Stocks and
Bonds
TASK NO. 1
Calculate the gain or loss for each item and record your answer in the
fourth column under “Change in Price”. In the fifth column, write whether
the change in price is a gain or a loss.
Item Price Bought Price Sold Change in Gain or Loss
Price
1 Php 1,445.20 Php 1,480.40 Php 35.2 gain
2 Php 496.80 Php 490.80 Php 6.00 loss
3 Php 215.60 Php 240.80 Php 25.2 gain
4 Php 1,193.20 Php 1,150.00 Php 43.2 loss
TASK NO. 2
Multiply the Number of Items by the Price Per Items to calculate the
Total Cost of the Items.
Item Number of Items Price Per Item Total Cost of the
Items
1 400 Php 89.60 Php 35 840.00
2 260 Php 50.80 Php 13 208.00
3 70 Php 382.00 Php26 740.00
4 540 Php 164.00 Php88 560.00
Commission
A payment to an agent or sales
person based on the value or
quantity of goods bought and
sold; broker’s or brokerage fee. A
commission is found by finding
the percentage of a sale.
Example 1:
Tony sells t-shirts on weekends. He
is paid a straight commission of 3%
on his sale. In April, his sales
amounted to Php 15 000.00. how
much was his commission?
ans: Php 450.00
Example 2
Lisa received a commission of
Php 11 000.00 on a sale of
Php 200 000.00. What was her
rate of commission?
ans. 5.5%
Example 3
Martin receives a 6% commission on
all items he sells. If his last week’s
commission was Php 7 500.00, what
was his total sale?
ans: Php 125 000.00
Source of Money For Expansion
Savings and Profits
Borrow money
Sell stocks or bonds
What is stock?
A stock is a type of
investment that represents an
ownership share in a company.
Investors buy stocks that they
think will go up in value over
time.
Definition of terms:
Stockholders- one who owns shares
of corporation stock
Stock Certificate- a paper issued to a
shareholder which shows on its face
the number of shares it represents
Dividend- earnings distributed to
shareholders of corporation
Certificate number- an accession
number or placeholder to keep track of
the number of certificates
Par value-the face value of bond or a
stock
No-par stock- stock issued without
stated value on the certificate
Market Price- the price at which a stock
on bond is sold
Preferred stock- type of stock for
which stockholders get first choice in
distributed profits
Common stock- the ordinary stock
of a corporation, paying no specified
rate of dividend
Initial Public Offering(IPO)- stock
sold before it is available on a stock
exchange
Trading
The buying and selling
of stocks and takes
place on a stock
exchange.
Formula:
Total cost of Stock= Market Price + Commission
Where:
Market Price: (no. of shares X par value)
TASK NO. 3
Find the total cost of each stock purchase below.
No. of Name of Market Price per Commission Total Cost
Shares Stock Share (par value)
1,000 ANI Php 1.75 Php 75.00 Php1 825.00
2,000 COAL Php 0.94 Php 94.00 Php1 974.00
500 FGEN Php 30.55 Php 763.50 Php16 038.5
100 SMC Php 106.00 Php 530.00 Php11 130.00
Dividend:
Ramon owns 75 shares of D&E
common stock, par value Php
400.00. if the corporation
declares a 7 ¼ % dividend, what
is the total dividend that Ramon
should get?
Solution:
•Dividend per share:
0.0725 X Php 400.00 = Php 29.00
(dividend on one share)
•Total Dividend:
75 X Php 29= Php2 175.00
Another Example:
Find the yearly income Mr. Reyes
will receive from an investment in
1000 shares of ABC stock if a
dividend of Php 14.80 per share
is paid quarterly.
Solution:
•Dividend for one quarter:
1000 X Php 14. 80 = Php 14 800.00
•Yearly income:
4 X Php 14 800.00= Php 59 200.00
Rate of Income
it is the ratio of the
annual dividends to
the total cost of stock
Formula:
𝐴𝑛𝑛𝑢𝑎𝑙 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠
Rate of income= 𝑥 100
𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑠𝑡𝑜𝑐𝑘𝑠
Example:
If Robert owns a share of stock
that costs Php 960.00 and pays
quarterly dividend of Php 22.40,
what is the rate of income?
ans: 9.33%
Selling of Stocks
Another way a stockholder earns an
income is to sell his stock.
A broker may be used to buy or sell
stocks. However selling stock will
either make a profit, break-even, or
take a loss.
Net Proceeds
The money that one will
receive after deducting
all the expenses from the
market price of the stock.
Formula:
Net proceeds= Market Price – Expenses
Where:
Market price = (no. of shares X selling price)
Find the net proceeds of the stocks on the
table below.
Expenses
Selling Prices
(Commission,
Name of Stock Shares Held per share (par Net Proceeds
Taxes, and
value)
Fees)
Food Corporation 100 Php 1 040.00 Php 2 640 Php 101 360.00
Property Holdings 250 Php 500.00 Php 1720.00 Php 123 280.00
Power
80 Php 1 480 Php 1880.00 Php 116 520.00
Corporation
Transportation
300 Php 320.00 Php2 240.00 Php 93 760.00
Corporation
Consider the following when you want to
invest on stocks.
1. Be a smart investor. Only
buy shares of stocks of
companies who are earning
big money consistently.
2. Decide whether you will
need a full-service broker, a
discount broker, or online
brokerage. In online
brokerage, you are allowed
to trade stocks directly
without a broker.
What is bond?
It is a form of long-term investment
issued by a corporation or government
where the purchaser becomes a creditor
of the company. People who buy a bond
are lending money to a corporation from
which they buy the bond. Hence, a bond
is very much like a loan.
A person who buys a
bond is not buying
ownership in a company
but is lending the
company money.
When an investor purchases a bond, they
are "loaning" that money (called
the principal) to the bond issuer, which is
usually raising money for some project.
When the bond matures, the issuer repays
the principal to the investor. In most cases,
the investor will receive regular interest
payments from the issuer until the bond
matures.
The following should be considered when
buying bonds.
1. The price of the bond.
2. The interest rate.
3. Whether the bonds can or cannot be
resold.
4. The earnings record of the issuer.
5. The credit history of the issuer.
6. The business condition.
Find the market price of one
Php 1000.00 bond at each quoted price.
1.98 =0.98x Php 1000= Php980.00
2.96 =0.96xPhp1000=Php 960.00
3.102 =1.02xPhp1000=Php1020.00
4.101 ¾ =1.0175xPhp1000=Php1017.50
5.99 ½ =0.995xPhp1000=Php995.00
Loan
Is an arrangement in which a
lender gives money (principal) to
a borrower in exchange for the
future repayment of the principal
along with interest or other
finance charges.
Did you know that loans
and investment are
considered similar?
Consider these two cases:
1.Deposit money in savings account.
the depositor may view it as an
investment because interest may be
earned from the amount of money
deposited, but the bank views it as loan
from the depositor which in turn the bank
will lend to another customer.
2. Borrowing money to buy a house
from a bank.
the borrower views the transaction
as a loan but the bank views it as
an investment to the borrower in
order to make a profit.
Consumer Loan
Are loans that banks and other lending
institutions extend to customers for personal and
or household purposes. All consumer loans must
comply with consumer protection laws.
They are loans granted for the purchase of a
house and lot package, condominiums,
appliances, cars, gadgets, food items,
medicines, clothing, travel and other personal
needs of concern.
Business Loan
It is the opposite of the consumer loan. Banks
provide business loans to start up or expand
business, to help business succeed, to buy new
equipment, finance expansion or modernization of
facilities, finance working capital requirements,
acquisition of raw materials and supplies and
other feasible reasons.
