Read the text “PROFIT AND PROSPERITY” and translate it into Russian.

Vocabulary and Comprehension Exercises

7. Give Russian equivalents.

In addition to; total revenue; opportunity costs; implicit return on capital; unpaid management time; reported business profits; uninsurable risks; due to regulation; enterprise’s activity.

8. Give English equivalents.

Подсчитывать прибыль, предельные издержки, заработная плата, определяются как, важно отличать деловую прибыль от экономической прибыли, полностью компенсированный, особые привилегии, основная цель, в денежном выражении, нести издержки, стабильность работы фирмы.

9. Choose synonyms (antonyms) from the following list.

Wage, profit, essential, aim, per cent, chiefly, total, to differ, usually, salary, mainly, book-keeper, income, patent, goods, similarity, revenue, interest, objective, generally, difference, to distinguish, accountant, corporate, purpose, important, implicit, products.

10. Insert prepositions.

1. … addition to wages, interest and rent there is one more category … income called profits.

2. How do profits differ … interest and the returns … capital?

3. Profits are defined … the difference … total revenues and total costs.

4. Business profits are the residual income measured … accountants.

5. Business profits include an implicit return … the capital owned … firms.

6. Economic profits are the earnings … all costs are subtracted.

7. Profits may result … firms exercising monopoly power … their patents, … special privileges or due … regulation.

8. The main purpose … an enterprise … a market economy is to maximize profit.

9. The rule … profit maximization is in the following: marginal products … all factors … production … terms of value are equal … their prices.

11. Fill in the blanks with the Vocabulary on the text.

1. In addition to wages, … and …, economists often talk about a fourth category of income called … .

2. Profits are defined as the difference between total … and total … .

3. … profits, start with total revenues from … .

4. In analyzing profits it is important … business … from economic … .

5. Business profits are the residual …, equal to sales less costs, measured by … .

6. Business profits include an implicit … on the capital … by firms.

7. Reported business profits are chiefly corporate … .

8. The main … of an enterprise in a market economy is … profit.

9. Any enterprise bears … .

10. Stability of a firm is achieved if … costs are equal to … revenue.

Prompts: to calculate, owned, revenues, profits (3), interest, sales, marginal (2), earnings, rent, costs, expenses, income, purpose, to distinguish, to maximize, accountants, return.

12. Find in the text definitions of the following:

Profits; business profits; economic profits; reported business profits.

7. From the text write out the sources of profit.

8. Ask questions to the underlined words.

1. Profits are defined as the difference between total revenues and total costs.

2. Firms generally own many of their own non-labour factors of production – capital, natural resources and patents.

3. It is important to compare average and marginal costs to define steady position of an enterprise.

13. Answer the questions on the text. Use the following expressions to begin your answer:

Ø The text tells the readers …

Ø I suppose …

Ø I think …

Ø I am certain that …

Ø If I got it right …

Ø It seems to me …

Ø In my opinion …

1. What are the categories of income?

2. How are profits defined?

3. How may profits be distinguished?

4. What are business profits?

5. What are economic profits?

6. What are reported business profits?

7. What are the sources of profits?

8. What is the main purpose of an enterprise in a market economy?

9. What is the rule of profit maximization?

10. How is stability of a firm achieved?

11. What is the result of an enterprise’s activity?

14. Agree or disagree. Correct wrong statements.

1. There are four categories of income: wages, interest, rent and profits.

2. Profits are the same as interest and returns.

3. Profits are defined as the sum between total revenues and total costs.

4. Business profits and economic profits are two different types of profits.

5. Business profits are the earnings after all costs are paid/

6. Economic profits include an implicit return on the capital owned by firms.

7. Economically it is necessary to distinguish different categories of profits.

8. The main purpose of an enterprise in a market economy is to maximize profit.

9. The rule of profit maximization is in the following: marginal products of all factors of production in terms of value are equal to their prices.

10. Only some enterprises bear expenses.

11. Stability of a firm is achieved if average cost are larger than marginal costs.

12. The result of an enterprise’s activity is total revenue and profit.

15. Complete the following sentences according to the text.

1. In addition to wages, interest and rent, economists …

2. Profits are defined as …

3. In analyzing profits it is important to …

4. Business profits are …

5. Business profits include …

6. Economic profits are …

7. In large corporations, therefore, economic profits …

8. Reported business profits are …

9. A second source of profit is …

10. Profits may result from …

11. The main purpose of an enterprise …

12. The rule of profit maximization is …

13. Stability of a firm activity …

14. The result of an enterprise’s activity is …

16. Arrange sentences according to the text.

1. Economically we must distinguish these three different categories.

2. Economic profits are the earnings after all costs – both money and implicit or opportunity costs – are subtracted.

3. Profits are defined as the difference between total revenues and total costs.

4. Business profits are the residual income, equal to sales less costs, measured by accountants.

5. The main purpose of an enterprise in a market economy is to maximize profit.

6. In large corporations, therefore, economic profits would equal business profits less an implicit return on the capital owned by the firm along with any other costs (such as unpaid management time) not fully compensated at market prices.

7. Any enterprise bears expenses.

8. In analyzing profits it is important to distinguish business profits from economic profits.

9. The rule of profit maximization is in the following: marginal products of all factors of production in terms of value are equal to their prices or each resource is used until its marginal product in terms of money is equal to its price.

10. The result of an enterprise’s activity is total revenue and profit.

Make up a plan of the text.

18. Speak on profits.

LESSON 9. STOCK MARKETS

Grammar Presentation: Косвенная речь.

Grammar Revision: The Present Perfect Tense

STOCK MARKETS

Stock markets or Stock Exchange have developed to make the buying and selling of securities easier. The main function of a Stock Exchange is to provide services and market where investors can buy and sell bonds, shares and other securities.

The stock market is one of the most important sources for companies to raise money. This allows businesses to go public, or raise additional capital for expansion. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate.

History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. Therefore,central banks tend to keep an eye on the control and behavior of the stock market and, in general, on the smooth operation of financial system functions. Financial stability is the raison d'être of central banks.

Exchanges also act as the clearinghouse for each transaction, meaning that they collect and deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction.

The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment. In this way the financial system contributes to increased prosperity.

There are two types of security markets: primary which issue new securities and secondary where the securities are bought and sold.

Stock market business is worldwide. In every country there are several large Exchanges. London, Johannesburg, New York, Melbourne, Tokyo, Calcutta, Paris, Amsterdam and Brussels are famous centres of stock exchange activity. Besides there are several stock exchanges, over-the-counter market and a special market for options.

The London Stock exchange has been dealing in different securities for over 200 years. As a result of legal reforms implemented in 1986 and known as “Big Bang”, the Exchange has changed radically over recent years. The most fundamental change has been the more away from the traditional market floor to screen-based trading. Now stockbrockers deal in securities through telephones and computers which have linked London much more closely with the other major international financial centres.

Every transaction on the Stock Exchange begins when the client decides to buy or sell securities. Securities for clients are bought and sold by a stockbrocker. He acts on the clients’ order.

Participants in the stock market range from small individual stock investors to large hedge fund traders, who can be based anywhere. Their orders usually end up with a professional at a stock exchange, who executes the order.

Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known as open outcry. This type of auction is used in stock exchanges and commodity exchange where traders may enter "verbal" bids and offers simultaneously. The other type of exchange is a virtual kind, composed of a network of computers where trades are made electronically via traders at computer terminals.

Buyers at the Stock Exchange are called bulls and bears. Bulls are active buyers who believe that the prices are going to rise. Bears make profit when prices are going to fall.

Vocabulary on the text

“Big Bang” – «Биг Бэнг» («Большой взрыв» - реорганизация Лондонской фондовой биржи 27 октября 1986 г.)

bear, n – «медведь», спекулянт, играющий на понижение

bond, n – облигация

bull, n – «бык», спекулянт, играющий на повышение

implement, v, – осуществлять

insurance, n – страхование

issue, n – выпуск, эмиссия

issue, v, – выпускать, пускать в обращение

market floor, n – операционный зал фондовой биржи

market for options – рынок опционов (сделка с премией – право купить или продать ценные бумаги по установленному курсу)

on the order – по распоряжению

over-the-counter market – внебиржевой рынок ценных бумаг

primary market – первичный рынок (на котором реализуются только вновь выпущенные ценные бумаги)

screen-based trading – электронная торговля

secondary market – вторичный рынок (на котором обращаются ценные бумаги, ранее выпущенные в обращение)

security, n – (чаще) pl – ценные бумаги

share, n – акция

stock exchange, n – фондовая биржа

stockbrocker, n – биржевой брокер

Phonetic and lexical exercises