English For The Financial Sector
English For The Financial Sector
English For The Financial Sector
1 financial industry
To learn about: the organization of the financial industry; key vocabulary
of banking products and services
To learn how to: express permission, necessity and prohibition
To practise: asking and talking about terms and conditions of bank
accounts
Lead in
• What services does your bank offer? Which of them do you use?
• If you are still studying, what area of finance do you want to work in, and why?
• If you are already working, what area of finance do you work in, and why? Would you like
to change your field of activity in the future, and why?
• Has the institution or company you work for changed significantly in recent years? In
what ways?
Vocabulary 1
You are going to listen to Peter Sinclair, the former director of the Centre for Central Banking
Studies at the Bank of England, talking about the financial industry. Before you listen, check
your understanding of banking vocabulary by completing each sentence with a word from the
box.
.
Complete the table.
.
making loans issuing shares or bonds
arranging mergers arranging mortgages
providing pensions arranging or fighting takeover bids
giving financial advice to companies offering life insurance
receiving deposits
Retail banks
Building societies
Insurance companies
Investment banks
\
Peter Sinclair
makes a
comparison
between the City
of London and the
Wimbledon tennis
tournament.
Discussion
Has your bank changed in any of the ways described by Peter Sinclair?
2 Now look again at the words above and put a stress mark in front of the stressed syllable
in each word.
Example: C.O"11. 'O£o~e.mte.s
3 Look at the following statements. Are the~ true or false, according to the article?
1 The Glass-Steagall Act was the result of the behaviour of investment banks.
2 The British and American financial markets are now cornpletelq unregulated.
3 German and Swiss banks did all t~pes of banking business at a time when American and
British ones were not allowed to.
4 During the 20th centurq, manu financial markets first became more regulated, and then
less regulated.
5 Large American banks no longer do the kind of things that led to the separation of
investment and commercial banking in the 1930s.
Discussion
• Which are the largest banks (or financial conglomerates) in ~our countrq?
• Towhat extent is banking regulated in ~our countru? What are the advantages and
disadvantages of this?
I I
Present Past
can / can't was / were (not) able to ORcould / couldn't
must hadto
mustn't was / were not allowed to ORcouldn't
is / are (not) allowed to was / were (not) allowed to ORcould / couldn't
has / have to had to
doesn't / don't have to didn't have to
needto needed to
needn't / don't need to didn't need to
3 Complete each sentence using a verb. Look back at the Reading and Listening exercises to find the
information you need.
Practice
Acustomer calls a bank to ask about the terms and conditions of a bank account. Your
teacher will give you a role to prepare. Use the phrases for permission, necessity and
prohibition from the Language focus above.
Work in pairs. Student A should look at page 115, and Student B at page 123.
Discussion
-iow do the bank accounts in the Practice compare with your own? Talk about the rules for
~our account using the language from the Language focus above.
The organization oj the financial industry Unit 1 13
3 Retail banking
To learn about: developments in retail banking, banking products and
-services, ke~ vocabularq of retail banking
To learn how to: express likelihood and probabilitq
To practise: talking about the future of retail banking
Lead in
• What services would ~ou expect a retail or commercial bank to offer?
• What is the difference between retail banking and investment banking?
• How do commercial banks make rnoneu?
1 commercial bankers ... in 1934, American lawmakers he meant no harm. He was only doing
2 investment bankers. had stripped investment banking what he was told to do by someone
out from commercial banking. higher up in an endless chain of
Investment bankers now underwrote command .... He had a wife, a station
securities, such as stocks and bonds. wagon, 2.2 children, and a dog that
Commercial bankers, like Citibank, brought him his slippers when he
took deposits and made loans .... returned home from work at six ....
After Glass-Steagall most people An investment banker was a breed
became investment bankers. ow I apart, a member of a master race of
I didn't actually know any commercial deal makers. He possessed vast, almost
bankers, but a commercial banker unimaginable, talent and ambition. If
was reputed to be just an ordinary he had a dog it snarled. He had two
American businessman with ordinary little red sports cars yet wanted four.
American ambitions. He lent a few To get them, he was, for a man in a suit,
hundred million dollars each day to surprisingly willing to cause trouble.
South American countries. But really,
3 'He lent a few hundred million dollars each da~ to South American countries.' This is an exaggeration.
What other exaggerations or jokes can you find in the text?
Discussion
Which area would ~ou preferto work in - commercial banking or investment banking? Wh~?
I t 1 Retait banking
Vocabulary 1
You are going to listen to Peter Sinclair, who we heard in Unit 1, talking about retail banking .
Before • you listen, check your understanding of the words and phrases in the box by matching
them with their definitions (1-7).
2 Listen again and look at the following statements. Are they true or false, according to Peter
Sinclair? C§J)
1 In the past, people used to keep more money in cash.
2 Because of retail banks, national income is increasing in developing countries.
3 Some people think that investment banking is more exciting than retail banking.
4 Investment banking is more profitable than retail banking.
5 There is more risk involved in investment banking than retail banking.
Discussion
• How has commercial or retail banking changed since the 1980s?
• How do you think it will develop in the next few years?
Vocabulary 2
1 Read the web page below advertising online banking, and complete the sentences overleaf.
Retail banking , J 19
1 A is an instruction to a bank to pay varying sums of money
to another account on particular dates.
2 A • pays interest but usually has limits as to how much
money can be withdrawn during a certain period of time.
3 A lists the recent debits and credits in a bank account.
4 An is an arrangement allowing someone to borrow money by withdrawing
more than they have deposited in their account, up to a certain limit.
S A pays no or little interest, but usually allows the holder to
withdraw cash or pay cheques without any restrictions.
6 A is an amount of money borrowed from a bank for a fixed period.
7 A is the amount of money in a bank account at a particulartime.
8 A is an instruction to a bank to pay regular, fixed sums of
money to another account.
2 Use a word or phrase from each box to make common word combinations. You can use
some words more than once.
using the telephone and 8 per cent game in their efforts to revolutionise
1 What have the banks not done during the past ten years?
2 What are banks expected to do in the future?
3 What has helped one bank to increase product sales in some branches?
1 No iore.£e.re11M
4 _
2 _
Discussion
• Think about a bank's different delivery channels, or the different ways of banking.
What are the relative advantages and disadvantages of these for the customer?
• Which types of customers are likely to prefer which delivery channels?
• What are the relative benefits and disadvantages of the different channels forthe
bank?
• Which way of banking do you prefer, and why? What services doyou expect from
a bank?
2 Can you think of any other phrases we can use for describing likelihood and probability?
Discussion
In pairs, use some of the phrases from the Language focus above to make some predictions
about the future of:
telephone banking the stock market in your country
internet banking interest rates in your country
branch banking your language learning
small national and regional banks your company
universal banking your career
Example:
I may well go to the UK for an intensive language course next year.
Practice
MGS Bank has to decide whether to invest substantially in its 30 branches, or whether to
try to encourage its customers to use the telephone and the internet. The Head of Retail
Operations and the Head of Internet Banking have a meeting with the Chief Operating Officer
to discuss this, before the Board meeting next week. Your teacher will give you a role to
prepare. Use the phrases for expressing probability from the Language focus above.
Work in groups of three. Student A should look at page 115, Student B at page 124, and
Student C at page 134.
22 Lr Retail banking
5 Loans and credit
AIMS Tolearn about: lending decisions; key vocabulary of loans and credit
Tolearn how to: give advice and make suggestions
Topractise: making lending decisions; giving advice to clients
Lead in
• How do commercial banks make a profit?
• How do banks decide who to lend money to? -;
• How do they decide what rates to lend at?
• How can large corporations raise finance?
• Why do large companies generally prefer not
to borrow from banks?
I--~ance Glossary
www.finance-glosssary.com
'-----.; ---- -- -- --
Corporate bonds are issued by companies to raise capital. They are an alternative
to issuing new shares on the stock market (equity finance) and are a form of debt
finance. A bond is basically an IOU (short for 'lowe you') - a promise to pay back
your original investment (the 'principal') at a maturity date, plus interest payments
(the 'yield' or 'coupon') at regular intervals between now and then. The bond is a
tradeable instrument in its own right, which means that you can buy and sell it during
its life, and its value will tend to rise and fall as interest rates change.
Thirty or forty years ago, large companies that wanted Companies and financial institutions are given
to borrow money generally got loans from banks. investment ratings, reflecting their financial situation
Then they discovered that they could borrow at a lower and performance, by ratings companies such as
rate by raising money directly from the public (and Standard & Poor's and Moody'S. The highest rating
from institutional investors like insurance companies (AAA or Aaa) is given only to top-quality institutions,
and pension funds), by issuing bonds. This process with minimal credit risk. Today, only one of these is a
of disintermediation - cutting out the intermediary bank (Rabobank, in the Netherlands). The only other
(the bank) between the borrower and the lenders - is AAA ratings - and there are very few - belong to large
obviously not a good thing for commercial banks. They corporations.
now have to lend their money to borrowers that are less
secure than large corporations. On the other hand, companies use investment banks to
issue their bonds for them, permitting banks to make
money from fees rather than from interest.
2 Use a word from each box to make word combinations from the text. You can use some
words more than once. Then use some of the word combinations to complete the
sentences below.
credit date
debt finance
equity instruments
financial payments
interest performance
investment rating
maturity risk
tradeable situation
2 Because bonds are you can sell them at any time, but their
price will depend on the company's and the level of interest
rates.
3 Only companies with hardly any get a AAA _
Vocabulary
You are going to listen to an interview about lending decisions. Before you listen, check
your understanding of the words and phrases in the box by matching them with their
definitions (1-10).
Listening 2: Margins
Listen to Gerlinde Igler talking about how banks determine lending rates, and answer the
questions below. (OAf'"
1 What are the two factors that determine the interest rate a customer is charged?
2 What is the advantage for a business of having a Triple A or AAA rating?
3 What are the different costs involved in the calculation of the bank's margin?
4 How can a bank reduce the risks involved in granting a loan?
Some common phrases are shown below; you will add more later.
Phrase Example
l Have you considered doing ... Have you considered getting life assurance?
Notice also the difference in spelling between the noun advice and the verb advise. The noun is
uncountable. We do not sayan advice; we say some advice, a piece of advice, several pieces of advice.
2 Which of the phrases opposite are more formal, and which more informal? Which of them would you use
in a formal letter? Which would you use with a colleague you know well?
3 Can you thi~k of any phrases using the verbs suggest, recommend and advise? Write them in the table
opposite showing the structure that is used, and add an example for each. Use a dictionary to help if you
need to.
4 Use some of the phrases opposite to give advice or make suggestions to the following people:
1 A customer who has $5,000 in a savings account paying 2.5%p.a. and a credit card debt of $3,000 on
which she is paying 1.25%per month
2 A customer who has just had a pay rise of $1,000 a month
3 A customer who wants to invest $50,000 in the stock of just one company
4 A customer who has just finished paying off his mortgage and asks for a loan of $50,000 to make
improvements to his house
5 A self-employed customer without any plans for retirement
6 A customer who wants to take €10,000 cash on a long vacation
7 A customer who complains about the length of the queues at his local branch
8 A shopkeeper who always keeps the day's takings at home overnight and pays them in to the bank
the following morning
Practice 1
As part of a training course, a bank is asking teams of employees from different departments
to give their opinion on loan applications. The bank operates at local, national and
international levels. It lends to individual customers, small and medium-sized businesses,
and large companies.
Yourteacher will give you a role to prepare. Use the phrases for giving advice and making
suggestions from the Language focus opposite.
Work in groups of four. Student A should look at page 116, Student B at page 125, Student Cat
page 134, and Student 0 at page 132.
Practice 2
A bank advisor is in a meeting with one of the customers from the cases in Practice 1.
Yourteacher will give you a role to prepare. Use the phrases for advising, suggesting and
recommending from the Language focus opposite.
Work in pairs. Student A should look at pages 117-8 and Student B at pages 125-6.
Writing
Following the discussion in Practice 1, Dear ...
write a brief email to the training manager, I'm writing to inform you about the decisions that
confirming the decisions made. were made in this morning's training exercise ...
EMI shares
Parmalat goes dive after WorldCom: yet
bankrupt after accounting another American
accounting scandal scandal auditing scandal
Lead in
• What is accounting? Why is it necessary for companies and organizations?
• Is there is one way of doing a business's accounts, or lots of different possible ways?
• What is auditing and why is it necessary?
Vocabulary 1
You are going to listen to Eric Sharp, a financial director, talking about accounting. Before you
listen, check your understanding of the words and phrases in the box by matching them with
their definitions (1-10).
36 "( Accounting
Listening 1: Iqpes of accounting
1 Listen to Eric Sharp talking about the different branches of the accounting
profession. What t~ree roles or areas of work does he mention?
2 Now listen again and match the two parts of the sentences below.
1 Bookkeepers
2 Management accountants
3 Senior accountants at financial controller and director level
4 Internal auditing
5 External auditors
a is about making sure that the management has sufficient control over what is going on
in the company.
b do the boring work - recording transactions in purchase ledgers and sales ledgers.
c have to verify that a company's published financial statements give a true and fairview
of its profit, its assets and its liabilities.
d interpret the transactions recorded by bookkeepers.
e use accounting data to make decisions about how the business should proceed.
3 Which branches of accounting defined in Vocabulary 1 are not mentioned by Eric Sharp?
Would you be interested in working in these areas of accounting?
Vocabulary 2
1 Investors and many people working in finance need to understand the basic terms in
financial statements. Decide which of the alternatives (a-c) each definition describes.
Unit 7 Accounting 37
5 Adjective meaning after all deductions have been made
a gross b net c zero
6 tAdjective meaning for a whole group of companies
a consolidated b corporate c mutual
7 Adjective meaning one year or less in financial statements
a annual b long-term c short-term
8 Part-ownership (less than 50%) of other companies
a conglomeration b liabilities c minority interests
_9 Things of value that cannot be physically touched, such as reputation (goodwill], brand
names and trademarks
a intangible assets b liabilities c tangible assets
10 The net worth of a company - the amount by which assets exceed liabilities
a dividends b profit c shareholders' equity
2 Now look at the income statement from Barclays Bank, and complete it using answers
from Vocabulary 1. Some words can be used more than once.
8arclays pte
(1) income statement - IFRS
For the year ended 31st December
2005 2004
Em Em
Continuing operations
Interest income 17,232 13,880
Interest expense (9,157) (7,047)
Net interest income 8,075 6,833
Fee and commission income 6,430 5,509
Fee and commission expense (725) (662)
Net (2) and (3) income 5,705 4,847
Net trading income 2,321 1,487
Net investment income 858 1,027
Principal transactions 3,179 2,514
Net (4) from insurance contracts 872 1,042
Other income 147 131
Total income 17,978 15,367
Net claims and benefits paid on insurance contracts (645) (1,259)
Total income (5) of insurance claims 17,333 14,108
Impairment charge and other credit provisions (1,571 ) (1,093)
Net income 15,762 13,015
Operating expenses excluding amortisation of (6) (7) _ (10,448) (8,514)
Amortisation of (8) (9) (79) (22)
Operating expenses (10,527) (8,536)
Share of post-tax results of associates and joint ventures 45 56
Profit on disposal of associates and joint ventures 45
Profit before tax 5,280 4,580
(10) (1,439) (1,279)
Net profit for the year 3,841 3,301
Example: 1,234,567,890
(British English) one billion, two hundred and thirty-four million, five hundred and sixty-
seven thousand, eight hundred and ninety
(American English) one billion, two hundred thirty-four million, five hundred sixty-seven
thousand, eight hundred ninety
1 Work in pairs and take turns to test your partner. One person finds one of the following
figures from the income statement, and reads it out. The other person says which figure
(1-6) it is. Use a calculator if you need to.
2 Work in pairs. Ask your partner how much time, in hours or minutes, they think they
spend in an average week doing the following things:
1 working
2 working in English
3 using a computer
4 eating
5 sleeping
6 watching television
7 waiting at red traffic lights.
Calculate how many seconds they spend on each activity per year. Read out the figures
while your partner writes them down, and then check that you both have the same
figures.
Umt 7 Accounting 39
Barclays PLC
Assets
Cash and other short-term funds 5,807 3,525
Treasury bills and other eligible bills n/a 6,658
Trading and financial assets designated at fair value 251,820 nfa
Derivative financial instruments 136,823 nfa
Debt securities and equity shares n/a 141,710
Loans and advances to banks 31,105 80,632
Loans and advances to customers (1) 262,409
Available for sale investments 53,497 nfa
Reverse repurchase agreements and cash collateral on securities borrowed 160,398 nfa
Insurance assets, including unit-linked assets 114 8,576
Property, plant and equipment (2) 2,282
Other assets 13,143 32,389
Total assets (3) 538,181
Liabilities
Deposits and items in the course of collection due to banks 77,468 112,229
Customer accounts (4) 217,492
Trading and financial liabilities designated at fair value 104,949 nfa
Liabilities to customers under investment contracts 85,201 nfa
Derivative financial instruments 137,971 nfa
Debt securities in issue 103,328 83,842
Repurchase agreements and cash collateral on securities lent 121,178 nfa
Insurance contract liabilities, including unit-linked liabilities 3,767 8,377
Subordinated liabilities 12,463 12,277
Other liabilities 14,918 87,200
Total liabilities 899,927 521,417
Shareholders' equity
Shareholders' equity excluding minority interests 17,426 15,870
Minority interests 7,004 894
Total shareholders' equity (5) 16,764
Total liabilities and shareholders' equity 924,357 538,181
Practice
You are the Chief Financial Officer at Barclays, presenting the 2005 results to the Board of Directors. Give the
most important figures, such as:
• the income received from interest, fees and commissions, trading, and insurance premiums
• the net income
• the pre-tax and after-tax profit
• the value of the group's assets, liabilities, and shareholders' equity.
You can also report how much higher or lower these figures are compared to the previous year, the annual
percentage increase or decrease, and some reasons for the changes. Use a calculator if you need to .
Lead in
• What are the functions of a central bank?
• How can the actions of a central bank affect individuals as well as companies?
Discussion
Which of the following would you expect a central bank to do? Mark them A = always,
S = sometimes, or N = never.
Vocabulary
You are going to read about the major functions of the Bank of England. Before you read, check
your understanding of the words (1-9) below by matching them with their definitions (a-i).
UK banks and building societies have to hold reserves at the Bank. These are
(4) at the Bank's official interest rate. If British banks need to borrow
short-term funds they do this in the (5) money markets.
The Bank can influence the amount of money and the interest rates in these
markets - this is how it implements its monetary (6) _
The Bank also deals in the foreign exchange market. It can use the UK's foreign
currency and gold reserves to try to influence the exchange rate if needed.
The Bank's other core purpose is to maintain the stability of the financial system.
The Bank has to detect and reduce any (7) to financial stability, and
make sure the overall system is safe and secure. It monitors and analyses the
behaviour of the major participants in the financial system and the wider financial
and economic environment, and tries to identify potential risks. A (8) _
and stable financial system is important, and is also necessary for carrying out
monetary policy efficiently.
2 Complete the text with the words (1-9) from the Vocabulary exercise opposite.
1 Just like the central bank, all companies have to tr~ to potential financial
2 Now listen to Kate Barker, and compare ~our answers with what she saqs. (OM'.
3 Check ~our understanding of the language Kate Barker uses b~ matching the words in the
box with their definitions (1-8).
However, if the number after a decimal represents a unit of money, length, etc., it is
usually read as a normal number.
o is called zero or (mainly in British English) nought. British English also uses oh, but
only after the decimal point, never before.
Examples: 11.005 eleven point oh oh five (or eleven point double oh five)
0.501 zero / nought point five oh one
0.001 zero / nought point oh oh one (or zero / nought point double oh one)
Practice
cide what you think a central bank would typically do in the following situations, and then explain why to the
ss. Use some of the new vocabulary from this unit.
1 A provincial savings bank has bad debts of $300 million and may go bankrupt because it lent too much
money to property speculators, and the value of their investments has gone down by 40%.
2 Inflation has increased by 1.25%in three months, which is half the country's annual inflation target. The
economy seems to be working at full capacity.
3 A trader at a large universal bank has lost $450 million in disastrous derivatives trades. This bank now
has absolutely no liquidity.
4 Demand for consumer goods has declined for the sixth successive month, and unemployment has
increased by 1.75%in three months.
Lead in
• What are your country's main exports?
• What are your country's main imports?
• Which countries or regions are your country's majortrading partners?
• What are the most common ways for importers to pay exporters for goods?
Vocabulary
You are going to read about a common way of financing foreign trade. Before you read, check
your understanding of the terms in the box by using them to label the two definitions below.
Finance (1) _
(2) _
o The advising bank authenticates the letter of credit and sends the beneficiary (the
seller) the details. The seller examines the details of the letter of credit to make sure
that he or she can meet all the conditions. If necessary, he or she contacts the buyer
and asks for amendments to be made.
o The buyer fills in a letter of credit application form and sends it to his or her bank for
approval.
Advice of.
letter of credit
O( Seller Buyer ) v Lettero f
A
credit application
""'O~
~~~~~;~1~gbank ~JjID ~ ~ "'" Issuing bank
~ Now read about the next six steps, and number them 5 to 10 using the diagram below.
=:J If the documents are in order, the advising bank sends them to the issuing bank for
payment or acceptance. If the details are not correct, the advising bank tells the seller
and waits for corrected documents or further instructions.
o The advising/confirming bank pays the seller and notifies him or her that the payment
has been made.
o The issuing bank advises the advising [or confirming) bank that the payment has been
made.
o The issuing bank [the buyer's bank) examines the documents from the advising bank.
If they are in order, the bank releases the documents to the buyer, pays the money
promised or agrees to pay it in the future, and advises the buyer about the payment. [If
the details are not correct, the issuing bank contacts the buyer for authorization to pay
or accept the documents.) The buyer collects the goods.
o The seller presents the documents to his or her bankers [the advising bank). The
advising bank examines these documents against the details on the letter of credit and
the International Chamber of Commerce rules.
o When the seller [beneficiary) is satisfied with the conditions of the letter of credit, he or
she ships the goods.
Issuing bank
2 The caller uses several expressions that are commonly used to ask for repetition and
clarification when you don't understand something. What are they?
(You don't hear one (You don't understand [You need more information
of the words.) the word beneficiary.) about which conditions.)
Practice
A customer calls a bank asking for clarification of some terms on the
bank's web page used in import and export contracts. The call centre
employee tries to answer the customer's questions. The bank's web page
is shown on the next page.
Incoterms determine who pays for all the costs of international trade:
transportation [or carriage], loading and unloading goods, insurance,
customs duties, etc. The different terms, usually abbreviated to three-
letter codes, are used all over the world, and so avoid uncertainties about
whether the buyer or the seller is responsible for paying for something.
Your teacher will give you a role to prepare. In the phone call, use phrases
for checking and confirming from the Language focus above.
Work in pairs. Student A should look at page 118, and Student B at page
127.
Incoterms identify the additional costs, over and above the cost of the goods, that the seller will invoice the buyer in
international sales contracts. They define who is responsible for arranging and paying for transportation, documentation,
customs clearance and transport insurance.
Group 2 _ The F Terms (Free, main carriage not paid by the seller)
FCA _ Free Carrier (named place)
FAS _ Free Alongside Ship (named port of shipment)
FOB _ Free On Board (named port of shipment)
The seller arranges and pays for the pre-carriage in the country of export The goods are delivered to a carrier appointed
by the buyer. The buyer arranges insurance against damage to the goods in transit
Lead in
• How many different currencies can you name?
• How is the value [the exchange rate] of your currency determined?
• Has the exchange rate, compared to the US dollar orthe euro, remained constant over
the last few years?
• 00 you know the history of your currency over the past 50 years?
b The Bank of England lost over £5 billion in one day attempting to protect the value of
the pound sterling. After this, governments and central banks intervened much less, so
there was almost a freely floating system.
c A fixed exchange rate system was started. The values of many major currencies were
pegged [or fixed] to the value of the US dollar. The American central bank, the Federal
Reserve, guaranteed that it could exchange an ounce of gold for $35.
d Twelve states of the European Union introduced a single currency, the euro, to replace
their national currencies.
e Gold convertibility ended because the Federal Reserve no longer had enough gold to
back the dollar, due to inflation.
2 'Now listen again, and complete the last part of what Sinclair says. C§l!)
... a lot of the people who are operating in foreign exchange markets don't tend to think so
much about (1) and what the currency really
ought to be (2) in order for its goods to be (3) at the right level
in (4) and so on. They're trying to guess very (5) _
_____ , and they're trying to guess the (6) of other traders.
They tend to say, 'Oh, let's see, if something is going up today it will probably go up tomorrow.'
They just go in one direction and you often get huge (7) _
_____ , going on for maybe even years, certainly for weeks and months, which are
pushing the currency away from what it really ought to be. This is a source of (8) _
and it's undoubtedly happening and it's due to the fact that people don't have (9) _
_____ and often tend to say, 'Well, if he's doing this then he must know something I
don't, I'd better copy him', and that can be a (10) for real trouble.
3 Do you know any other words that could be used for answers (6) and (10)?
Discussion
• Has the value of the currency of your country irsen or fallen in the past few weeks or
months? Do you know why?
• What international events do you expect to affect exchange rates in the next few weeks
or months? Why and how?
• How could you attempt to profit from these changes, if you had a large amount of cash
at your disposal?
2 Now read the text and - using your own words as much as possible - write seven
statements about the following figures:
a 5% e 1,000,000,000,000
b 30 f 24
c 85% g 95%
d 2
1 the total amount of money spent in 4 people who buy and sell things in
a market the hope of making a profit
2 another word for stocks and shares 5 easy to sell [to convert into cash]
3 belonging to one's own country 6 price changes
1 The phrases in the box are used to describe trends and graphs. Put them in the
table below, according to the word category. One has been done for you.
2 Do you know any other words and phrases that can be added to the table?
Foreign exchange it 13 65
3 Look at the graph showing the development of the USDI GBPexchange rate and
complete the description using words and phrases from the box.
2.8
2.6
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2.4 1[\ OJ
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71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07
Afterthe pound was devalued by 14%in 1967 it was worth $2.41. The pound
floated after 1971, and [I] during 1975 and 1976, before
[2) again between 1977 and 1980. There was a
[3J in 1981, and the pound continued to slide until 1985,
when it (4J at $1.06. In 1991 it reached $1.88, and
(5J at $1.96 in 1990, but in 1993 it fell again to below $1.50.
The pound [6J again during most of 2002-3.
4 Add any new words from the exercise to the table on page 65.
Practice
Find a graph from your job, a business publication or on the internet, and the necessary
background information. Then explain it to the class using some of the words from the
Language focus, and answer any questions they have. [If you can't find a graph but you have
the information, you could produce the graph yourself.J
For example, you could explain:
"AlltheNewa
That'. Fit to Print"
OF 22.6%
Discussion
• Have !:Jouever speculated in anqthing? What happened?
• Do !:Jouagree with Mark Twain that it's alwaqs dangerous to speculate in stocks and
shares?
• There were two big stock market crashes in the twentieth centurq. Do !:Jouknow when?
• Do !:Jouknow wh!:Jand how companies issue shares?
• Do !:Joupossess an!:Jshares? Wh!:Jdid !:JoubU!:Jthem? How did !:JoubU!:Jthem?
Vocabulary 1
You are going to read about share prices. Before you read, check your understanding of the
words and phrases in the box by matching them with their definitions [1-10).
1 a name for investors who bU!:Jshares because theq expect their price to rise
2 a name for shareholders who sell because theq expect the price to fall
3 a period of rapidlq rising share prices, followed b!:Ja quick collapse
4 assets a borrower uses to secure or guarantee a loan
5 certificates representing part-ownership of a cornpanq
6 financial organizations that own a lot of shares
7 people who bU!:Jand re-sell shares in a ver!:J short time, often just a few hours
8 to get mone!:J from investors with which to run a business
9 to offer securities for sale, to financial institutions and the public
10 when !:Jouhave no mone!:J to pa!:J!:Jourdebts, so !:Jouhave to sell !:Jourassets
oon
<II.. e +
NEWS
Why stock markets matter for you Stefan Armbruster, BBC News online
The saying goes: 'Don't invest what you can't afford to lose'.
But as stock markets fall, it is not just people who own shares who lose out. When the bears replace the bulls - in
other words, when the market falls - it affects almost everyone because stocks and shares have become an integral
part of almost all our financial lives.
There are a variety of ways in which stock market movements impact on our lives. The upbeat side of the growth
in share ownership is that when the stock market goes up, consumers with shares feel richer, they borrow more and
they spend more. But just as the stock market can go up, it can also go down. Usually the first to react to this are the
institutional investors who are involved in the financial markets on a daily basis.
The internet boom is an example. Many personal investors felt they were burnt by the popping of the dot.com
bubble. By the time they got around to selling shares in any number of failing internet based companies, the big City
investors had already pulled out of the market. The institutional investors did not escape unharmed either. And the
hits that they took also have an indirect, but potentially serious, effect on many people's financial health. Any pain
suffered by these institutional investors impacts on the returns paid on pensions, savings accounts or the interest
charged on mortgages.
For individuals with a more direct interest - say day traders attracted by the tech boom - share holdings can
be used as collateral to borrow money. But if the value and income from shares evaporate and the bank calls in
the loan, the result can be big losses or personal bankruptcy. Meanwhile pensions linked to the stock market, like
the ones being promoted by the UK government, are not immune. Unlike the state pension which is paid out at a
rate set by the government, investing in a private pension indexed to the stock market can increase the value of the
contributions dramatically, but they can also be erased.
Your job can also depend on the markets as companies use their valuation and the issue of new shares to raise
capital to expand. If they are unable to do this then they have to find ways of increasing the company's value to
attract investors. The key tool they use is to cut jobs. ~
2 Look at the following headlines and decide what type of movement they are describing.
Then put the words and phrases in the table below. Youwill add more later.
To 0 up'
3 France Telecom
-4 Thomson
5 Stocks in Germany
6 Lufthansa
7 Stocks in Britain
8 British Energy
9 Vodafone
10 Copper
11 Gold
12 Silver
4 Listen to the market report again, and add the words and phrases to the table on
page 73. Can you add any other verbs? Cim
Practice 1
You are going to describe a graph to a partner, and draw your partner's graph from a
description. Your teacher will give you a role to prepare. Use the words and phrases from the
Language focus. You can also use language from Unit 13.
Work in pairs. Student A should look at page 119, and Student B at page 128.
Practice 2
In pairs or groups, select 10 different stocks or shares, and invest an imaginary €10,000
in them, dividing up the sum as you wish. You can choose companies on any major stock
exchange, but remember that if you buy shares in foreign currencies there is a risk of
exchange rate movements.
Choose several blue chips - shares in large, well-established companies with a good
reputation for quality and profitability - as well as two high-tech companies, and two
companies that have only been listed or quoted on the stock exchange for less than a year
(this information can be found in the financial pages of newspapers).
Follow the progress of your portfolio in the financial press or on the internet. Depending on
the length of your course, select a date to report back, and see whose portfolio has gained
the most value - or lost the least!
1 Disadvantages of takeovers D
2 Raiders and asset-stripping D
3 Raids and bids D
4 The 'make-or-buy' decision D
5 The role of banks D
"r'
m!,eeling ahsoillfely marTelous.
l think II/acquire another company."
b There are two ways to acquire a company: a raid and a takeover bid. A raid simply involves buying
as many of a company's stocks as possible on the stock market. Of course if there is more demand
for stock than there are sellers, this increases the stock price. A takeover bid is a public offer to a
company's stockholders to buy their stocks at a certain price (higher than the current market price)
during a limited period of time. This can be much more expensive than a raid, because if all the
stockholders accept the bid, the buyer has to purchase 100% of the company's stocks, even though
they only need 50% plus one to gain control of a company. (In fact they often need much less, as
many stockholders do not vote at stockholders' meetings.) If stockholders accept a bid, but receive
stocks in the other company instead of cash, it is not always clear if the operation is a takeover or a
merger - journalists sometimes use both terms.
c Companies are sometimes encouraged to take over other ones by investment banks, if researchers
in their Mergers and Acquisitions departments consider that the target companies are undervalued.
Banks can earn high fees for advising on takeovers.
d Yet there are also a number of good arguments against takeovers. Diversification can damage a
company's image, goodwill and shared values (e.g. quality, good service, innovation). After a hostile
takeover (when the managers of a company do not want it to be taken over), the top executives of
the newly acquired company are often replaced or choose to leave. This is a problem if what made
the company special was its staff (or 'human capital') rather than its products or customer base.
Furthermore, a company's optimum size or market share can be quite small, and large conglomerates
can become unmanageable and inefficient. Takeovers do not always result in synergy. In fact,
statistics show that most mergers and acquisitions reduce rather than increase the company's value.
e Consequently, corporate raiders and private equity companies look for large conglomerates (formed
by a series of takeovers) which have become inefficient, and so are undervalued. In other words,
their market capitalization (the price of all their stocks) is less than the value of their total assets,
including land, buildings and - unfortunately - pension funds. Raiders can borrow money, usually
by issuing bonds, and buy the companies. They then split them up or sell off the assets, and then
pay back the bonds while making a large profit. Until the law was changed, they were also able
to appropriate the pension funds. This is known as asset-stripping, and such takeovers are called
leveraged buyouts or LBOs. If a company's own managers buy its stocks, this is a management buyout
or MBO.
1 a buying spree
2 boom
3 cyclical (adjective)
4 slump
5 to drum up business
2 Now listen, and look at the following statements. Are they true or false, according to Peter
Sinclair? (flD
1 Investment banks sometimes encourage companies to acquire other ones, because
this creates business for the bank.
2 The acquisitions policy of well- managed companies can be influenced by banks.
3 There are more takeovers when share prices are high.
4 Share prices were high all through the 1980s and 1990s.
5 When share prices are high, investment banks tell companies what to buy.
6 A company that doesn't want to be taken over will get advice from a large financial
institution such as an investment bank.
7 The value of merchant banks has recently gone down.
Here are some other linking words and expressions that can be used to describe cause
and effect:
so
to bring about
CAUSE ) to lead to --IIII!)). EFFECT
to result in
to cause
to mean
as a result of
because
EFFECT ) to result from
to arise from
-~). CAUSE
to be due to
to be caused by
Examples:
I was offered a better job in a bank so I left the insurance company.
Deregulation brought about major changes in the financial industry.
Major changes have arisen from the deregulation of the financial industry.
Look at the sentences about Procter & Gamble and Gillette, and make new sentences
describing cause and effect.
28 January 2005: Procter & Gamble announces that it is going to buy Gillette for $57 billion.
28 January 2005: Gillette rises nearly 13% on Wall Street, while P&G drops 2.1%.
P&G predicts cost savings of between $14 billion and $16 billion from economies of scale and
restructuring of the two companies. The combined companies' sales will be over $60 billion a
year.
10 April 2005: The US Federal Trade Commission [FTC) approves the acquisition, as long as the
companies divest some overlapping product lines, so as to restore competition in the market.
July 2005: The European Union approves the merger, as long as P&G sells its line of battery-
operated toothbrushes.
1 October 2005: The purchase is finalized. P&G exchanges its common stock for Gillette stock.
Gillette shareholders get an 18% premium on the closing share prices of 27 January 2005.
The Gillette Company ceases to exist and its stocks are no longer traded.
6,000 people, 4% of the combined workforce of 140,000, lose their jobs because of overlaps in
management and business support functions.
January 2006: P&G announces a 27% increase in sales and a 29% increase in net earnings.
Practice 2
MGS, a regional commercial bank with 30 branches offering a range of financial services to
local businesses and private individuals, is facing a takeover bid by a much larger national
competitor. The small size of the bank and the continuing trend of consolidation in the retail
banking sector make it likely that the bank will sooner or later lose its independence.
The executive directors of the bank are going to have a meeting to decide what to
recommend to the shareholders. Your teacher will give you a role to prepare. In the meeting,
use the words and phrases to describe cause and effect from the Language focus opposite.
Work in groups of five. Student A should look at page 119, Student B at page 129, Student Cat
page 135, Student 0 at page 133, and Student E at page 122.
Writing
Write a short summary of the meeting to send to the Board, giving your decision and
explaining the reasons for it. You may want to look back at Unit 12 for language to report
opinions.
Lead in
• Do you know what the main types of derivatives are?
• What are the two main uses of derivatives?
• Does the organization you work for use or trade derivatives?
Reading 1: Derivatives
Read the text and do the exercises on page 90.
Derivatives is a collective term for financial market products whose value depends on (i.e. is
derived from) the price of another underlying asset such as a stock, a stock index (the average
value of representative stocks in a given market), a currency, a commodity, etc. The main
derivatives are futures, options and swaps. They were developed to allow companies to reduce
uncertainty by guaranteeing future prices, at a reasonable cost. This allows companies to plan
more effectively.
Futures contracts are agreements to make or take delivery of specified commodities (foodstuffs,
metals, etc.) or financial instruments at a fixed future date, at a price determined when the
contract is made. Futures contracts allow both sellers and buyers to hedge or reduce risks. For
example, a cocoa grower can agree a price, quantity and delivery date with a chocolate
manufacturer. The seller eliminates the risk that the price will drop, and the buyer the risk that
it will rise. The same logic led to the development of financial futures: contracts to buy and sell
stocks, stock indexes, interest rates and currencies at a future date.
Options differ from futures in that they give the right, but not the obligation, to buy or sell an
asset at a fixed price on or before a given date. Buying a call option gives you the right to buy an
asset; buying a put option gives you the right to sell an asset. For example, if you expect the price
of a stock to rise you can buy the right to buy that stock in the future at the current market price.
If you think the price of a stock will fall in the next few weeks or months you can buy the right to
sell it in the future at the current price. If you are wrong, you do not have to exercise the option
to buy or sell the stocks, but you lose the price of the option. This is the premium the writer or
seller of the option receives from the buyer. Obviously, the expectations of the writer of an option
about the future value of the assets are opposite to those of the buyer, and the writer does not
expect the option to be exercised. Futures and options are traded by speculators hoping to make
a profit from price fluctuations, as well as by companies seeking to hedge. In fact, much more
derivative usage is based on speculation than hedging nowadays.
Borrowers and lenders can also swap or exchange future interest payments. A company that has
borrowed money at a floating rate could protect itself from a rise in interest rates by exchanging
this for a fixed interest rate loan with another company or financial institution. These are intere t
rate swaps. Companies can also undertake exchange rate swaps, exchanging funds in two different
currencies. At a future date the same amount of the currencies is re-exchanged at a predetermined
exchange rate. Over the term of the agreement, the counterparties exchange fixed or floating rate
interest payments in their swapped currencies.
Denvouves In,' ~9 89
1 Find words and phrases in the text to complete the sentences.
2 Use a word or phrase from each box to make word combinations from the text. You can use
some words more than once. Then use some of the word combinations to complete the
sentences below.
Listening: Derivatives
1 Peter Sinclair, who we have already heard in other units, was formerly director of the
Centre for Central Banking Studies at the Bank of England. Steve Harrison works in the
compliance department of a large bank in London - you will hear him talking about
regulation in Unit 23. Listen first to Peter Sinclair and then to Steve Harrison talking about
derivatives. C§B)
Who suggests that financial institutions need to take risks - Sinclair or Harrison?
90 Unit 19 Derivatives
2 Now listen again and answer the questions below. ~
1 What do Sinclair and Harrison say about how long derivatives have existed?
2 What does Sinclair mean when he says derivatives 'change the structure of risks and
returns'?
3 In what situation does Sinclair say a company would want to get US dollar assets ahead
oftime?
4 What, according to Sinclair, is the danger with derivatives?
5 What do you think Harrison means when he says derivatives 'have had a very bad
press'?
6 Harrison says derivatives can be used to protect positions, but 'they can also give you
exposure to areas that the bank decides that it wants to have exposure to'. What does
this mean?
7 What does Harrison mean when he says 'Financial institutions are in the risk and
reward business'? Do you agree?
NEWS
Buffett warns on investment 'time bomb'
The rapidly growing trade in derivativesposesa 'mega-catastrophicrisk' for the economy,legendaryinvestor
Warren Buffett haswarned.The derivativesmarkethasexploded in recentyears,with (1) banks
selling billions of dollarsworth of these investmentsto (2) asa way to off-load or managemarket
(3) . But Mr Buffett, the world's second-richestman, arguesthat such highly complexfinancial
(4) aretime bombs and 'financialweaponsof massdestruction' that could harm not only their
buyersand sellers,but the whole economicsystem.
Contracts devised by 'madmen'
Derivativesare financialinstrumentsthat allow investorsto (5) on the future price of, for example,
(6) or shares- without buying the (7) investment. Derivativeslike futures,
options and swapswere developedto allow investorsto (8) risksin financial markets- in effect buy
insuranceagainstmarketmovements- but havequickly becomea meansof investmentin their own right. Outstanding
derivatives(9) - excludingthose traded on exchangessuchasthe International PetroleumExchange
- are worth closeto $85 trillion, accordingto the InternationalSwapsand DerivativesAssociation.Somederivatives
contracts,Mr Buffett says,appearto havebeen devisedby 'madmen'.In his 'Annual letter to shareholders'Mr Buffett
comparesthe derivativesbusinessto 'hell ...easyto enter and almost impossibleto exit'.
Discussion
• Why is it possible to describe derivatives as 'weapons of mass destruction'?
• What do you think Buffett means by a 'time bomb'?
• Do you know any examples of bankruptcies resulting from derivatives trading?
What happened, and why?
Derivatives Unit 19 91
Clarifying, summarizing and paraphrasing
In many business situations - such as presentations, negotiations and meetings - it is
often useful to paraphrase, summarize or clarify what has been said.
1 The following sentences (1-12) contain examples from the Listening exercise.
Which of the actions (a-c) could the phrases and sentences in italics be used for?
Example:
'Derivatives have had a very bad press.'
'If I understand you correctly) you're saying that they've had a lot of bad publicity.'
Practice
Prepare a short talk, for a company's senior management, on one of the following topics:
For examples of the dangers of derivatives, look up the bankruptcy of one or more of the following institutions on the
internet: Barings Bank, Orange County, Long-Term Capital Management, WorldCom, Enron, Global Crossing.
When speaking, use some of the summarizing phrases from the Language focus. When listening to other learners'
talks, ask questions using some of the clarifying phrases.
92 Unit19 Derivatives
21 Asset management
To learn about: asset and fund management; key vocabulary of asset
management and allocation
To learn how to: disagree diplomatically
Topractise: talking to a client about their investment portfolio
Lead in
• If you had a large amount of money to invest, would you invest it yourself, or get a
professional investment consultant to do it?
• Would you like to invest and manage other people's money?
• What are the different basic strategies of asset management?
2 Readthe statements below, which summarize what Paula Foley says, and then listen
again. In what order does she say these things? (014'.
a Asset allocation means deciding how much to invest in different classes of
investments: bonds, stocks and so on. 0
b Asset management involves investing in bonds, stocks, cash, precious metals and
funds. 0
c How you manage assets depends on the client's objectives and the portfolio's size. 0
d If you diversify too much it becomes too expensive. 0
e It's easier to diversify a large portfolio than a small one. 0
f Objectives can be either long term or short term. 0
g The risk of a portfolio depends largely on the expected returns. 0
istening 2: Investment stules
1 Listen to Paula Foley talking about investment
4~."4
styles. How many styles does she mention? f(i·o..,f.• • •
3 Use a word from each box to make common word combinations. One word can be
used twice.
asset accumulation
capital earnings
conservative industries
growth investment
investment management
stable values
9 Jo : 21 Asset management
Fundmanagement: Mug's game
Anger is growing with those who manage money, - will be futile. This theory opened the door to those
particularly with those poorly performing active offering merely to track the index. Index-tracking grew
managers who claimed that it was precisely during hugely during the bull market of the 1980sand 1990s.In
tough times that they would come into their own against the bear market of the past two years, people have not
indexed funds. In Britain, two-thirds of active managers pulled out much money from index funds - or at least,
underperformed the index last year, even before the not yet.
fees that they charged are subtracted. Those people are
Not everybody buys the efficient-market hypothesis,
handsomely rewarded for losing money. Each year they
however. George Soros, a well-known speculator, thinks
pocket 1-2% of the assets they manage, on top of initial
he made his money because markets often over- or
charges of as much as 5%.Indexers, by contrast, charge
undervalue things. He also challenges the view that
only 0.5%a year, with no upfront fees.
share prices are simply a passive reflection of underlying
An average fund manager will beat the market some of value, or of the expected earnings of a company. A high
the time. Over the long run, though, the great majority share price might, for example, trigger certain actions: a
of fund managers will do no better than the market public offering of a company's shares, or a merger or an
average, particularly once their charges are taken into acquisition. A low share price, meanwhile, might stop
account. The chances are slim of finding one of those plans for an initial public offering or a merger. This is
blessed few who can show real, sustained skill in stock- what Soros calls the market's 'reflexivity'.
picking. Even if you find one, you may discover that
If knowledge of such a two-way relationship between
what made him good in one economic period will serve
share prices and assets can be put to good use, a fund
him less well in the next.
manager might consistently do better than the market
Believers in the so-called efficient-market hypothesis, Peter Lynch. formerly of Fidelity Investments, showed
developed by American economists in the 1960s, have that a more old-fashioned technique - looking for good
tried to demonstrate the impossibility of consistent companies that the market fails for a time to appreciate
outperformance. They argue that all useful information - can also outperform. Yet a few examples among a cast
that is available to market participants is already factored of many thousands of fund managers offer only small
into a company's share price. Additional analysis of a consolation to the average investor, who will almost
hare by, for instance, taking a closer look at a company's always be better off - or these days, rather worse off
books or talking to its management - as well as all - putting his money in an index fund.
attempts at discovering patterns in price movements
Jiscussion
-,0 you agree with the people who say that it is impossible to beat the stock market, on
sverage?
Match the direct statements (1-6) with the more diplomatic phrases (a-f).
Practice
An investment advisor has a meeting with a client. They have very different ideas as to
how the client's money should be invested. Your teacher will give you a role to prepare. The
investment advisor should use the diplomatic language from the Language focus above.
Both sides may need to use the phrases for making, accepting and rejecting proposals in
Unit 18.
Work in pairs. Student A should look at page 121, and Student B at page 131.
Writing
After the Practice meeting, you need to write a letter or an email to summarize what
happened.
Write an email to the client proposing the changes you want to make to his / her portfolio,
and asking him / her to confirm that he / she accepts them. Then write an email to your
boss explaining the situation - what the client wants to do, what you have suggested, and
why - as you think the client might complain.
Write a letter to the Wealth Management Director of the bank, complaining that the person
responsible for your account does not seem to know enough about asset management and
does not listen to you, and that you want someone more senior to take over responsibility
for your account.
Lead in
• Why are ifnancial institutions supervised and regulated? If they were not regulated, what
could they do that would not be in their customers' best interests?
• Have ~ou ever had an~ problems as a customer with the products or services of a financial
institution?
a Banks that underwrite securitq issues [shares, bonds, etc.) for companies are obliged
to buy the securities if they are unable to sell them to other financial institutions or to
the public.
b Analusts in the research departments of large banks studu the financial situation
of companies, and write reports about them for potential investors. In doing so, the
analqsts learn a great deal about companies, and so are often in a position to give them
advice about raising capital, etc. However, the~ are usuallq competing with other banks
to get business from these companies.
c Auditors know a lot about accounting methods and acquire a lot of information about
the companies whose accounts theq audit. This puts them in a ver~ good position to
obtain extra - and generalh, ver~ lucrative - consulting work with these companies.
d People working in banks' corporate finance and mergers and acquisitions departments
often have information about takeover bids and other deals that are being planned but
have not ~et been announced.
Vocabulary 1
You are going to listen to Steve Harrison, who works in the compliance department of a
large bank in London, talking about financial regulation. Before you listen, check your
understanding of the words and phrases in the box by matching them with their definitions
[1-6).
3 Are there any conflicts of interest that occur in the organization you work for? How are
they dealt with?
There are lots of word groups like this in English. Verbs can be made into nouns and vice
versa, and nouns can be made into adjectives and adverbs, by adding suffixes.
Examples:
advise
consultant
deal [with)
industrial
investment
unmanageable
organized
profit
value
Common suffixes include: -ing, -ment, -ation, -ness, -ility (to make nouns)
-er, -or, -ist (to make nouns for people or occupations)
-ize, -ise (to make verbs)
-able, -ed (to make adjectives)
Prefixes for negatives include: un-, dis-, non-
Discussion
The situations described below involve well-known conflicts of interest and require people to
make ethical choices. What would you do in these situations, and why? Discuss them in pairs
or groups. Use some of the words from the Vocabulary exercise above in your discussion.
1 You get a job in a bank's mergers and acquisitions department. One of your new
colleagues informs you, 'Whenever we know that Company A is going to take over
Company B, and that Company B's stocks are going to rise, we go out and buy some of
Company B's stocks. We make a profit, but nobody loses, because the stocks we buy
had already been sold by somebody else. OK, this is called "insider dealing", but what's
the problem? It shouldn't be a crime.'
JOONESBURY © 2002 G.B Trudeau. Reprinted with permission of UNIVERSAL PRESS SYNDICATE. All rights reserved.
3 You work in the research department of a bank. You have written a report which
demonstrates that a local manufacturing company would be a good takeover target
for the market leader in the industry. This multinational company could modernize the
local company's factory and produce goods more efficiently. But it would probably also
take over all the company's other functions, and close down the local marketing, sales,
research and development, finance, and human resources departments, resulting in a
lot of people losing their jobs. Another possibility would even be forthe new owners to
close down everything, and move production elsewhere. This would have a catastrophic
effect on yourtown.
''Let me get back to you on that-I've got an rffice full ofpeople right nou:"