1	2	3	4	5	6	7	8	9	10

20

Suppose the offer has a clause that says that if you cannot obtain enough shares …(1)… a controlling interest, you can cancel the offer and return all the shares …(2)… their original owners. This offer creates an incentive to rush to tender shares …(3)… you. You still run the risk, however, that other takeover entrepreneurs will observe …(4)… what you are doing and bid …(5)… you …(6)… control of the firm. You would be justifiably annoyed …(7)… a bidding war because it was your initial hard work that identified the firm as a hot prospect. The greater the roadblocks that you must face in acquiring control, the less is your initial incentive to engage …(8)… the costly activity of uncovering underperforming firms. If you could swoop in quickly and buy …(9)… all the shares of the firm, you would avoid the problem of having other investors benefit …(10)… your discovery that the firm is underperforming.

1	2	3	4	5	6	7	8	9	10

21

If the proportion of equity capital …(1)… the total capital is small or …(2)… other words the ratio of other fixed cost capital …(3)… total capital is high, it is said to be…(4)…a state of high gearing of capital. Reverse is the case of low gearing of capital i.e., low proportion of equity capital or high proportion of fixed cost capital …(5)… the total capital is an indication of low gearing …(6)… capital. A company …(7)… low gearing is one that is mainly being funded or financed …(8)… equity capital and reserves, whilst the one …(9)… a high gearing is mainly funded …(10)… debt capital.

1	2	3	4	5	6	7	8	9	10

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22

In a low geared company, the fixed cost of capital will be lower and the equity shareholders will get a higher profit …(1)… way of dividend and …(2)… case of high gearing the fixed cost of capital will be higher and the profits to be distributed …(3)… the equity shareholders will be lower. The role of capital gearing …(4)… a business is as important as gears …(5)… an automobile. In an automobile, gears are used to maintain the desired speed. Initially, an automobile starts …(6)… a low gear, and as soon as it gets momentum, the low gear is changed …(7)… high gear. Similarly, a business is started …(8)… a low gear, i.e, high proportion of equity capital and as soon as, the business gets momentum, it may subsequently issue fixed cost securities, i.e., preference shares and/or debentures. Thus the process of capital gearing deals …(9)… the makes …(10)… of capitalization.

1	2	3	4	5	6	7	8	9	10

WORD BUILDING

Complete the sentences by changing the form of the word in capitals when it is necessary.

I

23.	In the United States, a common … tactic against hostile takeovers is to use section 16 of the Clayton Act to seek a restriction, arguing that section 7 of the act	DEFEND
24.	would be violated if the … acquired the target's stock.	OFFER
25.	The main consequence of a bid being considered hostile is … rather than legal.	PRACTICE
26.	If it is a friendly takeover and the board of the target … , the bidder can conduct extensive due diligence16 into the affairs of the target company,	COOPERATION
27.	… the bidder with a comprehensive analysis of the target company's finances.	PROVIDE

II

28	In contrast, a hostile bidder will only have more … , publicly available information about the target company,	LIMIT
29	rendering the bidder vulnerable to … risks regarding the target company's finances.	HIDE
30	An … problem is that takeovers often require loans provided by banks in order to service the offer,	ADD
31	but banks are often … willing to back a hostile bidder	LITTLE
32	because of the … lack of target information which is available to them.	RELATE

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III

33	A hostile takeover can be … in several ways.	CONDUCT
34	A tender offer can be made where the … company makes a public offer at a fixed price above the current market price.	ACQUIRE
35	Tender offers in the United States are regulated by the Williams Act. Such a company can also engage in a proxy fight, whereby it tries to persuade enough … ,	SHARE, HOLD
36	usually a simple … , to replace the management with a new one which will approve the takeover.	MAJOR
37	Another method involves quietly purchasing enough stock on the open market, … as a "creeping tender offer", to effect a change in management. In all of these ways, management resists the acquisition, but it is carried out anyway.	KNOW

IV

38	The … factor which must be taken into account by the promoters while drafting the financial plan of a company is capital gearing .	MUCH, IMPORTANT
39	Gearing means the ratio of different types of securities to total … .	CAPITAL
40	The term, when … to the capital of a company, means the ratio of equity share capital to the total capital and is known as capital gear ratio or capital gearing.	APPLY
41	Thus the term capital gearing is used to indicate the relative proportion of fixed cost bearing securities such as … shares and debentures to the ordinary share capital in the capital structure.	PREFER
42	Interest of equity shareholders is represented by the amount of share capital plus retained … and undistributed profits.	EARN

V.

Use the –er, -ship, -ion, --ty, –cy, -al suffixes to make the names of the following. If you need to use a dictionary, try looking up the words in bold.

	43	The limitation or control of someone or something, or the state of being restricted.
	44	The activities associated with being an entrepreneur.
	45	The state of being bankrupt.
	46	Arranged in order of rank; that of the nature of a hierarchy.
	47	The fact or state of being a proprietor.
	48	Someone who is involved in a situation inside the firm and who has secret or private information about the company.
	49	The state of being legally liable for something such as a debt.
	50	The state of owning something.

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GRAMMAR BACK UP. The

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Participle and The ing-form.

I

Choose the option (A, B, C or D) that best completes the sentence.

51. 
    Three of the company's employees ... shares while in possession of inside information.
    

1. 
   admitted buying
   
2. 
   admitted to buy
   
3. 
   to admit buying
   
4. 
   admit to buy
   

52. 
    . If a nation’s balance of payments continues in deficit it should take additional measures ... further withdrawals.
    

1. 
   to avoid to make
   
2. 
   to avoid making
   
3. 
   avoiding to make
   
4. 
   avoid making
   

52. 
    . To correct a deficit in the balance of payments a nation should consider ... imports which can be accomplished by imposing tariffs and quotas.
    

1. 
   reduce
   
2. 
   to reduce
   
3. 
   reducing
   
4. 
   having reduced
   

52. 
    . The statistics used in determining a deficit or surplus are inexact and the specialists handling them can’t help ... minor mistakes.
    

1. 
   to make
   
2. 
   making
   
3. 
   being made
   
4. 
   make
   

52. 
    . The marketing department is keen on increasing the proportion of sales on credit which is likely ... a profit, not a loss by the end of the fiscal year.
    

1. 
   to yielding
   
2. 
   yield
   
3. 
   yielding
   
4. 
   to yield
   

52. 
    . Developed market-economy countries have ... constraining inflation and in maintaining growth but unemployment levels are still high.
    

1. 
   succeeded in
   
2. 
   managed
   
3. 
   afforded
   
4. 
   forbid
   

52. 
    . Accounting for one-third of overseas earnings, invisible trade is worth ... to be of great significance to the economy.
    

1. 
   being considered
   
2. 
   being considering
   
3. 
   to be considering
   
4. 
   to be considered
   

52. 
    . Handling the statistics, used to determine a deficit or surplus, specialists are used … data which are sometimes far from being exact.
    

1. 
   to get
   
2. 
   to getting
   
3. 
   getting
   
4. 
   to be got
   

52. 
    . The company keeps innovating and improving and learns from the past because it can’t afford ... lazy and nonresponsive.
    

1. 
   be
   
2. 
   being
   
3. 
   been
   
4. 
   to be
   

52. 
    . Wholesale business is often done on credit and lenders risk ... to them if they stop trying to chase up bad debts.
    

1. 
   losing money owning
   
2. 
   loosing money owing
   
3. 
   loosing money owed
   
4. 
   to loose money owing
   

52. 
    . The new scheme ... a graded salary which means that you can actually count on earning a much higher basic salary.
    

1. 
   suggests paying
   
2. 
   suggests to pay
   
3. 
   suggest that you should pay
   
4. 
   to suggest paying
   

II

Read the text. For each question (1-10) choose the best word or word combination (A, B, C or D) to fill in each gap.

62.

Hostile takeovers can be traumatic for the target company, and they can also be risky for the other side, as …(1)… company may not be able to obtain certain relevant information about the target company. Companies are …(2)… on a daily basis. There are two types of sale agreements. In the first, a merger, two companies come together, …(3)… their assets, staff, facilities, and so forth. After a merger, the original companies cease to exist, and a new company arises instead. In a takeover, a company is purchased by another company. The …(4)… company owns all of the target company's assets. A "hostile takeover" allows …(5)… over a target company …(6)… management is …(7)… to a merger or takeover. A takeover is considered "hostile" if the target company's board …(8)… the offer, and if the bidder continues …(9)… it, or the bidder makes the offer directly after …(10)… its firm intention to make an offer.

	A	B	C	D
1	acquire	to acquire	the acquiring	acquired the
2	buy and sell	bought sold	bought and sold	being bought and sold
3	are blending	blending	having blend	blended
4	purchasing	purchase	purchase of	having purchased
5	to have taken	to take	a bidder taking	a bidder to take
6	which	whose	what	that
7	unwilling agree	unwill agreeing	unwilling agreeing	unwilling to agree
8	will reject	rejects	rejecting	will be rejecting
9	to pursue	pursue	pursuing of	the pursue
10	announce	announced	to announce	having announced

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