1、Unit 13The Business of Making MoneyExercises1. Questions on the text:1) What are the latest developments in private equity in recent yearsCompared to the 1980s, the targets of today s private equity groups are much bigger in size. In recent years, the private equity industry has raised record moneya

2、nd its share of mergers and acquisitions has grown massively. The industry has also become a byword for money-making skills but its wealth has also brought many enemies.2) According to the article, what are the main inconveniences for a company to be a publicly quoted companyThe main inconveniences

3、for a publicly quoted company include: its executives have to face intrusive media coverage; it has to obey strict and long corporate-governance codes; it also has to face the threats of activist investors and short sellers and the scrutiny by some politicians.3) What are the main reasons for a comp

4、anyto get listed on a stockmarket Traditionally there are three main reasons to get a company s sharelisted on a stockmarket. The first is to raise capital, either to expand the business or to allow the founders to realise their wealth. The second is to help retain staff, who can be offered share op

5、tions as an incentive to stay and work hard. The third involves prestige;customers, suppliers and potential employees may be reassured (and attracted) by the apparent seal of approval given by a public listing. Meanwhile, being publicly listed gives a companybetter access to fund investors and retai

6、l investors.4) Why are companies in the Anglo-Saxon economies reluctant to borrow from banksCompanies in the Anglo-Saxon economies were reluctant to borrow from banks because their often felt nervous about the possibility of the sudden withdrawal of credit from the banks, due to a change in lending

7、policy, new management or an economic downturn.5) According to the article, what are the main sources for today scompanies to raise money (including equity capital and debt) Nowadays the main sources for companies to raise money are: first, equity market; second, banks, though much less important th

8、an they used to be; third, bond market; fourth, private equity.6) How do private-equity firms respond to the problems identified byProfessor Jensen with regard to public companiesProfessor Jensen argued that the structure of a public companycreatesan inherent conflict between investors and the manag

9、ers they hire to run the business, particularly with regard to the use of free cash flow. He also argued that borrowing imposed discipline on executives. Private-equity firms have applied his argument in practice by gearing up the balance sheets of companies they buy with more debt than public firms

10、 are willing to accept. Though private equity firms, in the process, often have a bad reputation for relentlessly cutting unprofitable operations and shedding jobs, academic studies suggest that they create jobs rather than destroy them.7) What are the similarities and differences between today s pr

11、ivate-equity firms and the conglomerates of the 1970s and 1980s Similarities between today s private -equity firms and the conglomerates of the 1970s and 1980s are: first,both of them use theirfinancial power to construct diverse industrialempires; second, bothclaim that they could improve the compa

12、nies they owned through superior management. The differences are: first, the conglomerates used highly rated shares to buy companies while private-equity firms use borrowed money; second, the conglomerates used to makeever-bigger acquisitions continuously to expand while private-equity firms claim t

13、o sell regularly their portfolio companies or business for profit.8) What make it impossible for the private-equity model to become the norm for companiesThere are several reasons: first,what might be logical for anindividual company might not be best for the economy overall. If all companies were t

14、o substitute debt for equity on the scale that private-equity firms have, there would be an increase in the cost of debt. That would lead to lower equity returns; second, since private-equity firms need an exit route to sell their investments, a public market will be needed in the end for someoneto

15、realise their profit; third, a bigger role for private equity might makethe economy more vulnerable because in a world where most companies carried private-equity-style debt levels, companies would be much more vulnerable and recessionsmight become much more frequent andconsequently monetary policy

16、would become more difficult, and even government revenues might be affected.9) According to the article, what factors have helped the development of private-equity firms since 2003Those factors are: low interest rates, lots of liquidity and rising asset prices 10) What are the signs showing that pri

17、vate-equity firms maynow face the peak of the cycleThose signs are: first, bond yields have been rising, making takeovers more expensive; second, the high level of corporate profits suggests that it could be difficult for private-equity firms to wring more money out of these companies; third, the re

18、lentless campaign againstprivate-equitytax privileges maylead to government actions againstthe interestsof private-equity firms; last,more and moreprivate-equity deals often leads to more competition and thus lower returns.2. Fill in each blank of the following sentences with one of the phrases in t

19、he list given below:1) The journey usually takes six weeks but you should allow for delays caused by bad weather.2) A popular bicycle rental scheme in Paris that has transformed travelin the city has run into problems just 18 months after its successful launch.3) China' s import as a proportion

20、of total trade has substantially increased in recent years as it ' s been pursuing a more balanced trade.4) A growing pile of evidence shows that skimping on sleep promotes weight gain.5) Such a move would put the bank in danger of going bust .6) We have turned down four applicants already.7) Wh

21、enyou're cooking, you should keep all the ingredients close at hand.8) She wrote to him in the belief that he would help her.9) Dr. Cong will continue to lead the company as its CEOand hold a stake in it for three years.10) A lot of questions were being asked at the conference today and surprisi

22、ngly the officials answered themin spades .11) In the absence of outside leadership, wehave created these guidelines in order to respond timely and effectively.12) With the joining of South Africa, the Bric club of influential emerging economies is now in pursuit of a common market among them.3. Mat

23、ch the terms in column A with the explanations in column B:A B1) corporate governance a) An investor who attempts to force a corporation tomake changes in management, board structure,investment policies, use of retained earnings, orother practices, often by introducing shareholderproposals or puttin

24、g forward alternative directors. 62) bridge financingb) An interest group that endeavors toinfluence3) trade union another, that4) stakeholder companies before5) short seller laws, andcorporation (or6) activist investor have banded7) venture capital company8) pressure group currency, ortime9) asset

25、stripping startup firms andgrowth10) stock option has direct orpublic policy and especially governmentallegislation, regarding its particular concerns andpriorities. _8c) A privilege, sold by one party togives the buyer the right, but not the obligation, tobuy or sell a stock at an agreed-upon price

26、 within acertain period or on a specific date.尤d) A method of financing, used bytheir IPO, to obtain necessary cash for the maintenance of operations. 2e) The set of processes, customs, policies,institutions affecting the way acompany) is directed, administered or controlled. 1f) An organization of

27、workers thattogether to achieve common goals such as higherwages or better working conditions. 3g) The process of buying an undervalued with the intent to sell off its assets for a profit. 9h) An investor who sells a commodity, security which he or she does not own at the of sale. 5i) Money provided

28、 by investors to small businesses with perceived long-term potential. 7j) Person, group, or organization thatindirect stake in an organization because it canaffect or be affected by the organization's actions,objectives, and policies. 44. Translate the following into Chinese:出于幾個(gè)原因，上市的前景對(duì)私募股權(quán)投資公

29、司而言具有相當(dāng)?shù)奈Α?duì)創(chuàng)始人和其他高級(jí)合伙人來(lái)說(shuō)，上市提供了一個(gè)契機(jī)，既可以實(shí)現(xiàn)他們所創(chuàng)造的 企業(yè)的一部分價(jià)值，又能成為資本的另一個(gè)來(lái)源，使他們能為其公司提供資金。對(duì)公司而言，上市為新職位引進(jìn)高級(jí)人才提供了 “通貨”，甚至還能在未來(lái) 的收購(gòu)中使用這一 “通貨”。對(duì)投資者而言，上市是一個(gè)機(jī)會(huì)，讓他們能夠加入到私募股權(quán)投資公司源源 不斷的錢流之中，而過(guò)去他們對(duì)此只能無(wú)奈地挑刺和眼紅。 現(xiàn)如今他們不僅能投 資基金，還能直接投資于私募股權(quán)投資公司本身。然而，這些公司可不是標(biāo)準(zhǔn)的上市公司。私募股權(quán)投資公司的價(jià)值在于他們 能夠迅速而有力地改善證券投資公司的狀況，向管理層提供大筆的股權(quán)激勵(lì)薪 酬，并且實(shí)

30、施高度專一的公司治理和監(jiān)督。而這一切只有在沒(méi)有公開(kāi)市場(chǎng)的關(guān)注 和審視之下才能實(shí)現(xiàn)。因此，即便已經(jīng)上市，這些公司仍然竭其所能盡力為其證券投資公司保持 “黑 匣”的狀態(tài)。因此，與其他上市公司相比，它們向投資者披露的信息更少，在公 司治理和信托方面所作的承諾更有限。經(jīng)濟(jì)景氣時(shí)，市場(chǎng)信任私募股權(quán)經(jīng)理們，相信他們知道用“黑匣”式投資方 式要達(dá)到的目的。這時(shí)債權(quán)融資更加容易，而估值會(huì)隨之迅速上升，同時(shí)早期的 回報(bào)激發(fā)了巨額的籌資水平，這一切在第一批私募股權(quán)投資公司上市時(shí)達(dá)到了頂 峰。不過(guò)，在如今的經(jīng)濟(jì)背景下，投資者惶然不安，同時(shí)信任不足使上市的私募 股權(quán)投資公司的股票變得十分脆弱。 即便是在經(jīng)濟(jì)平穩(wěn)時(shí)期，

31、不管是投資者還是 分析師都沒(méi)有充分的把握預(yù)測(cè)這些公司的收入和現(xiàn)金流程度。在目前的環(huán)境下， 由于人們對(duì)任何一種信息披露和透明度不足的交易模式缺乏了解和信心，因此它們不可能成為上市股票市場(chǎng)支持的解決方案，即使它們以前具備競(jìng)爭(zhēng)優(yōu)勢(shì)。5. Fill in each of the following gaps with one of the sentences given below:1) For many, buying shares is about making a quick profit, not investing for the long-term.2) Banks remain relu

32、ctant to lend.3) Their rise was partly driven by the conclusion that equity markets were not the most efficient means of raising capital.4) The approach was simple.5) After about five years, during which time debt would have been paidoff and profits lifted, the company would either be floated or sol

33、d directly to a new buyer.Supplementary ReadingHow Long Can U.S. Stocks Keep Their Edge1. Which one of the following statements about the Templeton Growth fund is NOT trueA. It was started by John Templeton.B. It can invest in foreign companies.C. It has always preferred . Stocks since its launch.VD

34、. Many of its top holdings are U.S. companies.2. According to the article, the decline of euro . Stocks.A. has no impact onB. is good news forVC. reduced the domestic attractiveness ofD. has nothing to do with3. Which one of the following statements is NOTthe reason cited by mutual funds to invest i

35、n . StocksA. Many U.S. companies are successful global companies.B. The U.S. economy is in great shape. VC. The outlook for major international markets is rather mixed.D. U.S. companies are quite profitable.4. According to the moneymanagers cited in the article, emerging marketsA. usually have very

36、low valuation of good quality companies.B. have negative returns for equity funds.C. have attracted a lot of capital flows in recent years.VD. will continue bringing huge profits to investors.5. When Mr. Kinniry of the Vanguard Group said “ that discount has now been closed ” , “ that discount ” refers to.A. the price differences between different . Stocks.B. the difference in price-to-earnings multiples between different emerging-market stocks.C. the price differences between different emerging-market s