Business Studies Course - Investment
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A financial column - Functions

Magnus Blake has called Ivan into his office for a talk. Read what he says, and Ivan's replies and try to answer the questions. When you have finished click on 'ANALYSIS'

Magnus Blake: "Hello young Ivan, I just thought I'd ask you to stop in for a minute. I hope you don't mind."
Why does Blake say "young Ivan?"

Ivan: "Um, no, of course not."
What is the significance of the hesitation at the start of this reply?

Magnus Blake: "It's just with Mike Bardwell being sick, and everything, I'd like a chance to chat with you about how things are going."
Why does Mr Blake use the word "chat"?

Ivan: "Fine. I've made a couple of investments, but it's early days yet - I haven't really had a chance to see how they are going to perform."
Why does Ivan's reply start with the word "Fine"?

Magnus Blake: "Ah, yes. Your investments. I've been looking at them. What's your opinion?"
What is Mr Blake asking Ivan to do?

Ivan: "I've chosen three so far. A football club, a solar power start-up and the Wuffy thing. I'm looking at AZB music next. "
Has Ivan answered the question?

Magnus Blake: "Who are AZB music? I've never heard of them. Another of your obscure companies?"
Why is Mr Blake being rather aggressive?

Ivan: "Heavy metal fusion stuff. It's going to be the next big club thing. They have the sole rights to the rock band Cottobis. I reckon Cottobis will be in the top ten inside a month, and stay right up there for about a year. We get in early on their recording company, and make a fat profit."
Is this the right response?

Magnus Blake: "A rock band. Very original. I have to ask you, Ivan what do all these investments of yours have in common? I don't see any link between them, except they are all a bit chancy.
What does "very original" mean here?

Ivan: "Well, if my research is right, they are all going to make a good profit. Well, at least they should. I'm in different market sectors to reduce risk. My instructions are to choose speculative shares, so I reduce my risks in this way.
Why does Ivan repeat the words "reduce risk"?

Magnus Blake: "H'm. Personally, I think you should take at least one blue chip on board. How about Ross Cullen? Just to balance your portfolio."
What is the motive for this suggestion?

Ivan: "Yes, I've been looking at them. They are safe, but the returns are lower than our client would like. Could I suggest Global Provident instead? They are a good company with a good record, but returns are higher."
Is this a good answer?

Magnus Blake: "Ah, yes. Provident. Good idea. Yes, do that. By the way, how are you getting on with the others in the office?"
Why has Mr Blake changed the subject?

Ivan: "Oh, fine. Sally's very friendly and helpful."
Why does Ivan only mention one of the people in his office?

Magnus Blake: "Good to hear it. Well, make sure you get those Provident shares. I'll be watching the rest of your shares with great interest, Ivan. We'll see if your faith in them is justified."
Did the "chat" go well for Ivan?

ANALYSIS