Business Studies Course - Investment
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Bankrupcy report - Functions

This is part of a conversation between Sally and Ivan. Read the conversation, and study how Ivan replies to Sally. What is he doing, and why? When you have finished click on 'ANALYSIS'

Sally: Well, Ivan. I hate to say I told you so, but it looks as though one of your investments has run into problems.

Ivan: Oh no. It all seemed to be going so well. Which investment were you talking about?

Sally: Have you seen this article about Wagnerox?

Ivan: Yes, they have gone bankrupt. It's a pity. They had some really clever technology that might have changed the way that you use computers. But their business plan was not up to much, it turned out.

Sally: Peter was telling me that you made a big investment in Wagnerox last week, while I was out of the office.

Ivan: Well, not that big an investment. I went in for twenty thousand pounds actually.

Sally: Why didn't you tell me?

Ivan: I thought I'd leave it to Peter. He seems pretty efficient. And I knew you wouldn't be happy.

Sally: Can you blame me? We have to explain to Mr Blake that we have lost 20 000!

Ivan: Why? What have you done?

Sally: Don't be silly, Ivan. I'm talking about Wagnerox. Haven't you read the article? The shares are worthless.

Ivan: So I will have no trouble buying the shares back then, will I?

Sally: What do you mean ? you mean ..?

Ivan: Yes, Sally, I shorted them. That means, Sally, that you sell shares you don't have. Last week I sold 20 000 worth of Wagnerox shares. Now I have to buy them to balance my position. The shares are still trading at 0.25p. So I am going to make well over 19 000 pounds.

Sally: Ivan, you are a beast.

Ivan: I'm a beast who has just done a nice bit of business. Do you fancy a drink after work to celebrate?

ANALYSIS