Lesson No 7 Stock Market Terminology (Second Part)

LESSON No 7
STOCK MARKET TERMINOLOGY (Second Part)

1. In the following conversation between two work colleagues, Peter explains to Juan
how the stock market works and the meaning of some different words and terms
used in it. Focus on the words/phrases in BOLD and think about their meaning.
Juan:
'I'm a little worried about investing in the stock market. It isn't doing well at the moment.
Do you think I'll lose money if I buy shares at the moment?'
Peter:
'You're right. The overall or average value of stocks and shares is falling at the moment.
People who work in the stock market call this a bear market, when overall share prices are
falling. When overall share prices are increasing, they call it a bull market.'
Juan:
'So how would I know if the stock market is a bear market or bull market?'
Peter:
'People who buy and sell stocks and shares look at share indices to see how well the stock
market in general is performing. A share index, measures the average performance of the
share prices of a group of different companies. A share index will tell if the average share
price of all the companies in that group is increasing or decreasing. For example, one of the
most famous share indices is called the Dow Jones 30 index. This share index measures the
average combined performance of the share prices of the 30 largest public limited
companies in America. In the last 6 months, the value of the Dow Jones 30 index has fallen
from 13,160 to 12,101. But share indices only measure the average performance. So
although the majority of companies' share prices are falling, there will be some companies
whose share prices are actually increasing. So even in a bear market where average share
prices are falling, if you buy shares in the right company, you can still make money.'
Juan:
'What happens if I buy shares in a company and it files for bankruptcy? It doesn't have
enough money to pay it's debts and to continuing operating?'
Peter:
'Once a company has filed for bankruptcy, all trading (buying and selling) of its shares is
stopped/suspended on the stock exchange. If the company has to close down, then you'll
1
probably lose all the money you spent on the company's shares. But sometimes, another
company will take it over, which means to buy the company. If that happens, then you'll
receive some money for your shares.'
Juan:
'Is a takeover the same thing as a merger?'
Peter:
'They are similar. They are where two companies become one. But with a takeover, one
company buys another company. With a merger, two companies combine. Normally, with
a merger the two companies are of a similar size. With a takeover, it's normally a big
company buying a smaller company.'
Juan:
'So I need to do some research on companies before I decide which shares to buy. With the
stock market performing so badly at the moment, it seems like a big risk to invest money in
stocks and shares at the moment.'
Peter:
'Not necessarily. As I said before, although most stock/share indices are showing that on
average the share prices of companies are falling, it is only an average and some
companies' share prices are actually increasing. But if you want to reduce the risk of losing
money, you could buy preferred stocks or shares in a company.'
Juan:
'What does preferred stocks mean?'
Peter:
'There are two types of stocks/shares you can buy in a company. The first type is called a
preferred stock/share. With this type, the owner of them is paid a fixed dividend (extra
payment) by the company. So you're guaranteed a dividend unless the company has very
bad financial problems. The second type is called a common stock, which is also called an
ordinary share. With this type, the dividend you receive can change depending on the
company's performance or how much of the profits that the management of a company
wants to keep and not give in dividends. The amount of profit which a company keeps and
doesn't give to its shareholders as a dividend, is called retained earnings.'
Juan:
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'Apart from buying preferred stock, are there any other ways to reduce the risk of losing
your money?'
Peter:
'Choose shares in companies which are stable and buy shares in many different companies.
Your stock portfolio, which means what shares or stock you own, should be a mixture of
shares from different companies in different sectors and industries. This will spread you
risk, so you won't lose all your money if one of the companies you have shares in goes
bankrupt. Also, after you have bought shares in a company, you should decide at what price
you will sell or unload the shares if their price changes. This is called an exit point. So, if
you bought shares in a company for $20, you can set an exit point at $15, which means you
will sell your shares in the company if they reach that price. Exit points are used to
minimise loss.'
2. Find the meaning of the bolds words doing a list of them.

BEAR MARKET (Mercado Bajista): Is when a market experiences prolonged price
declines
BULL MARKET (Mercado Altista): Is the condition of a financial market in which
prices are rising or are expected to rise.
COMMON STOCK (acciones ordinarias ) : Is a security that represents ownership in a
corporation. Holders of common stock elect the board of directors and vote on corporate
policies
EXIT POINT (puntos de salida) : Is the price at which an investor or trader closes a
position. The exit point may be determined in advance based on a trader's or investor's
strategy.
FILES FOR BANKRUPTCY (Declararse en quiebra): Is the declaration that happens
when a person or an organization goes insolvency.
MERGER (Fusión) : Is an agreement that unites two existing companies into one new
company.
PREFERRED STOCKS (Acciones preferentes): Are equity, but in many ways, they are
hybrid assets that lie between stock and bonds
RETAINED EARNINGS (Ganancias retenidas) : The Common Stock retained
immediately following the Distribution
SHARE INDEX (índice de acciones) : Is an index that measures a stock market, or a
subset of the stock market, that helps investors compare current price levels with past prices
to calculate market performance.
STOCK PORTFOLIO (Cartera de acciones) : Refers to the compilation of individual
stocks that you own. Complete investment portfolios include assets from various classes,
such as stocks, bonds and cash reserves
TAKE IT OVER (Otra empresa se hace cargo) : One company assume control of other
3
HOME ACTIVITY
3. Write your opinion throughout a mail to a friend telling him/her about the stock
market. at least 15 lines- or make a video of 30 seconds.
For: Paula Delgadillo

Subject: Experience in stock market
Hi Paula, i hope you are well curiously today I remembered that some time ago you told
me that you were interested in the stock market as you well know I have been involved in
this market for years and lately I've had several problems regarding and lately I've had
several problems regarding bear and bull market and retained earnings ,Due to the fact that
the markets with the current situation have entered into crisis, which is reflected in the
values of currencies or stocks in the portfolios I have been on the verge of withdrawing my
investments in this market throughout the global situation I really think that this is not the
time for people to invest since it is not known when this will end, the retained earnings they
had were decreased to 0 due to the variation in the currencies.For a time, the profits I made
by investing in the portfolio were very beneficial for me and my family group, but the virus
and the oil problem of the last few months completely collapsed the portfolios. I can not tell
you that this market does not generate profits because the time in which I lived from it was
long, but at this moment it is better to think about other matters and wait for the stock
portfolio to improve. I hope your family is well and this situation can be overcome quickly
and calmly.
Greetings and hugs
LESSON No 8-SALES
1 Choose the correct word or expression (A, B or C) to complete each sentence.
1. Orders are written down on an order form
a. authorised dealer b. order form c. assessment
2. An inclusive price includes VAT.
a. inclusive b. exclusive c. expiry
3. A price freeze is a period when prices cannot be increased.
a. price freeze b. hold-up c. price-fixing
4. A mark down is a reduction in price.
a. mark up b. profit margin c. mark down
5. We have just received a demand for a quotation.
4
a. requirement b. demand c. request
6. After an initial deposit, you pay instalments
a. remittances b. instalments c. shipments
7. A payment which is overdue is one which is late
a. early b. on time c. late
8. A bonded warehouse is one that is controlled by Customs.
a. warehouse b. trade fair c. bonded warehouse
9. If you have out of stock goods, you don't have any left.
a. out of stock b. overcharged c. run out of
10. A warehouse is where a company displays its products.
a. retail outlet b. showroom c. warehouse.
3 Use the Spanish translations to find the ten horizontal words in the crossword, and
translate the vertical word.
l. factura 2. venta por correspondencia 3. Depósito 4 licencia de exportación 5, retraso 6.

exigir 7. Pago 8.
demanda de
1 i n v o i c e
m a i l o r d e r
d e p o s i t
e x p o r t l i c e n c e
d e l a y
6 d e m a n d
r e m i t t a n c e
8 r e q u e s t
p a y m e n t i n f o r c e
10 q u o t a t i o n
información 9. precios en vigor 10. Cotización.
HOME ACTIVITY
3. Make a video selling a product. 1 minute at least.

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LESSON No 7

STOCK MARKET TERMINOLOGY (Second Part)

'Is a takeover the same thing as a merger?'

'What does preferred stocks mean?'

2. Find the meaning of the bolds words doing a list of them.

For: Paula Delgadillo

1. Orders are written down on an order form

a. authorised dealer b. order form c. assessment

2. An inclusive price includes VAT.

a. inclusive b. exclusive c. expiry

3. A price freeze is a period when prices cannot be increased.

a. price freeze b. hold-up c. price-fixing

4. A mark down is a reduction in price.

a. mark up b. profit margin c. mark down

5. We have just received a demand for a quotation.

6. After an initial deposit, you pay instalments

a. remittances b. instalments c. shipments

7. A payment which is overdue is one which is late

a. early b. on time c. late

8. A bonded warehouse is one that is controlled by Customs.

a. warehouse b. trade fair c. bonded warehouse

a. out of stock b. overcharged c. run out of

10. A warehouse is where a company displays its products.

a. retail outlet b. showroom c. warehouse.

l. factura 2. venta por correspondencia 3. Depósito 4 licencia de exportación 5, retraso 6.

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