Grammar

4. Find out Infinitives in the sentences below, define the form and the function.

1. The transactions may include the flotation of companies on a recognised stock exchange in order to restructure ownership.

2. These transactions include equity issues by companies in order to raise capital for development.

Reading and Analysis

5. Read the text and be ready to answer the questions. Text a

Use of the term “corporate finance” varies considerably across the world. In the United Kingdom and Commonwealth countries, the term “corporate finance” tends to be associated with investment banking, i.e. with transactions in which capital is raised for the corporation. These may include raising seed, start-up, development or expansion capital, mergers, demergers, acquisitions or the sale of private companies, equity issues by companies, including the flotation of companies on a recognised stock exchange in order to raise capital for development or to restructure ownership. On the other hand in the United States it is used to describe activities, decisions and techniques that deal with many aspects of a company’s finances and capital.

Capital investment decisions are long-term corporate finance decisions relating to fixed assets and capital structure. Management must allocate limited resources between competing opportunities or projects in a process known as capital budgeting. Making this investment, or capital allocation, decision requires estimating the value of each opportunity or project, which is a function of the size, timing and predictability of future cash flows.

In many cases, for example R&D projects, a project may open or close the paths of action to the company, but this reality will not typically be captured in a strict NPV approach. Management will therefore employ tools which place an explicit value on these options. The two most common tools are Decision Tree Analysis (DTA) and Real options analysis (ROA). They may often be used interchangeably.

6. Review the terminology of the text:

движение денежной наличности, анализ реальных возможностей, быть взаимозаменяемыми, проекты НИОКР, реконструировать право собственности, капитал на расширение, стоимость возможности, основной капитал, решения по капитальным вложениям, финансы корпорации, страны Содружества, разделение, анализ дерева решений.

7. Complete the following sentences using the text.

1. In the U K and the Commonwealth the term “corporate finance” is associated … .

2. The transactions in which capital is raised include raising start-up or expansion capital, mergers, acquisitions, equity issues including the flotation of companies in order to raise capital … .

3. in the US the term “corporate finance” is used to describe activities, decisions and techniques that … .

4. Management must allocate limited resources between competing opportunities or projects … .

5. Management employs tools which place an … .

8. Answer the following questions.

1. What is the term «corporate finance» associated with in the UK the Commonwealth?

2. What are the possible transactions in which the capital is raised?

3. What does the term «corporate finance» mean in the US?

4. What does the process of capital budgeting assume?

5. Should the value of each opportunity be estimated?

6. What are the tools to place an explicit value on the options?