BANKING, THE STOCK EXCHANGE, COMPANY

FINANCES, INVESTMENT, INSURANCE

KEY VOCABULARY
Banking
A countrys central bank (The Bank of England in the UK, the Federal Reserve Board
in the US, the Hungarian National Bank in Hungary) looks after the governments finance and
monetary policy and acts as a banker to other banks. However, for the general public and
many businesses, banking services are provided by commercial banks which have branches
throughout the country. These banks offer a wide range of services which include accepting
deposits, making loans and managing customers accounts.
The Stock Exchange
A company can raise money on the stock market or stock exchange (a market place
for buying and selling shares) in two different ways. It can issue shares (US stocks), or units
of its capital, to institutional investors or the general public. When an investor buys a share,
using the services of a specialist company or broker, he or she becomes a shareholder (US
stockholder) and owns a part of (or has a stake in) a company. Shareholders can make money
by receiving dividends, paid as a proportion of a companys annual profits, and when the
value of their shares increases.
A company can also borrow money from investors by issuing bonds, loans for fixed
periods with fixed interest rates.
Securities refers to both shares and bonds. Each year billions of shares and bonds are
sold or traded on the worlds major stock exchanges.
Company finances
The management of the company needs information to be able to run the firm
efficiently. The owners (shareholders) of a company are interested in how well the company
is doing since their profit depends on it. They can learn about it from the financial statements
prepared by the accounting department. The government is interested in accounting in order
to see if the company has met its tax obligations. That is the reason why every company is
required by law to keep financial records and ensure that they are examined (audited) each
year. Listed companies, whose shares are sold on the stock exchange, have to present their
accounts to the public in an annual report.
The Profit and Loss Account is the most important summary of the companys
revenues, expenditures and operating costs. Balance sheets are statements of a companys
wealth on a given date. (It is not the same as the profit and loss account which records the
changes in a companys wealth over a year). The balance sheet is in two parts: assets on the
left-hand side and liabilities on the right-hand side. An asset is something that has value, or
the power to earn money. These include: current assets: money in the bank, investments that
can easily be turned into money, money that customers owe, stocks of goods that are going to
be sold; fixed assets: equipment, machinery, buildings and land; intangible assets: things
which you cannot see, for example brands: established brands have the power to earn money.
Liabilities are a companys debts to suppliers, lenders, the tax authorities, etc.

Insurance
People buy insurance to protect themselves against the losses that may result from an
accident or catastrophe. For example, a company involved in a major construction project
may have all the necessary skills for completing the job but there is still an element of risk.
Extreme weather conditions or a natural disaster could damage or destroy the work that has
been done. To protect itself, the company can pay a sum of money a premium to an
insurance company who will underwrite the risk or guarantee to provide financial
compensation if such an event occurs. The exact details of this insurance are contained in the
insurance policy which is a document showing the risks that have been insured against and
the levels of compensation that will be paid.

VOCABULARY (Banking)
Task 1 Complete the text using these words.
cash dispensers
current account
investment advice
overdraft

cheque
deposit account
loan
pension

credit card
foreign currency
mortgage
standing order

My salary is paid directly into a low-interest (1)_______________. I can withdraw money

from automatic (2)_______________ with a cashcard, so I hardly ever actually go into a
bank. I pay regular, monthly bills by way of a (3)______________: the bank pays them
according to my instructions, and debits my account. I pay irregular bills by
(4)________________. Nearly everyone I know in Britain has a chequebook, but when I
lived on the Continent, I found that people hardly used them. They often paid cash, or
paid bills at a post office with a paying-in slip.
I also have a (5)_____________which is useful for ordering things by post or on the
telephone, and for travelling worldwide. I also use it in shops and restaurants, but try not to
spend more than I can pay when the bill comes a month later, as this is a very expensive way
of borrowing money. The annual interest is exorbitant well over 20%.
I used to have a (6)_______________ in a building society which paid higher interest
than the current account at the bank, but had restrictions as to how and when I could
withdraw my money. But then we bought a flat. I got a 90% (7)_______________from
the building society: i.e. we had to pay a deposit of 10% with our own savings.
That is why I have no more money and no more deposit account. In fact I have
arranged an (8)________________with the bank, which means I can occasionally
withdraw more money than is actually in my account. Interest is calculated daily. Last year
I asked the bank for a (9)________________ to buy a car. I (only!) wanted two months
salary, but they refused. Since I don't like the high interest rates that the garage's hire
purchase people charge, I bought a cheap second-hand car instead.
I always use the bank to buy (10)______________ when I go abroad, because their
rates are better than the bureaux de change. I don't like travellers cheques, and I've
never had my money stolen yet.

My bank is also always trying to sell me a private (11)____________ plan, for

when I retire, but I'm not interested. They also keep offering me (12)____________
about shares, bonds, unit trusts, mutual funds, and so on. They don't seem to realize
that if I could afford to buy all these things, I wouldn't need an overdraft.
Task 2 Complete these sentences about Central Banks using the words in the box.
act / fix / implement / issue / control / function / influence / supervise
Central Banks, such as the Bank of England
1)
____________ as banks for the government and for other banks.
2)
____________ monetary policy either the governments, as in Britain, or their own,
if they are independent, as in Germany and the USA.
3)
____________ the money supply.
4)
____________ the minimum interest rate.
5)
____________ as lender of last resort to commercial banks with liquidity problems.
6)
____________ coins and bank notes.
7)
____________ (floating) exchange rates by intervening in foreign exchange markets.
8)
____________ the banking system.

LISTENING COMPREHENSION (Banking)

Task 1: Listen to Eleanor Stevens, an HSBC Bank branch manager, describing the bank that
she manages. Make notes under these headings.
Location
Opening hours
Number of
employees

Number of
customers
Services
offered
Role in the
community

Task 2: Mark Cowan is the owner of a new shopping service called The Pedigree Page,
specialising in providing a variety of products for pet owners which can be ordered on the
Internet. Listen to the dialogue between Mark Cowan and his bank manager and answer the
following questions.
1)
2)
3)
4)

The bank manager is pleased because _____________________________________

Mark is meeting the bank manager to_____________________________________
Marks plans regarding his business are _____________________________(2 ideas)
____________________________________________________________________
The data/documents the manager needs are __________________________(3 things)
____________________________________________________________________
____________________________________________________________________

VOCABULARY (Finance) Task 1 Match a word from the box with its definition.
There are more words in the box than you need.
transaction
overdue
1)
2)
3)
4)
5)
6)
7)

balance sheet
profit
reminder

tax
debts

assets
accountant

revenue
auditing

money you get from doing business after taking away costs
money that you pay to the government according to your income
officially checking an organisations accounts
a document showing the companys current financial position
the process of making a payment
a person who inspects financial records and prepares tax reports
this letter is sent to customers who havent settled their accounts

Task 2/A Match the definitions 1 to 6 with the financial terms a) to f).
1) money owed by one person or organisation to
another person or organisation
2) a period of time when business activity
decreases because the economy is doing badly
3) difference between the selling price of a
product and the cost of producing it
4) a place where company shares are bought and
sold
5) money which people or organisations put into a
business to make a profit
6) equal parts into which the capital or ownership
of a company is divided

a) gross margin
b) recession
c) shares
d) debt
e) stock market
f) investment

Task 2/B Match the sentence halves.

1) Earnings per share are
2) A forecast is
3) Bankruptcy is
4) A dividend is
5) Pre-tax profits are
6) Revenues are

a) a part of the profits of a company paid to the owners of

shares.
b) a companys profits divided by the number of its shares.
c) a description of what is likely to happen in the future.
d) money which businesses receive from selling goods or
services.
e) when a person or organisation is unable to pay their debts.
f) the money a business makes before payment to the
government.

Task 2/C Complete this report with the terms from part A and B.

In our home markets it has been another excellent year. (1)__Pre-tax profits___ are up by 23
million, and the (2)______________ for the next quarter is equally good. Profits from abroad
are down because of a (3)_____________ in Japan. However, our performance overall has
been good, and then (4)___________ have increased to 26.4p and the (5)__________ will be
increased to 4.3p per share, which will please our shareholders.
We plan to issue new (6)_________ in order to finance expansion in Asia. We also plan to
increase our (7)___________ in plant and equipment before entering the Chinese market. We
are particularly pleased with our performance in France and Germany where
(8)____________ have increased. As a result of using a new distributor, our costs fell giving
us a (9)____________ of 40 percent on our main product line. We will use any extra cash to
reduce the level of our (10)_____________.
Our performance in Italy should improve significantly following the (11)___________ of our
biggest competitor. However, we should not become too satisfied with our share price as
economic conditions remain uncertain and the (12)__________ will continue to reflect this.
Share prices will not rise in the short term.

VOCABULARY (Insurance) Task 1 Match the words in italics from sentences a-e
below to these definitions.
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)

the customers demand for payment _________________

the price an insurance company states to provide insurance_______________
the money the client has to pay to be insured ______________
insurance protection _______________
the conditions of an agreement ________________
the insurance document ________________
financial responsibility ________________
to pay the money which is owed _______________
the money the insurance company pays for loss or damage ____________
produce an official document ______________

She made an expensive claim last year so her car insurance premium has gone up.

At last the other partys insurance company has admitted its liability and has agreed
settle our claim. You should receive a cheque for compensation in the next couple of

Before you sign the policy you should check its terms carefully.

If you find the quotation satisfactory, we can issue a policy by the end of the week.

You have bought some valuable property in the last few years, you should increase
the level of your cover.
Task 2 Complete these sentences with for, with, against, and out.

to
weeks.

Many film stars and artists have insured themselves (1)______Lloyds. The film star Betty
Grables legs were insured (2)______ 1,000,000 but unfortunately they didnt have to pay
(3)______.
Even though there was 10,000 damage the insurance company tried to make her settle
(4)_____ half.
Banks can now take (5)_____ rogue trader cover to protect themselves (6)______ the
unauthorized activities of their employees.
A whiskey distiller insured his nose (7)_______ 200,000 while a famous food critic took
(8)______ a policy insuring his taste buds (9)________ permanent damage.

READING TASK
The jumbled text below describes the process that a car owner has to go through to insure
his/her car. Put the sentences in the right order (a-g).
A
B
C

D
E
F
G

If the car owner accepts the quotation, the company issues a policy which states the
terms of the cover provided. ...........
If he / she is adequately covered and the claim is valid, the insurance company is liable
to pay the claim in full. ...........
For example, third party cover will just pay for damage or injury to other people. Fully
comprehensive cover, on the other hand, will cover damage to the policyholders own
vehicle. ...........
Once the car owner has chosen the type of cover, he / she will be given a quotation for
the premium that has to be paid. ...........
However, if the company decides the car is worth less than the insured value, they will
try to settle the claim for less. ............
This means that, if the policyholder then has an accident, he / she can make a claim.
.............
First of all, he / she contacts an insurance company. The insurance company will ask
for personal and vehicle details and the kind of cover the car owner wants. ....1.....

ARTICLES
Give a Hungarian summary of the articles below. Make sure you include all the
important information.
Lloyd's of London makes loss after hurricanes
Lloyd's of London today reported only a small loss for 2005, despite the worst year for natural
disasters on record.
The world's oldest and largest insurance market confined its losses to 103m following
a 1.3bn profit in 2004. It said last year had cost the insurance industry far more than the
September 11, 2001 terror attacks in the US.

The insurance industry was last year hit hard by claims arising from hurricanes
Katrina, Rita and Wilma amounting to $65bn (37bn). Katrina killed hundreds, flooding New
Orleans and damaging oil rigs in September.
Lloyd's said it had limited its market losses through rigorous performance
management. Since September 11 which led to a 3.1bn 2001 loss at Lloyds insurers
have sold shares, raised money and tightened underwriting standards to withstand a major
catastrophe.
For Lloyds to emerge from such a year with just a small loss represents an excellent
performance by the market, the Lloyd's market chairman, Lord Levene, said.
Lloyds is not an insurance company, but an insurance market made up of members.
There are 62 insurance businesses operating within the 318 year-old market. Lloyds insurers
specialise in risks in areas including natural disasters, aviation and marine accidents.
6th April, 2006
Research shows trust in online banking
Britons are more confident about the security of online banking now compared with
three years ago despite recent website scams and loopholes, according to research published
today.
The study conducted by the market information specialist TNS shows that more than
one in five (22%) adults surveyed were either likely to start using or planned to increase their
use of online banking in the future, and those aged 16-24 are the most confident users. A
further 11% used internet banking services and had no plans to change their usage, while just
4% planned to decrease the use of internet banking.
Rosemary Bayman, managing consultant at TNS said: Over the past few years, as
internet access has increased, it has become more convenient for many people to pay their
bills and manage their finances online. However, internet banking is not the right solution for
everyone: banks must continue to offer their customers choice in how they manage their
finances. In a society where there are greater constraints on peoples time, online banking
offered customers greater flexibility, making it easier for them to run financial affairs. Ms
Bayman added: In the light of recent security scandals, banks with online facilities have
doubled their efforts to improve security and remove any weaknesses from their systems.
USE OF ENGLISH / WRITING
Orders
Task 1 Use the words below to complete this extract from a covering letter that has
been sent with an order.
alternative
hand over

consignment
packed

crates
settle

delivery
transaction

depot
wrapped

Would you please make sure that the (1) ________________ of fabrics is (2) _____________
carefully in tissue paper, and (3) ________________ securely in (4) ________________ and
sent to our main goods (5) ________________ at the above address in Milan.

If the items listed are not available, please do not send (6) ________________ materials or
colours. If there are any problems with (7) ________________ , could you let us know
immediately.
We will (8) ________________ your draft for 25,000 DM, at our bank as soon as they (9)
________________ the shipping documents.
If this (10) ________________ is successful, we will place larger orders in the future.

Task 2 Match up the phrases in A with the phrases in B to make complete sentences,
and put the verbs into the first conditional.
A

1 Unless the consignment (arrive) by the end

of the week,

a if you (order) more than 20,000 units.

2 We (be able) to give you a discount

b we (place) further orders with you.

3 Unless the items (be/wrap) with extreme

care

c we (accept) an alternative.

4 If the colours we specified (be) not in

stock,

d we (have to) cancel the order.

5 We (send) the consignment by road

e many of them (get) broken.

6 If this transaction (be) successful,

f if the railways (be) on strike.

Task 3 Complete each unfinished sentence in the exercise below, so that it means the
same as the one before it.
1 If we dont hear from you, well assume there are no problems.
Unless we
2 We cant give you a 15% discount because your order isnt large enough.
If you order
3 On receipt of your order, well despatch the goods immediately.
As soon as

4 We can only process your order if we receive the necessary documents within fourteen days.
Provided that we
5 The colour you require may be out of stock. Would you accept an alternative?
If we
6 We cannot accept your order without a letter of credit.
Unless you
Task 4 The following verbs can all be used with the noun ORDER. Choose the best verb
to complete the sentences, using each one only once, in the correct form.
confirm
refuse
deliver
ship
make up
cancel
despatch

place

1 We should like to ________________________ an order with you for 5,000 units.

2 As we are unable to supply the quantity you requested, it would be quite understandable for
you to ________________________ your order.
3 We are confident that we will be able to ________________________ the order to you next
week.
4 You will be pleased to know that your order K451 has already been
________________________ from our depot.
5 Please ________________________ your order in writing, so we can inform our
distribution depot.
6 Your order was ________________________ yesterday on the SS Oxford.
7 Unfortunately, we shall have to ________________________ your order unless payment is
settled in cash.
8 I would like to reassure you that your order will be ________________________ in our
depot by staff who have experience in handling these delicate materials.

Task 5 In this email Mr Takahashi is placing an order, but the sentences have become
confused. Rewrite the email with the sentences in the correct order, starting new
paragraphs where appropriate.
1.

Best wishes

2.

If some of the items are out of stock, please do not send substitutes.

3.

When you send the order, please make sure all cartons are clearly labelled with our
logo and numbered.

4.

I can confirm that the 10% quantity discount off net prices that you offered is
acceptable.

5.

Dear Sig. Causio

6.

I attach our order No 49301/231 for the selection of shirts, trousers, and jackets which
we discussed on the phone yesterday.

7.

Kosaburo Takahashi

8.

As agreed, we will pay by letter of credit I have already arranged this with the bank.

9.

Please note the order must be here by 10 April, in time for the new season.

10.

As soon as the bank hands over the shipping documents, the credit will be released.

Task 6 Make words from the jumbled letters and match them with the definitions
below.
a SMPOMILCTEN IPLS
b NOVCIIE
c GIFOWRDNRA GNETA
d TSTMTEELEN
e RIA ILWYALB
f IHPS
g VIGCNERO TRTEEL
h CIAVDE TNEO
1.
2.
3.
4.
5.

PERSON OR ORGANIZATION THAT CONVEYS GOODS TO THEIR

DESTINATION.
LETTER ACCOMPANYING A DOCUMENT OR GOODS, EXPLAINING THE
CONTENTS.
LIST OF GOODS OR SERVICES THAT STATES HOW MUCH MUST BE PAID
FOR THEM.
DOCUMENT INFORMING A CUSTOMER THAT A CONSIGNMENT IS ON ITS
WAY TO THEM.
PAYMENT OF AN ACCOUNT.

6.
7.
8.

SMALL PIECE OF PAPER WITH A COMPANYS DETAILS ON IT.

TO SEND GOODS BY ROAD, RAIL, AIR OR SEA.
DOCUMENT THAT GIVES INFORMATION ABOUT GOODS SENT BY AIR.

Task 7 Complete sentences 1-12 with the pairs of words.

accept/quotation
correct/amend
note/records

apologise/inconvenience
assure/prompt
attached/delay
discount/repeat
dispatched/firm
first-time/pre-payment
processed/track
temporarily/stock
would/grateful

1.

Please return attached form asap so that your order can be processed without any
delay.

2.

We ____________ be ________________ if you could supply bank references.

3.

Our normal terms for _________________ customers are 50% ________________ .

4.

I have spoken to my line manager, and we are pleased to offer a small _____________
on this occasion in the hope that it will lead to ________________ orders.

5.

The goods will be __________________ 3 days from receipt of a _______________

order.

6.

We _________________ you that your order will have our ________________

attention.

7.

We _______________ your _______________. Please ship at the first available

opportunity.

8.

Your order has been ________________. You can ________________ shipping

details on our website.

9.

We ___________________ from our __________________ that payment of invoice

5718 is still outstanding.

10.

We are _______________ out of _________________of this item, but we expect new

supplies shortly.

11.

We __________________ for any _________________ which may have been caused.

12.

The __________________ information is given below. Please _______________ your

records accordingly.