ENGLISH FOR BUSINESS

“FINANCE”

Lecture :

Syaifullah, S.Pd.I., M.Pd.

GROUP NAME:
SHENDY ELISABET S (1988203032)
FLORENCYA BR TUMANGGOR (1988203027)
PRIMA MATTA ALLEGRA (1988203059)

UNIVERSITY OF LANCANG KUNING

FACULTY OF TEACHING AND EDUCATION
ENGLISH DEPARTMENT
PEKANBARU
2020/2021
 Preface
Assalamualikum Wr.Wb
Praise and gratitude to Allah SWT who has given abundance of Mercy, Taufik and His
guidance so that we can complete the preparation of this paper on Finance properly. We do not
forget to give prayers and greetings to the Prophet Muhammad, who has shown the path of
goodness and truth in the world and the hereafter to mankind.
This paper was prepared to fulfill the assignments of the English For Business course and
also for the general public as material to add knowledge and information that hopefully is useful.
We compile this paper with all our capabilities and as much as possible. However, we
acknowledge that the preparation of this paper is certainly not perfect and there are still many
mistakes and shortcomings. Therefore, we, as compilers of this paper, ask for constructive
criticism and suggestions from all who read this paper, especially the English For Business
Lecturers, which we hope as correction material for us.
Wassalamualaikum Wr.Wb

Pekanbaru, 28 February 2021

Author
 Table of Contents
B. Role Play Microfinance……………………………………………………………………..3
C. Kinds of financial institutions of banks……….…………………………………………….3
2.VENTURE CAPITAL………………………………………………………………………….4
A.understanding venture capital………………………………………………………………4
B.venture capital profit…………………………………………………………………….…4
C.capital venture investment…………………………………………………………………...4
D.role play investing in starts ups……………………………………........................................5
3.BONDS………………………………………………………………………………………….6
A.bond characteristics………………………………………………………………………….6
B.types of bonds……………………………………………………………………………….6
A.
B.
C.
D.
E.
A.
B.12
C.
conclusion………………………………………………………………………………………. 14
reference …………………………………………………………………………………………15

1.BANKING
A.Understanding financial institutions of Banks

"The bank's financial institutions are one of the finance firms on which it directly aggregates
funds and services to large communities."
As for some of the banking services provided by the financial institutions of the bank are:

Collecting services (inkaso) clearing services (valas) the safe deposit service boxtravelers
chequebank cardbank draftletter of credit (l/c) and other bank services.

B. Role Play : Microfinance

A major bank has been rescued by the government after losing billions of euros on
speculative investments.But it has lost a lot of customers and now haa a very bad reputation.one
of the directors thinks that the way the bank can regain public trust and restore its to enter the
microfinance market in developing countries.He/she calls a meeting to explain the idea to
colleagues.Your teacher will give you arole to prepare.Take part in the meeting to decide what to
do.

C. Kinds of financial institutions of Banks

1. Central bank

The central bank is a financial institution with the responsibility of stabilizing the
national value and value

2. General bank

General bank function As a financial intermediary. As a financial institution, which provides a

bridge between those who have more money (the surplus unit) and those who need it.

3. Rural Banks (BPR)

A Rural Bank (BPR) is a type of bank that provides financial services in the form of savings,
time deposits, and others of the same form, then distributes these funds for business capital
needs.

D. Objectives of Bank Financial Institutions

.Banks collect funds from valuable public documents so that public funds are safer. The Bank
redistributes funds raised for use in financing in the fields of economy and development. The
Bank provides capital assistance in the form of credit to the public or companies for venture
capital.
2. VENTURE CAPITAL

A. What is Venture Capital?

Venture capital (VC) is a company built specifically to provide investment to small

companies. In this case the small company in question is a startup, a technology company that is
designed to develop quickly. In return for the investment that has been given, the venture capital
will get a portion of the shares of these companies. The hope is that when the funds are
disbursed, the shares are worth more than the capital they provide. Therefore, venture capital
does not only provide capital to one startup, but also to many companies to make as much profit
as possible.

B. How does venture capital profit?

Every venture capital usually has two types of income, which is:

1. Management fee

Is that the limited partner of operations that must be given at the beginning of
investments, and that can not be withdrawn from them. The management fee should be paid by
the lp between 2 and 3 percent of the total investment.

C. capital venture Investment type.

The venture capital's investments are diverse as well, so what are the types?

1.Seed capital

Seed capital is a startup investment that remains in the product's validation stage. The
venture capital will help the startup develop products, market research and operational costs.

2.Startup capital

The stage can also be called "later-seed stage" which is a stage for startups that already
have products and already have income. Venture capital that provides investment at this stage is,
in a sense, not too much. Investments given will usually be used to recruit more team members,
additional market research, and also to maximize products.

3.Early stage capital

 These investments are made to startups that have been operating for about two or three
years. Where the startup already has an office, a team management, and of course a growing
sales. At this stage, the venture capital will provide an investment to boost sales to a peak level,
boost productivity, and increase company efficiency.

4.Expansion capital

It is an investment if a startup is stable enough and they require assistance from venture
capital to carry out the next expansion. Investments given at this stage will usually be used for
marketing.

5. Late stage capital

These investments are offered when a startup reaches the stage of sale and has an
impressive income. Investments given are assistance to increase capacity, marketing or increase
employee salaries. Moreover, investment at this stage usually offers to make an acquisition and
join (m&a) with other companies to dominate the market. It could also be necessary to exit by
offering a share to the public.

D.Role play; Investing in start – ups

Imagine that you are investment managers for a large financial institution such as a
pension fund or an insurance company that has decided to invest up to 2% of its assets in start –
up companies.it will not be difficult to find companies in which to invest.because you regularly
receive proposition from venture capital firms,but first,you want to establish a strategy.

3. BONDS

A. The concept of a bond is either a credit-debt certificate or a certified creditor issued

by a corporation or a government to the lender or the investor. Thus, the bonds were the debtors,
while the shareholders were the debtors. Normally, bonds are issued by companies requiring
capital loans from outside companies. The loan has a varying tenor or time frame, ranging from 5
to 30 years. The bonds are also a product of capital markets, not of bank or non-bank finance
institutions. But, Banks can also have the role of agents who sell bonds.

#Bond Characteristics
Bonds have different characteristics from other types of securities, namely:

 Bond Value
 Term of the Bond
 Principal and Coupon Rate
 Payment schedule.

# Types of Bonds

Bonds have many types which are divided into several categories, namely based on the
issuer, the interest payment system, and based on the types and characteristics. In addition, the
types of bonds are also divided based on the benchmarks used. However, in general the types of
bonds, namely

1. Based on the nominal

Judging by the nominal value, bonds are divided into two, namely: Conventional Bonds, are debt
securities that have a very large nominal amount, which is around 1 billion rupiah per slot. Retail
bonds are debt securities that have a small nominal amount, such as 1 million rupiah only.

2. Bonds Based on the Issuer

If viewed based on the issuer, the bonds will be divided into three, namely:

3.Corporate Bonds

Corporate bonds are a type of bond issued by certain companies such as the government
or state-owned enterprises or private companies with a period of 1 year. For example PT
Indofood Sukses Makmur Tbk. with the INDF code, issued bonds worth Rp. 2 trillion in 2014
with a fixed interest rate for a period of five years.

4.Government Bonds

Government bond is a type of bond issued by the government. This type of bond was first
issued in Indonesia in August 2006. However, Indonesian government bonds are further divided
into four parts, namely, Indonesian retail government bonds or ORI, Retail Sukuk, Retail Saving
Bonds or SBR and Savings Sukuk or ST.
5.Municipal Bonds

Municipal bonds are a type of bond issued by local governments to fund development
projects related to the public interest.

Interest payments .Based on interest payments, bonds divide into four types, which is:

 Zero drawn bond.

 Coupon Bonds
 Fixed Coupon Bonds or Fixed Coupons
 Floating Coupon Bonds or Floating Coupon.

Bonds have several distinct advantages and defaults like any other securities. Here is the
explanation:

1. Excess bonds

Bearer bonds will receive interest or bonds that are of higher value than interest on bank
deposit. Some of these coupons are either permanent or floating. Bonds with bonds would be
easier to trade in the secondary markets in accordance with the ( BEI ) mechanism or out of( BEI
).There is no invitation, the resignation will benefit in the form, that is, one day the resignation
will be traded. Bonds can be used as collateral for bank credit or purchase other asset
instruments. Investment is one of the safe investments because the payment of principal debt and
coupons is guaranteed in the rules of law.

2. Bond shortage.

Not always bonds are safe, as some kinds of bonds carry a risk of default from the bearer
bonds, so the investors cannot profit or lose their investment value. However, such risks are
limited to types of bonds that are not protected by legislation.

Bonds will also be more easily affected by economic changes, political conditions, or interest
rates. In addition, investors are more likely to suffer losses if they sell bonds at the secondary
market before they are due.

4.STOCKS AND SHARES

Stocks
 Let's confine ourselves to equities and the equity markets. Investment professionals often
use the word stocks as synonymous with companies—publicly-traded companies, of course.
They might refer to energy stocks, value stocks, large- or small-cap stocks, food-sector stocks,
blue-chip stocks, and so on. In each case, these categories don't refer so much to the stocks
themselves as to the corporations that issued them. Financial pros also refer to common stock
and preferred stock, but, actually, these aren't types of stock but types of shares.

Shares

A share is the single smallest denomination of a company's stock. So if you're divvying

up stock and referring to specific characteristics, the proper word to use is shares. Technically
speaking, shares represent units of stock.

Capital growth

Sell shares for more than you bought them for. The market price of shares fluctuates due
to supply and demand, driven by the attractiveness of a company and its performance.

Receive regular payments in the form of dividends, which are your share of company profits.

Share prices can change suddenly, for example, due to a company announcement. Shares
are therefore more suitable as a medium/long-term investment, since they will have more time to
recover from any dips. It’s a case of balancing risk and reward, for example, small, start-up firms
are more risky than larger, more established companies (‘blue chips’), but might offer faster
growth. It’s therefore a good idea to set goals and timescales before getting started.

How to buy stocks and shares?

Simply open an account and pay in some money. You’ll then be ready to buy and sell shares
online (or over the phone) with us. Every day in the UK, hundreds of thousands of deals take
place, trading several billion pounds worth of shares.

You can buy shares in a variety of ways:

Individual companies, which you’ll need to keep a close eye on.

Collective investments, such as funds or investment trusts, which can spread risk and offer you a
more ‘hands off’ approach.
Concepts in Stocks and Shares

Shares: The total capital in the company is divided into very small units. These units form
the worth of a company. Each of this unit is called stock or a share. Stock capital: To run a
company, you require capital. And this total capital in a company is called as the stock capital.

Dividend: When the company makes a profit it distributes it among its shareholders. This
distribution of profit is known as the dividend. It is usually paid annually in the form of a
percentage of a share. Also, this dividend is only paid on the face value of any bond.

Shareholder: Perhaps the most important body in the organization are the shareholders.
The shareholder of a company is the one who owns more than one share of the company. As a
part of authentication, the company issues a certificate to every shareholder describing the total
number of shares given and it’s value..

Brokerage: Different companies have different stocks and it can be traded by anyone in
the market. This is done through brokers at the share market. The fee that these brokers charge is
called the brokerage. When a stock or a share is purchased, then the cost price is also added with
a brokerage. Also, when the stock is sold, this brokerage is deducted from the selling price.

Market value: Through brokers, you can trade and sell the stocks of the different
companies in the market. This value of shares changes depending upon the market.

This change is called the market value of a stock or a share. There are conditions in a share:

 It is called at a below par or discount when the face value of a share is more than the
market value
 The market value is at par when the face value is the same as the market value.
 It is above par or at a premium when the face value is less than the market value.

5.TAKEOVERS
Acquisition is a takeover (takeover) of a company by buying shares or assets of the
company, the company that was purchased remains. (Brealey, Myers, & Marcus, 1999).

Reasons for Mergers and Acquisitions

There are several reasons for companies to merge either through mergers or acquisitions,
namely:

a. Growth or diversification

Companies that want fast growth, in terms of size, stock market, and business
diversification can carry out mergers and acquisitions. The company does not have the risk of
new products.

b. Synergy

Synergy can be achieved when the merger produces economies of scale. The level of
economies of scale occurs because the combination of overhead costs increases revenue that is
greater than the total revenue of the company when it is not merged.

c. Increase funds

Many companies cannot obtain funds for internal expansion, but can raise funds for
external expansion. These companies merge with companies that have high liquidity, which
causes an increase in the company's borrowing power and a decrease in financial liabilities. This
allows for increased funding at a low cost.

d. Adding management or technology skills

Some companies cannot develop properly because of lack of efficiency in management or

lack of technology. Companies that cannot streamline their management and cannot pay to
develop their technology can merge with companies that have expert management or technology.

e. Tax considerations

Companies can carry tax losses for up to 20 years or until the tax losses are covered. A
company that has a tax loss can make an acquisition with a company that generates a profit to
take advantage of the tax loss.

f. Increase owner liquidity

Mergers between companies allow companies to have greater liquidity. If the company is
larger, the stock market will be wider and stocks will be easier to obtain so that it is more liquid
than smaller companies.
g. Protect yourself from takeovers

This occurs when a company becomes the target of a hostile takeover. The firm's target is
to acquire another company, and finance its takeover with debt, because of this debt burden, the
company's liabilities are too high to be borne by interested bidding firms (Gitman, 2003).

Types of Mergers and Acquisitions

According to Damodaran 2001, a company can be acquired by another company in several ways,
namely:

a. Merger

At the merger, the directors of both parties agree to join with the approval of the
shareholders. In general, this merger is approved by at least 50% of the shareholders of the target
firm and the bidding firm. In the end the firm's target will disappear (with or without a
liquidation process) and become part of the bidding firm.

b. Consolidation

After the merger process is complete, a new company is created and shareholders of both
parties receive new shares in this company.

c. Tender offer

Occurs when a company buys another company's outstanding shares without the firm's
target management approval, and is called a tender offer because it is a hostile takeover. The
firm's target will remain as long as there is resistance to the offer. Many tender offers later turned
into mergers because the bidding firms succeeded in taking over control of the firm's target.

d. Acquisistion of assets

A company buys another company's assets through the firm's target shareholder approval.
(p. 835).

Acquisition Case Example

1. 1.Aqua which was acquired by Danone. The first example of an acquisition case is Aqua,
which is the largest bottled drinking water producer in Indonesia. The acquisition was
 carried out because the way the development was not strong enough to save Aqua from
the threat of new competitors.
2. 2.BenQ against Siemens. The second example of an acquisition case is BenQ's purchase
of a large portion of Siemens' stake. Siemens is a mobile phone manufacturer from
Germany founded on October 12, 1847 by Werner von Siemens. After becoming the
ruler of the European market, in 2005 Siemens suffered an operating loss of US $ 170
million, after which its market share continued to decline. Currently, Siemens only
controls about 5% of the world cellphone market, very far behind Nokia which controls
30% of the market.
3. Acquisition of PT. Semen Gresik and Thang Long Cement PT Semen Gresik Tbk
(SMGR) made acquisitions with a cement company from Vietnam, Thang Long Cement.
The acquisition is planned to be completed in mid-December 2012.
 COUNCLUSION
Financial statements are the result of an accounting process that can Used as a tool to
communicate financial data or activities Companies to concerned parties. The financial
statements It is necessary for the concerned party to have high quality and In accordance with
general principles of accounting. But facts on the ground. Shows that many of the problems are
still encountered in the report Financial thus leaving a reasonable opinion with the exception The
financial statements.
 Reference

http://www.kotaksecurities.com
http://www.wealthify.com
https://www.kompas.com/skola/read/2020/01/29/140000269/bank-
pengertian-fungsi-dan-jenisnya?page=all
https://www.linovhr.com/modal-ventura/
https://jurnal-sdm.blogspot.com/2009/05/obligasi-pengertian-
karakteristik-dan.html
https://jurnal-sdm.blogspot.com/2009/07/merger-dan-akuisisi-
pengertian-jenis.html
https://pakdosen.co.id/akuisisi-adalah/