretty depressed.
B: The falling market has discouraged many investors.
A: But all things work in cycles. A bear market will eventually be followed by a bull market. B: That’s true. When the market does touch its bottom, it’ll rebound. A: I hope the investors will soon come back to the market and drive it up.
B: But there’re still risks. Wars, weather problems—all these affect buyers’ confidence. We’re not sure if the market has reached its bottom.
A: The bear market has lasted over four years; I think it’s time for it to pick up.
B: It’s really hard to say. The Japanese stock market has had a bear run of about ten years. A: Really
B: And when NASDAQ fell from 5,000 points to 3,000 points, some people believe it was a golden opportunity to enter the market. Then the market plunged. A: So the stock market is really risky. I may lose money. B: And maybe even your shirts.
A: Well, perhaps I’d better put my money on the bank.
The stock has to be launched.
Helen: You know, this has been a privately owned company since we first opened last year and, to
be honest with you, I’m inclined in keeping in that way.
Bill: But the market is changing rapidly, and we need to think long term and take proactive measure; otherwise, we’ll find ourselves behind the competition.
Helen: That’s a good point; perhaps I should be more open—minded about this. Bill: Don’t you think you’re a little short of funds at the moment Helen: That’s true.
Bill: You simply can’t afford to upgrade your facilities without considerable outside investment.
The bank won't lend you the money. Helen: I haven’t tried it.
Bill: Even if it did, the interest rate for that much capital would be more we could afford. I’m
convinced, the only way to generate the funds we need is to go public. Helen: What should I do then
Bill: A consultant will be coming in next week to explain the registration procedure for an IPO.
Helen: That’s great because I want to have a thorough understanding of what this entails before any decisions are made.
Bill: The important point is that you have to demonstrate you’re financially qualified to be listed on the stock market.
Now Your Turn
A: Mr. Smith, though your company has grown fast few years, the market is changing the rapidly. So you need to think the long term and take proactive measures; otherwise, you’ll find it
behind the competition.
B: You’re quite right, but can you be more specific about what we must do
A: Don’t you think your company is a bit short of funds to expand production at the moment. B: That’s right.
A: You simply can’t afford to upgrade your facilities without large external investments. B: Perhaps I have to borrow money from the bank. A: It won’t lend you so much money. B: I haven’t tried it.
A: Even if you got a loan, the interest rate for large sum would be more than you can afford. I’m convinced, the only way to gather funds you need is to go to public. B: What should I do then
A: Let me explain the requirements for an IPO.
B: I’m all ears. I want to have a thorough understanding of what this entails before I make further decisions.
A: The important point is that you have to demonstrate that you are financially qualified to be launched on the stock market. You must show you have a capital of 50 million yuan. B: Our company does have that amount of money. Are there other requirements
A: You have to prove that the company has been making a profit in the past three years. It’s also essential that there are no false financial reports.
B: Ok, no problem. I’ll try to go through the Registration procedure to get our company listed.
MODEL 3 Nothing is certain n the stock
market
Susan: Hey, Chris, have you read the paper today Chris: No. why What’s up
Susan: The store market has dropped again.
Chris: Oh, no! Not again! How many points did it lose this time Susan: One hundred.
Chris: Let’s see…that’s a drop of three percent. Well, there goes the money I was going to use to buy a new car.
Susan: Before you get upset, I think you should look at the stock listings for today. Chris: What for
Susan: Well, some stocks actually gained, especially telecom stocks.
Chris: Let me see that paper. You’re right! My stock went up five percent overnight! That’s great! Susan: For now, anyway. It may plunge tomorrow.
Chris: you’re right. I’m going to call my broker cash in my stocks. I’m not taking any more changes with my savings.
Susan: You’re wisher than most people I know. Sometimes it’s better to play it safe.
Now Your Turn
A: Hey, Jack, I hear you become a millionaire by investing in the stock market. But I always lose money in the market. Can you give me a few tips
B: First of all, let’s look at the stock listing in today’s newspaper. A: Wow, the stock market dropped again. B: What stock did you buy A: BCD.
B: How many points did it lose this time A: More than a hundred.
B: Let’s see…That’s a drop of nearly five percent.
A: Oh, there goes a lot of my money. I’m thinking about pulling out of the market. B: Before you get upset, I’d like to give you some advice. A: What’s that
B: Well, the market is cyclical. Through you’re losing money now, your stock may gain in future. Personally, I believe your stock is a good one. You’d better keep it until it goes up one day. A: So I can’t make money in a short time
B: Let’s look at XYZ stock. It’s now a junk stock, but it’s been low for a long time. It may climb up at any moment.
A: So, I’ll buy it and wait for it to go up.
B: And cash in your stock when it reaches a point that is high enough to give you a profit. My basic principle is to buy at the bottom and sell at the peak.
A: I see. I’ll buy low and sell high. But what if XYZ plunges again after I buy it B: You have to take changes. There’s always risk in the stock market.
Let’s Talk
Gregory: I’ve been thinking about getting into the stock market, but I don’t know where to start.
What do you know about buying stocks
Sylvia: Well, I have a few investments, so I know a little about it. Now it is probably a good
time to invest. The market is low; prices are probably pretty good.
Gregory: So you mean it’s high time to enter the market What kind of stock do you suggest
Sylvia: I won’t recommend any specific stock. You have to make the decision on your own. If
you want to make money quickly, you could try speculating.
Gregory: What do you mean by speculating
Sylvia: You buy stocks that go up quickly for a fast profit.
Gregory: Isn’t that risky Stocks that go up fast also tend to go down fast.
Sylvia: You just have to guess how high they’ll go, and then sell when you think they are about
to come down. If you guess right, you can make lots of money in the blink of an eye.
Gregory: But I hear that many people guess wrong. When they think the market is already very
low, they start to buy. Then the market continues to drop.
Sylvia: In that case you will lose your shirt. But to make money, you have to take changes. Gregory: Hmm, I’m not much of a gambler.
Sylvia: So you probably want to stick to blue chip stocks for a guarantee return on your
investment.
Gregory: That sounds right up my alley.
Gregory is thinking about getting into the stock market and wants to know how to buy stocks.Sylvia say the market is low, so prices are probably pretty good. Gregory sees it is high time to enter the market.
Sylvia Suggest speculating, which means buying stocks that go up quickly and then selling quickly for a fast profit.
Gregory finds it risky because stocks that go up fast also tend to go down fast.
Sylvia says that he has to guess how high they will go and then sells when he thinks they’re
about to come down.
Gregory hears that many people guess wrong. When they start to buy, the market continues
to drop.
Sylvia says that, to make money, he has to take changes.Gregory admits that he is not much of a gambler.Sylvia suggests that he stick to the blue chip stocks for a guaranteed return on his
investment.
Discussion
A: I’m renting an apartment. If you go on like this, I’ll never have an apartment of my own. So I’m thinking buying an apartment, but I don’t know whether it’s good time to invest in property. B: Soon it’ll be high time to buy houses. There’s been good news for buyers lately. A: What’s it
B: in the light of the speculative investment in real estate, the government has recently issued a number of rules. For example, those who sell newly—bought apartment have to pay a tax. So probably fewer people are willing to speculate in the real estate market, and the housing prices will drop.
A: I have to wait and see. I would be glad even if the prices just remain stable. Any other good news
B: Some people propose bypassing the real estate developers. They want to pool their funds to build their own apartment buildings. In this way they can cut the costs by a big margin.
A: Sounds interesting, though I’m not sure if it’s practical. About when do you think I should buy an apartment
B: Pretty soon. I guess the prices will fall soon.
A: I want to know exactly when. Shall I buy it next week or next month
B: You just have to guess how low the prices will go, and then buy at the right time.
A: It’s a bit risky because I may guess wrong. After I buy an apartment, the price may plunge again.
B: You have to take changes and make the decision on your own.
A: Hmm, I’m not much of a gambler. Perhaps I’ll wait and see and continue to live in the rented apartment.
B: There’s also risk in this. It’s not altogether impossible that housing prices will move up a little bit. If that’s the case, you’ll have to pay even more in the future.
A: My God, there are risks everywhere! So you’ve told me next to nothing.
Further Listening and Speaking
Task1: what do you know about NASDAQ
As the world’s largest electronic, NASDAQ is not limited to one trading location. Rather, trading is executed through NASDAQ’s complex computer and telecommunication network, which sends real—time quote and trade data to more than million users in 83 countries. Without size and location limitations, NASDAQ’s open market structure allows a virtually unlimited number of participants to trade in a company’s stock.
Today, NASDAQ lists the securities of nearly 4,100 of the world’s leading companies, and each year it continues to help hundreds of companies go public.
Trading on NASDAQ is not limited to any fixed number of participants. This allows a large number of firms with widely different business models and trading technologies to connect to the NASDAQ network and compete on an equal basis. Rather than forcing investors to go through a single financial firms called makers. More than 500 market making firms trade on NASDAQ, acting ad distributors for NASDAQ-listed securities. Those market makers are unique in that they invest own capital in NASDAQ-listed securities, and then turn around and distribute the stock as needed. They are required at all times to post their bid and ask prices in the NASDAQ network where they can be viewed by all participants. By being willing to buy or sell stock using their own funds, the market makers strengthen NASDAQ’s market, ensuing that there are always buyers and sellers for NASDAQ-listed securities and enabling trades to be filled quickly and efficiently.
1. How many participants does NASDAQ allow to trade in one company’s stock D) An unlimited number.
2. What does NASDAQ’s computer and telecommunications network do C) It immediately sends quote and trade information to over million users.
3. According to the passage, which of the following is true of NASDAQ A) It has launched more than 4,000 companies.
4. What role do the market makers play
B) They buy and sell NASDAQ stocks to help strengthen the market.
5. Which of the following is the best title for the passage A) The operation of NASDAQ.
Task 2: Stockbroker as Liquidator
In the midst of the shaky market of last week, many brokers got calls from their clients requesting they sell their shares. One broker told such a story:
One of my clients called me on Thursday. He was anxious and out of breath, and spoke with great urgency.
He said to me, “Jone, sell it all. Sell everything, fast, right away.”
I tried to explain to him that the market was cyclical, and that in the long term stocks would return to normal.
He said, “John, let me tell you a secret. You know I’ve been married for sixty years now, and I’ve been your client for five.”
“Yes, go on.” I said encouragingly.
“Well, my wife Lucie has a sort of phobia about the market. When we got married, I promised her that I would follow in her parents’ footsteps and never venture into the stock market and always leave all our money under the mattress. Her great grandparents once lost everything in a great crash, and ever since then her family found investing in the market similar to crime.”
“Wow, Howard, I didn’t know that. I guess you want the money because the market is going down.”
“No, John, I want the money because she ordered a new mattress, and it is being delivered in two days.”
Task 3: A Stock Market Crash
A stock market crash is a dramatic loss of shares of corporations. Crashes often follow speculative stock market bubbles such as the dot-com boom.
After the most famous crash in 1929, known as the Black Thursday when the Dow Jones Industrial Average dropped 50%, there came the Great Depression. The following years saw the Dow drop a total of over 85%.
There was also a crash on Monday, October 19, 1987, known in financial circles as the Black Monday, when the Dow lost 22%of its value in a single day, bringing to an end a five-year bull run. The pattern was repeated across the world.
The stock market downturn of 2002 was part of a larger bear market that took the NASDAQ 75%from its highs and broader indices down 30%.
Stock market crashes are driven by panic as much as by economics factors. They often follow stock market bubbles. So long as the prospect of further daily drops in the value stocks continues, those who invest in equities will be discouraged. If few people are willing to make further investments, a bear market is expected to persist.
News Report
Worsening Bank Assets
Many of the traditional quantitative indicators suggest that bank asset quality is deteriorating, and that supervisors therefore need to be more sentitive to problems at individual banks, both currently and in the months ahead.
Some of the credits that were made in earlier periods of optimism—especially syndicated loans—are now under pressure and scrutiny. The softening economy and all special circumstances have especially affected borrowers in the retail, manufacturing, health care and telecommunication industries. California utilities, as you know, have also been under particular pressure. All of these, and no doubt other problem areas that are not now of foreseeable, require that both bank management and supervisors remain particularly alert to development.
We are fortunate enough that our banking system entered this period of weak economic performance in a strong position. After rebuilding capital and liquidity in the early 1990s, followed by several years of post-World War II record profits and very strong loan growth, our banks now have prudent capital and reserve positions.
In addition, asset quality was quite good by historical standards before the deterioration began. Building on banking practices, we are in the process of improving both lending and supervisory policies that we trust will foster better risk management; but these policies could also reduce the pro-cyclical pattern of easing and tightening of bank lending and accordingly increase bank shareholder values and economic stability. It is an easy road, Mr. Chairman, but it seems that we are well along it.
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