金融英语Lecture 5 Stock.doc

StockStock Market：A stock market(or equity market): a private or public market for the trading of company stock and derivatives of company stock at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.Stock Market Indexes： Stock Market Indexes: indicators to measure the performance of the stock market.1. Dow Jones Average（道琼斯平均数）2. Standard & Poors 500 Composite（标准普尔500指数）3. NYSE Composite （纽约证交所综合指数）4. NASDAQ Composite（那斯达克综合指数）5. Nikkei 225 & Nikkei 300（日经指数）6. FTSE (Financial Times of London)（伦敦金融时报指数）7. Heng seng Indexes（恒生指数）What is stock? Stock: an instrument that signifies an ownership position (called equity) in a corporation, and represents a claim on its proportional share in the corporations assets and profits. PS: Ownership in the company is determined by the number of shares a person owns divided by the total number of shares outstanding. For example, if a company has 1000 shares of stock outstanding and a person owns 50 of them, then he/she owns 5% of the company. Why does a company want to share its money with other people?1. First, the company may be doing very well. It may need money to expand. By selling shares of stock, the company can get the money it needs. 该公司可能目前经营情况良好，需要资金扩大业务，通过出售股票，该公司得到所需资金。2. Sometimes, it is advantageous for the company to go public for tax reasons. Because of the tax laws, the company may save money on taxes by selling shares on the stock exchange. 有时由于税收原因，“发行股票”对公司会非常有利，因为税法规定公司在证券交易所出售股票可以减免税收。3. Sometimes, a company may owe a lot of money to banks. By selling shares of stock, it may be able to pay the banks. 还有的时候，公司拖欠银行巨款，可以通过出售股票获得资金偿还银行款项。4. In general, all companies that sell shares of stock on the stock exchange need to raise money for one reason or another. 一般而言，无论出于什么原因，所有在证券交易所出售股票的公司都是为了聚集资金。 Types of Stock1. Common Stock： A share of common stock in a firm represents an ownership interest in that firm. Common stockholders vote, receive dividends, and hope that the price of their stock will rise.2. Preferred Stock： Preferred stock, also called preferred shares, preference shares, is a special equity security that has properties of both an equity and a debt instrument and is generally considered a hybrid instrument. Preferred stock are senior to common stock, but are subordinate to bonds in terms of claim or rights to their share of the assets of the company.Differences between Common and Preferred1. Because preferred stockholders receive a fixed dividend that never changes, a share of preferred stock is as much like a bond as it is like common stock.2. Because the dividend does not change, the price of preferred stock is relatively stable.3. Preferred stockholders do not usually vote unless the firm has failed to pay the promised dividend.4. Preferred stockholders hold a claim on assets that has priority over the claims of common shareholders but after that of creditors such bondholders.Other Types1. A Share：A shares are specialized shares of the RMB currency that are purchased and traded on the Shanghai and Shenzhen stock exchanges.2. B Share：B shares are owned by foreigners who cannot purchase A-shares due to Chinese government restrictions.3. H share：refers to the shares of companies incorporated in mainland China that are traded on the Hong Kong Stock Exchange. 4. N share：refers to Chinese companies listed on the NYSE, NASDAQ, or the American Stock Exchange. The term stands for New York. 5. S share：S chips, also known as S-Shares, is a term that refers to Chinese companies listed on the Singapore Exchange. 5. Blue chip ：according to the New York Stock Exchange, a blue chip is stock in a corporation with a national reputation for quality, reliability and the ability to operate profitably in good times and bad.6. Red chips：stocks are the stocks of mainland China companies incorporated outside mainland China and listed in Hong Kong. The actual business is based in mainland China and controlled, either directly or indirectly, by the central, provincial or municipal governments of the Peoples Republic of China. Rights of Stockholder;1. Dividend Allocation：This right usually get paid with dividends. How much of the dividends will be decided by the proportion of shares they have and the total profit the company has.2. Management Participation：Stockholders are entitled to consult the constitution, cahier of stockholder conference and financial reports. Also they can suggest or question the management about operational policy. By voting in a stockholder conference, every vital decision will be decided by them.3. Residual Assets Allocation： If a company goes into bankruptcy, after cleaning all the external debts, stockholders are entitled to allocate the residual assets. 4. Preemption of New Stocks：When a company issues additional stocks, all of or most of new stocks must be firstly sold to existing stockholders by their share proportion. The purpose by doing that is to protect old stockholders interest and retain the current share proportion. The price of new stocks which are sold to old stockholders is much lower than the price of new stocks which are sold to external investors. Old stockholders could enjoy the price spread either buying new stocks or selling the preemption to external investors.How does investor earn money?1. Investors who buy shares of stock in a company may make money in two ways: They may begin to make money right away. 购买公司股票的投资者可以用两种方式赚到钱，并且可以立即赚到钱。2. Suppose that a person invests in a company, and the company makes money. The company shares this money with the investor. This money that is shared is called a dividend. Dividends are usually sent to investors once every three months while they own the stock. 假设：某人向某公司投资，而该公司盈利了，该公司则与这位投资者分享利润，分到的钱称为股利。通常，股利每3个月一次分派给持股的投资者。3. A second way that investors may make money is to sell the stock at a higher price than they paid when they bought it. 第二种办法是投资者以高出买入价的价格售出股票： 4. The price of each share of stock goes up if the company does very well. It may also go up for many other reasons. But when it does go up, a person may sell it and make a profit.如果该公司经营状况良好；股票价格就会上涨， 股价也会因其他诸多原因上升。当股票价格确实上涨时，投资者卖出股票就可获得利润。Three Types of Efficiency1. Weak Form：Security prices reflect all information found in past prices and volume.2. Semi-Strong Form：Security prices reflect all publicly available information.3. Strong Form：Security prices reflect all informationpublic and private.Example 1：Air China Wins Nod for New Stock Issue (Xinhua News Agency March 31, 2006) 1. Shareholders of Air China have approved the carriers plan to offer up to US$2.7 billion in a domestic stock listing that would provide the cash for a fleet of new Airbus and Boeing jets. 2. The proceeds from the stock issue will be used to buy 20 Airbus A330 aircraft, 15 Boeing B787s and 10 Boeing 737s, the Hong Kong and London-listed national flag carrier said in a statement Thursday. 3. Air China won approval last month from regulators for an initial public offering (IPO) on the Shanghai Stock Exchange to finance the purchase of the aircraft. 4. The money will also be spent on improving facilities at Air Chinas Beijing base. 5. Li Jiaxiang, chairman of Air China, said last month the company expected to pay no more than US$5.68 billion for all of the planes, while the development of the Beijing facility would cost about 600 million yuan (US$74 million). 6. No date for the IPO was provided but Air China calculates that the nominal value of the new shares will be one yuan, with the exact price to be determined by market conditions at the time of the sale. 7. Despite the nod from shareholders, any stock sale would have to wait until the government re-initiated public offerings, which have been suspended on the two stock exchanges since April last year as a liquidity-building measure. Example 2 : B, Inc. Announces Initial Public Offering 08/05/051. New York, August 5, 2005 - Today, B, Inc. (NASDAQ: BIDU), the leading Chinese language Internet search provider, announced its initial public offering of 4,040,402 American depositary shares, or ADSs. Each ADS represents one Class A ordinary share. The ADSs are evidenced by American depository receipts, or ADRs. The ADSs began trading today at US$27 per ADS on the NASDAQ National Market under the symbol BIDU.2. The offering consists o