Corporations must decide whether to raise money by borrowing or by issuing stocks. There is a

Greater risk in borrowing because the company puts itself in debt to someone else. If the debt

Cannot be repaid, bankruptcy may result. By borrowing, however, management has more control

Over the operations of the company, whereas when a corporation offers stock to the public, a degree

Of control is lost. Management becomes responsible to the ownership — those who hold the stock.

Stock issues also decrease company income because dividends must be paid out to stockholders

From company profits. New companies are quite likely to issue stock, since they are seeking venture

Capital, or start-up money.

The Function o f Securities

Commentary and Notes to Text 18.7.1.2

To borrow — брать взаймы (заимствование)

Certificates of debt — долговые сертификаты

To recover the principal — возмещать основную сумму

Lender — заимодавец (кредитор)

To raise money — добывать деньги

Debentures — долговые обязательства (облигации), дебентуры

Versus... — в сравнении с...

Stock issues... — выпуски акций...

Venture capital — венчурный капитал

18.7.1.3. Read the text “Securities — Stocks” and give a short definition of securities mentioned

In the text.

Securities — Stocks

Stocks. Ownership, or equity interest, in a corporation is represented for most investors by

two types of stock: common and preferred. Of the two, common stock represents the primary