1st year English / semester 2
Unit 5: The money and its importance in the world of business
Banks and the stock exchange
The main function of banks is to keep their depositors’ money safe and readily available.
A depositor’s money may be paid into a bank on deposit account or on drawing account also
named “current account”.
A “deposit account” is made for a fixed period and is allowed a low rate of interest. A
“drawing account” does not bear any interest but the customer may draw on his money at any
time and he is given a cheque book for his transactions and payments.
All business transacted through the Bank is recorded in the “Pass book” so that the
customer may have a statement of his account whenever he requires it.
In addition, banks collect their depositors’ accounts, discounting them if required. They
can transfer money abroad by delivering letters of credit or travellers’cheques.
Letters of credit are documents requesting the banks’ agents abroad to advance the bearer
any sums up to a stipulated amount.
Travellers’ cheques are for fixed amounts which can be cashed anywhere against the
customer’s signature.
The Stock Exchange (Stock Market): is a place where dealers in securities meet to
transact business. Transactions are effected through stockbrokers, who help their customers to
make investments by buying securities or to sell their shares, bonds or debentures when they
want to transfer them. The prices of the funds admitted to an official quotation are recorded in
the official list issued every afternoon.
Activities
Activity 01: Comprehension questions.
1. What is the main function of banks?
2. Explain the difference between deposit account and current account?
3. Why the letters of credit is needed abroad?
4. What is meant by the Stock Exchange?
Activity 02: Complete the sentences with the best word.
1. Dividends are paid to…………..each year if adequate profits are made.
a) customers b) debtors c) shareholders
2. The value of a company's shares is called………………….
a) equity b) dividend c) holding
3. A ................. is an agreement by a government or organization to pay back, with interest,
money it has borrowed.
a) bond b) portfolio c) stock
4. He offered his home as security or………………when he borrowed from the bank.
a) warranty b) collateral c) deposit
5. We want to find a partner who will take a……………..in our business.
a) risk b) stake c) share
6. Money owed by a company to its suppliers forms part of its……………. .
a) losses b) damages c) liabilities
7. We have a………………..of $1 million to finance our three-month advertising campaign.
a) budget b) cost c) bill
Activity 03: Match each concept to the correct definition.
1/ Cheque book A/ Any proof of ownership or debt that has been assigned a value and may be
sold.
2/ Deposit account B/A loan to a company or government that pays investors a fixed rate of return
over a specific timeframe.
3/Rate of interest C/A small book containing preprinted paper with the customer's checking
account information
4/ Current account D/an instrument used by a lender, such as a bank, to secure loan repayments
against the borrower’s assets.
5/ Stockbrokers E/A type of bank account where the money in it earns interest.
6/ Bond F/A personal bank account which you can take money out of at any time using
your cheque book or cash card.
7/ Securities G/Equal parts into which the capital or ownership of a company is divided.
8/ Debentures H/Buys and sells securities on a stock exchange on behalf of clients.
9/ Shares I/ The percentage usually on an annual basis that is paid by the borrower to the
lender for a loan of money.
10/Debt J/Money owed by one person or organization to another person or
organization.
Activity 04: Match the verbs with the correct noun to make frequent collocations.
1. to write off a) a share issue
2. to file b) a company
3. to take out d) a debt
4. to underwrite c) for bankruptcy
5. to liquidate d) a loan
