1. To borrow — брать взаймы (заимствование)

2. certificates of debt — долговые сертификаты

3. to recover the principal — возмещать основную сумму

4. lender — заимодавец (кредитор)

5. to raise money — добывать деньги

6. debentures — долговые обязательства (облигации), дебентуры

7. versus... — в сравнении с...

8. stock issues... — выпуски акций...

9. venture capital — венчурный капитал

18.7.1.3. Read the text “Securities — Stocks” and give a short definition of securities mentioned

in the text.

Securities — Stocks

Stocks. Ownership, or equity interest, in a corporation is represented for most investors by

two types of stock: common and preferred. Of the two, common stock represents the primary

active ownership in a company but may have less claim to earnings on profits than does preferred

stock.

Common stock is issued by all corporations. It represents more effective ownership and control

because it is, with some exceptions, the voting stock. Holders of common stock have the right to

choose company directors. Each share of common stock affords its holder one vote. On occasion,

companies will issue classified stock. One class will permit voting rights and will probably be retained

by the company directors and management. The stock classified as nonvoting will be sold to

the general public. The New York Stock Exchange does not list a company’s nonvoting common

stock, but some exchanges do.

Holders of common stock are entitled to receive company earnings reports, and they may attend

annual meetings and vote on company policies. Stockholders who do not go to meetings

often vote by proxy. This means that they delegate in writing their authority to vote their shares of

common stock.

The disadvantage of common stock is its minimal claim on company earnings. Dividends on

preferred stock must be paid first. In case of company failure, holders of bonds and preferred stock

have first claim on assets.

Preferred stock also represents ownership in a corporation. Holders of preferred stock are entitled

to dividends before the common stockholders are. If the company is liquidated, the preferred

stock is paid off before the common stock is, but after the bonds are.

Dividends on preferred stock generally are fixed and cumulative. They do not increase if the

company prospers. They may, however, be reduced or suspended if earnings are poor. If they are

reduced or suspended, they cumulate and are paid when earnings improve. Most corporations

arrange for preferred shareholders to get voting rights if dividends on preferred stocks are suspended

for a specified period.

Some preferred stocks are convertible into common stocks. The right to convert is an option for

Investors who prefer to receive a fairly certain income rather than exercise the rights of ownership.

There are some types of bonds that are also classified as convertible securities.

Par value is a term for the face value of a stock as stated on the stock certificate. Par value thus

represents the assets behind each share at the time of issue. Par value has a direct relation to the

assets or to the market value of the shares themselves. Some companies issue stock with no stated

value, called no-par stock. It may be sold at any price, whereas par-value stock cannot initially be

sold for less than its stated value.

Option trading is one of the more complicated aspects of the stock market. Options are contractual

agreements between buyers and sellers that confer the right either to buy or to sell 100 shares of

stock at a fixed price at a specific time.

Options trading was standardized in 1973 by the formation of the Chicago Board Options Exchange

and became quite similar to dealing in commodity futures. This market is only for the well-

266

informed investor who knows how to speculate and who is able to bear losses in a very risky type of

investment. An even more intricate feature was added to the market in 1982 — trading in stock

index futures. This type of options trading is a highly speculative transaction in which investors sell

or buy futures as a hedge against the way they believe the market will go — up or down.

Stock certificates, the actual pieces of paper that represent ownership, are disappearing from

the market in some places. The Tokyo Stock Exchange has nearly eliminated them, relying instead

upon computer entries. The United States Department of the Treasury no longer prints or issues

Treasury bills or bond certificates. The persistence of stock certificates in the United States is mostly

due to the public’s fondness for them.

Commentary and Notes to Text 18.7.1.3