Financial markets: Exercises

10.1 Write these words in the spaces below: bonds, 10.5 Match the names of the different stock indices to
equities, money market instruments, securiti es, shares, their descriptions.
stocks. Note that three words are near synonyms.
CAC DAX Dow FT. E Nasdaq S&P
The generał term 1 securities____ refers to shares
2 _ _ _ (or equities or 1 index of 500 large US companies _ _
) stock+ 3 + 2 index of 4,000 US companies, many of them in the
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technology area, and some quIte small
3 index of 30 large, well-established US companies, chosen
10.2 Fili in the missing letters.
by the editors of the Wall Street Journal
1 lnstead of investing in the shares of just one company, you 4 index of 30 large German companies
can invest in a m I fund wh1ch holds a basket of
5 index of 40 large French companies_ _ _
stocks
6 index of 100 large UK companies __
2 Regular income can be provided by the di ds of
shares that you own. 10.6 Rank these financial instruments according to
3 The issuer of a bond pays back the orig1nal amount (= the their probable risk: from 1 (low risk, low return, low
pr _ _ al) to the bondholder over a fixed period of volatility} to 4 (high risk, high potentia! return, high
time (= the t rn of the loan) volatility}.
4 The most traded bond in the world is the 30-year US a) an investment-grade corporate bond _J
government T-bond. The letter T stands for b) a UK government bond LJ
'tr y'. c) a fund investing in small biotech com anies L
10.3 Make collocations using an item from each box. d) shares in an individual company listed on the Dow (eg
Then use the collocations to complete the sentences General Electric) [_
below.
10.7 Choose which of these investment objectives is
capital fix d junk risk � most suitable for the investors described below:
income, growth, income + growth.
bond � growth management rate 1 a highly-paid young professional, without a family, who
A fund that exactly follows the movement of an index is wants to save long-term for a pension ___
called a __ tracker fund 2 a newly retired person who wants to supplement their
2 A fund can provide regular income or _____ pension _______
3 sorneone in their fifties who has Just rece1ved money from
3 A bond is a financial instrument where a borrower raises an inheritance - they want to save for their pension, but
capital and then repays the loan at a __ also want help paying for their children's university fees
of interest over a fixed term.
4 A high-risk corporate bond can be called a _____ 10.8 Match these financial institutions with their
descriptions below: endowment, insurance company,
5 'Hedging' is a term associated with _ investment bank, mutual fund, pension fund.
. lt means having a second position in a
1 used by large companies to issue bonds, buy and sell
market, so that if the market moves against your first
currencies, rnanage their portfolio of shares in other
position your losses are minimized
companies, and advise on any potential merger or
10.4 Divide each set of words in italics into two, acquisition __
according to their meaning. 2 used to save money during your working life and then
have an income during retirement __ _
a booming I bear I bull I depressed I fa/ling I rising I
strong I weak market 3 used by private investors to hold a basket of stocks
2 to acquire I buy I have I hold I own I purchase shares
4 used to protect yourself against risks (money Is paid out if
sornething bad happens) _______
5 used to generate an income for non-commercial purposes,
in particular to run a university or provide for charity (the
'Bill and Melinda Gates Foundation' has one)

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