Task 1. Report the dialogue. Use the following reporting verbs:

to acknowledge that	to point out (that)	to guess if/whether
to surmise that	to explain that	to try to find out if/whether
to certify that	to confirm that	to add

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Task 2. Work with a partner. Look at the dialogue and discuss what A. and B. say about the following subjects.

1. 
   the ways to buy into the company
   
2. 
   difference between ordinary and preferred stocks
   
3. 
   difference between stocks and bonds
   
4. 
   difference between securities and derivatives
   

Task 3. Say it in English:

1. 
   цена покупателя
   
2. 
   купить долю компании
   
3. 
   опцион покупателя
   
4. 
   прирост капитала
   
5. 
   выплата дивидендов
   
6. 
   обыкновенная акция
   
7. 
   нарицательная цена, номинальная стоимость
   
8. 
   обанкротиться
   
9. 
   первоначальный платеж /взнос
   
10. 
    котируемая компания (акции которой зарегистрированы на фондовой бирже)
    
11. 
    запрашиваемая цена, цена продавца, цена предложения
    
12. 
    дополнительные блага, привилегии, льготы
    
13. 
    привилегированные акции
    
14. 
    обусловленное уплатой премии право купить или продать ценные бумаги (товар) по установленному курсу и в определенное время
    
15. 
    опцион продавца (на продажу)
    
16. 
    назначать цену; устанавливать расценки
    
17. 
    ценные бумаги
    
18. 
    привилегированное право служащего компании может включать право на покупку акции компании по сниженной или фиксированной цене
    
19. 
    разница между ценами покупки и продажи ценных бумаг,
    
20. 
    фондовая биржа
    
21. 
    брит. владелец государственных ценных бумаг; амер. акционер; пайщик, владелец акции
    
22. 
    преимущественное право акционера на подписку на вновь эмитируемые акции компании, выпускаемые с целью увеличения ее капитала
    
23. 
    справиться, одолеть, решительно взяться за решение проблемы
    
24. 
    приносить прибыль
    
25. 
    попасть в затруднительное положение
    
26. 
    выпускать (эмитировать) акции
    
27. 
    заплатить текущую (действующую) цену
    
28. 
    продать документ, дающий право на долю в прибылях
    
29. 
    торгуемый финансовый инструмент
    
30. 
    свидетельство, дающее своему держателю право купить акции /облигации компании по определенной цене в течение определенного периода
    

Task 4. Use Supporting Materials to continue the dialogue about securities, financial derivatives and hedging⁴. Search for keywords NYSE, AMEX, treasury bonds, gilt-edged securities, blue-chips, FTSE, LIFFE, futures contracts,

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forward contracts, LIBOR, warrant, subscription right in the Internet to find further information about one of these items. Make use of helpful phrases from the dialogue above.

Supporting Materials

Although it sounds like it might be the hobby of your neighbor obsessed with his topiary garden⁵ full of tall bushes shaped like giraffes and dinosaurs, hedging is a practice every investor should know about - there is no arguing that portfolio protection is often just as important as portfolio appreciation.

The best way to understand hedging is to think of it as insurance. Hedging occurs almost everywhere, and we see it every day. For example, if you buy house insurance, you are hedging yourself against fires, break-ins, or other unforeseen disasters.

Portfolio managers, individual investors, and corporations use hedging techniques to reduce their exposure to various risks. In financial markets, however, hedging becomes more complicated than simply paying an insurance company a fee every year.

Hedging against investment risk means strategically using instruments in the market to offset the risk of any adverse price movements. In other words, investors hedge one investment by making another. Technically, to hedge you would invest in two securities with negative correlations. Of course, nothing in this world is free, so you still have to pay for this type of "insurance" in one form or another.

For the most part, hedging techniques involve using complicated financial instruments known as derivatives, the most common of which are options, futures and warrants, whose value derives from and is dependent on the value of an underlying asset⁶.

With these instruments you can develop trading strategies where a loss in one investment is offset by a gain in a derivative. Traders can use derivatives to hedge or mitigate risk by entering into a derivative contract whose value moves in the opposite direction to their underlying position and cancels part or all of it out.

We've been comparing hedging versus insurance, but we should emphasize that insurance is far more precise than hedging. With insurance, you are completely compensated for your loss (usually minus a deductible⁷).

Hedging a portfolio isn't a perfect science and things can go wrong. Although risk managers are always aiming for "the perfect hedge," it is difficult to achieve in practice.

Because risk is an essential element of investing, you should gain a fairly good awareness of how investors and companies work to protect themselves.

Many big companies and investment funds will hedge in some form. Oil companies, for example, might hedge against the price of oil while an international mutual fund might hedge against fluctuations in foreign-exchange rates.

There are many specific financial vehicles to accomplish hedging, including insurance policies, forward contracts, swaps, options, many types of over-the-counter and derivative products, and perhaps most popularly, futures contracts.


DIALOGUE 2

Read and translate the following dialogue:

Mergers, Takeovers & Acquisitions

A.	Listen, if shareholders decide on a company’s policy by voting, then whoever owns the majority of shares in a company can take decisions.
B.	Let me see … . Of course, a threat that the company can be taken over keeps the managements on their toes. By the way, takeover battles are often fought through the pages of the press.
A.	You mean “take-over” bids, don’t you?
B.	Yes, an attempt to get control of a public limited company may be carried out by purchasing, or offering to purchase, the whole or part of the ordinary shares. And the price is usually well in excess of their quoted price.
A.	Is takeover the only possible situation?
B.	No, of course not. I’m sure you have heard the term M&As.
A.	Mergers and acquisitions?
B.	Yes. We're not going to get into the nitty-gritty8 of describing the details, but for now just keep in mind this may be a merger (two companies join together to form a new one), a takeover or acquisition (one company buys another one). The latter happens when a company offers to buy all the shareholders’ shares at a certain price (higher than the market price) during a limited period of time. This is called a takeover bid.
A.	And if a company tries to buy as many shares as possible on the stock market, hoping to gain a majority?
B.	This is called a raid.
A.	Oh, I know that this practice has been under attack in the press, and some bids have been nothing more than attempts to make a great deal of money at the expense of the shareholders.
B.	But, usually, this is only possible when the company’s assets have been undervalued by the directors who have allowed them to be shown in the balance sheet at a figure that is far below their true value.
A.	Does gaining control of a company always have a negative meaning? If, for example, a company’s Board of Directors agrees to a takeover, and the shareholders agree to sell?
B.	Then it becomes a friendly takeover. On the contrary, attempts to acquire companies in the face of opposition from existing management are called hostile takeovers. The number of hostile takeovers relative to friendly takeovers is small: however, drama surrounds them, and they usually capture the interest of the press and the public.
A.	Aren’t hostile takeovers a mixed blessing?
B.	It’s a complicated question. Opponents of hostile takeovers, including the management of the target company, claim these takeovers are not in the long-run interests of the stakeholders. The opponents claim that the “raiders” will sell off assets to pay for the acquisition and severely cut back on research and development expenditures to conserve cash and to generate immediate increases in reported earnings.
A.	I believe companies have various ways of defending themselves against a hostile bid. For instance, they can try to find another company that they prefer to be bought by.
B.	May be, may be… . Sometimes the companies choose issuing new shares at a big discount, which reduces the holding of the company attempting the takeover, and makes the takeover much more costly.
A.	Is it legal?
B.	It is. They have the right to do so. You will agree that it is worse when a proxy fight9 occurs.
A.	Wait …. . Proxy is the authority to represent someone else, especially in voting. If you do something by proxy, you arrange for someone else to do it for you.
B.	Right in every detail. This is the situation when a group of outsiders try to gain control of a company by persuading existing shareholders to vote into office a new team of directors.
A.	I guess, proxy fights are expensive. I know that illegal insider trading is also part and parcel of the process.
B.	Not all trading on information is illegal insider trading. For example, while dining at a restaurant, you hear the CEO10 of Firm A at the next table telling the CFO11 that the company's profits will be higher than expected, and then you buy the stock, you are not guilty of insider trading unless there was some closer connection between you, the company, or the company officers.
A.	But I guess, illegal insider trading would occur if the CEO of Company A learned (prior to a public announcement) that his company will be taken over, and bought its shares knowing that the share price would likely rise. But that will be the subject of another discussion.

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Task 1. Report the dialogue. Use the following reporting verbs:

to conclude	to indicate that
to suppose that to remark to support the idea that to answer in the positive/negative	to mean to assure that to pause to doubt
to try to find out	to explain

Task 2. Work with a partner. Look at the dialogue and discuss what A. and B. say about the following subjects.

1. 
   takeover bids
   
2. 
   friendly and hostile takeovers
   
3. 
   acquisitions
   
4. 
   mergers
   
5. 
   situations when the company’s assets are shown in the balance sheet at a figure that is different from their true value
   
6. 
   proxy fights
   
7. 
   raids and raiders
   

Task 3. Say it in English:

1. 
   "налет" (осуществляется в виде массированной скупки акций компании-жертвы с целью получить контрольный пакет ее акций)
   
2. 
   приобретение, аквизиция (приобретение контрольного пакета акций компании)
   
3. 
   борьба за контроль над компанией с использованием доверенностей на голосование на общем собрании
   
4. 
   враждебное поглощение (попытка получить контроль над компанией путем скупки ее акций на рынке против воли руководства или ведущих акционеров этой компании)
   
5. 
   заинтересованная сторона (любое лицо или группа лиц, имеющих интерес в компании: акционеры, работники, пользователи отчетности, поставщики, клиенты, кредиторы, государство, общественность и т. д.)
   
6. 
   назначенная цена; объявленная цена; прокотированная цена
   
7. 
   покупка (акций) осведомленным лицом; незаконные операции с ценными бумагами на основе внутренней информации о деятельности компании-эмитента
   
8. 
   предложение о поглощении (предложение о покупке контрольного пакета акций, сделанное акционерам поглощаемой компании другой компанией) /публичная офферта
   
9. 
   слияние или объединение компаний
   
10. 
    компания-мишень
    
11. 
    "фирма-налетчик", компания, потенциально способная поглотить другие компании.
    
12. 
    проголосовать за привлечение к руководству компанией нового состава директоров
    

Task 4. Use Supporting Materials to continue the talk about M & As. Surf the Internet for key words IPO (Initial Public Offering), vertical-backward merger, vertical-forward merger, buyout, insider trading to find further information. Make use of helpful phrases from the dialogue above.

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Supporting Materials

Insider trading is the trading of a corporation's stock or other securities (e.g. bonds or stock options) by individuals with potential access to non-public information about the company. In most countries, trading by corporate insiders such as officers, key employees, directors, and large shareholders may be legal, if this trading is done in a way that does not take advantage of non-public information. However, the term is frequently used to refer to a practice in which an insider or a related party trades based on material non-public information obtained during the performance of the insider's duties at the corporation, or otherwise in breach of a fiduciary¹² or other relationship of trust and confidence or where the non-public information was misappropriated from the company.

While "legal" insider trading cannot be based on material non-public information, some investors believe corporate insiders nonetheless may have better insights into the health of a corporation (broadly speaking) and that their trades otherwise convey important information (e.g., about the pending retirement of an important officer selling shares, greater commitment to the corporation by officers purchasing shares, etc.)

Illegal insider trading is believed to raise the cost of capital for securities issuers, thus decreasing overall economic growth. Insider trading cases may be cases against:

• 
  Corporate officers, directors, and employees who traded the corporation's securities after learning of significant, confidential corporate developments;
  
• 
  Friends, business associates, family members, and other "tippees" of such officers, directors, and employees, who traded the securities after receiving such information;
  
• 
  Employees of law, banking, brokerage and printing firms who were given such information to provide services to the corporation whose securities they traded;
  
• 
  Government employees who learned of such information because of their employment by the government;
  
• 
  Other persons who misappropriated, and took advantage of, confidential information from their employers.
  

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