General SENIOR

HIGH

Mathematics SCHOOL

Module
Stocks and Bonds
8
Quarter 4
General Mathematics
Quarter 4 – Module 8: Stocks and Bonds
First Edition, 2020

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Published by the Department of Education Division of Pasig City

Development Team of the Module

Writer: Jan Rhesa V. Capilitan
Editors: Nenet M. Peñaranda
Reviewers: Louela O. Dolotina
Illustrator: Name
Layout Artist: Name
Management Team: Ma. Evalou Concepcion A. Agustin
OIC-Schools Division Superintendent
Carolina T. Rivera, Ed. D.
OIC-Assistant Schools Division Superintendent
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General SENIOR
HIGH

Mathematics
SCHOOL

Module

8
Quarter 4

Stocks and Bonds

Introductory Message

For the facilitator:

Welcome to the General Mathematics for Senior High School Module on Stocks and
Bonds!

This module was collaboratively designed, developed and reviewed by educators from
Schools Division Office of Pasig City headed by its Officer-In-Charge Schools Division
Superintendent, Ma. Evalou Concepcion A. Agustin in partnership with the Local
Government of Pasig through its mayor, Honorable Victor Ma. Regis N. Sotto.
The writers utilized the standards set by the K to 12 Curriculum using the Most
Essential Learning Competencies (MELC) while overcoming their personal, social,
and economic constraints in schooling.

This learning material hopes to engage the learners into guided and independent
learning activities at their own pace and time. Further, this also aims to help learners
acquire the needed 21st century skills especially the 5 Cs namely: Communication,
Collaboration, Creativity, Critical Thinking and Character while taking into
consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to manage
their own learning. Moreover, you are expected to encourage and assist the learners
as they do the tasks included in the module.
For the learner:

Welcome to the General Mathematics Module on Stocks and Bonds!

The hand is one of the most symbolized part of the human body. It is often used to
depict skill, action and purpose. Through our hands we may learn, create and
accomplish. Hence, the hand in this learning resource signifies that you as a learner
is capable and empowered to successfully achieve the relevant competencies and
skills at your own pace and time. Your academic success lies in your own hands!

This module was designed to provide you with fun and meaningful opportunities for
guided and independent learning at your own pace and time. You will be enabled to
process the contents of the learning material while being an active learner.

This module has the following parts and corresponding icons:

Expectation - These are what you will be able to know after completing the
lessons in the module

Pretest - This will measure your prior knowledge and the concepts to be
mastered throughout the lesson.

Recap - This section will measure what learnings and skills that you
understand from the previous lesson.

Lesson- This section will discuss the topic for this module.

Activities - This is a set of activities you will perform.

Wrap Up- This section summarizes the concepts and applications of the
lessons.

Valuing-this part will check the integration of values in the learning

competency.

Posttest - This will measure how much you have learned from the entire
module.
 EXPECTATION

At the end of the learning module, you are expected to:

1. illustrate and distinguish stocks and bonds; and

2. solve problems between stocks and bonds.

PRETEST

Identification. Write your answer on the space provided.

__________1. These are units of equity or ownership in a company or corporation.

__________2. These are certificates that promise to pay a fixed rate of interest by a
corporation or government at the end of certain time.
__________3. It is a term for the interest that the bond issuer will return to the
purchaser as a percentage of the principal.
__________4. A Gayuen Company declared a Php 100 000 000.00 dividend for the
common stocks. If there are total of 50 000 shares of common stocks,
how much is the dividend per share?
__________5. Corporation TANG declared a 3.5% dividend on a stock with a par
value of Php 100.00. Mrs. Zaeun owns 150 shares of stocks. How
much is the dividend she received?

RECAP

In your previous lesson, you have learned how to solve problems involving
present value of a deferred annuity. Let us apply the knowledge you have learned.

We are experiencing a COVID 19 pandemic, thus Mr. Delmo was not able to
work to finance the needs of his family. He availed a loan and agreed to pay
Php10,000.00 monthly for 1 year. The first payment is due after 6 months. How
much is the present value of the loan if the interest rate is 12% converted monthly?
 LESSON

Before investing money to any institutions or organizations, people should

have a basic financial plan and understand the risk as well as the rewards of
investing. Many investors today choose to invest their money in stocks and bonds.
Stocks and bonds are called securities and people who purchase them are called
investors.

What are Stocks?

Stocks or shares are units of equity or ownership in a company. You can be
considered a stockholder or shareholder if you buy shares of stocks of a company.
They become legal part owners of the company. As an owner, the stockholder is
eligible to receive a dividend or a share of the company’s profits. The amount of this
dividend may change from year to year depending on the company’s performance.
Stockholders carry a certificate of ownership called stock certificate which
is a document that shows the company’s name, the person’s name, the number of
shares owned or bought, the certificate number and the par value. The value of the
stock printed in the certificate is called the par value. Some corporations issue stock
without giving the shares nay value. This stock is called no-par stock.
Par Value

Certificate Number

Shareholder or Stockholder Number of Shares

[Grab your reader’s attention with a

great quote from the document or
use this space to emphasize a key
point. To place this text box
anywhere on the page, just drag it.]

Corporation Issuing the Certificate Signatures of the Corporation

There are two types of stocks that are usually issued by a company, the
preferred stocks and the common stocks. In common stocks, the payment and
size of the dividends is determined by the board of directors of the issuing firm. The
dividend varies according to the company’s performance. If the company does well,
it will pay sizable dividend. Stockholders may vote for the company’s directors and
attend annual stockholders’ meetings. In preferred stocks, the dividends are paid
according to fixed periodic rate. Owners of the preferred stocks do not have voting
rights or the right to attend stockholders’ meetings. Common stockholders have the
lowest priority in terms of any cash distribution. If the business goes out, dividends
are paid first to preferred stockholders before they can be paid to common
stockholders.

What are bonds?

Bonds are certificates that promise to pay a fixed rate of interest by a
corporation or government at the end of certain time. A bond is a certificate of debt
whose repayment has been agreed upon by both the borrower and lender. A person
who buys a bond is called bondholder, is not buying ownership in a company but is
lending the company a money. Unlike a stockholder, a bondholder is not involved in
running a business, does not vote in the institution’s annual meeting but first to
claim in the institutions earnings.
Bonds can also be referred to as bills, notes, debt securities or debt
obligations. Each bond issued to investors will contain the following information
detailing the borrower’s obligation in the transaction. The face value or principal of
the bond is the amount of money transferred from lender to borrower when bond is
first issued. Maturity date is the day by which the borrower must repay the bond’s
principal in full. Coupon is a term for the interest that the bond issuer will return to
the purchaser as a percentage of the principal.
Coupon Rate

Corporation/Government Issuing the Certificate Face Value

General Mathemtics by Oronce, March 2017

Maturity Date
 Bonds have two kinds of values. These are par value and market value. The
par value is the same as its face value. This is the amount printed on the face of
the bond which the borrower promises to pay the bond holder on the due date. The
market value of a bond is the price at which the bond is being sold. If the market
value is greater than the par value, then the bond is selling at a premium. On the
other hand, if the market value is less than the par value, then the bond is selling
at a discount.

When bonds are bought and sold through a broker, the broker charges a
broker’s commission or brokerage fee. Hence the amount of investment becomes
the market price of the bonds plus the broker’s commission.

Example 1. A XZIEY Company declared a Php 20,000,000.00 dividend for the

common stocks. If there are total of 500 000 shares of common stocks, how much
is the dividend per share?
Given: Total Dividend = P 20,000,000.00
Total Shares = 500,000
Find Dividend per Share
Solution
𝑇𝑜𝑡𝑎𝑙 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑
Dividend per Share =
𝑇𝑜𝑡𝑎𝑙 𝑆ℎ𝑎𝑟𝑒𝑠
20,000,000
=
500,000

= 40
Therefore, the dividend per share is Php 40.00.
Example 2. Corporation ANNE declared a 6.5% dividend on a stock with a par
value of Php 300.00. Mrs. Star owns 100 shares of stocks. How much is the
dividend she received?
Given: Dividend Percentage = 6.5%
Par Value = Php 300.00
Number of Shares = 100
Find the Dividend
Solution
The dividend per share is : 300 x 0.065 = Php 19.50.
Since there are 100 shares, the total dividend is:
19.5/share x 100 shares =Php 1,950.00
In summary, Dividend = (Dividend Percentage)x(Par Value)x(No. of Shares)
= (0.065)(300)(100)
= Php 1950.00
Thus, the dividend is Php 1950.00.

Example 3. Corporation TALIE, with a current market value of Php 135.00, gave a
dividend of Php 20.00 per share for its common stock. Corporation TALYANG, with
a current market value of Php 15.00, gave a dividend of Php 105.00 per share. Use
the stock yield ratio to measure how much dividends shareholders are getting in
relation to the amount invested.
 Solution
Given: Corporation TALIE
Dividend per share = Php 20.00
Market Value = Php 135.00
Find the stock yield ratio
𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
stock yield ratio =
𝑚𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒
20
stock yield ratio =
135
=0.1481 or 14.81%
Given: Corporation TALYANG
Dividend per share = Php 15.00
Market Value = Php 105.00
Find the stock yield ratio
𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
stock yield ratio =
𝑚𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒
15
stock yield ratio =
105
=0.1429 = 14.29%
Thus, Corporation TALIE has a higher stock yield ratio that Corporation
TALYANG. Thus each peso would earn you more if you invest in Corporation TALIE
than in Corporation TALYANG. If all other things are equal, then it is wiser to invest
in Corporation TALIE.

Example 4. Determine the amount of the semi-annual coupon for a bond with a face
value of Php 550,000.00 that pays 15.3% payable semiannually for its coupon.
Given: Face Value F = Php 550,000.00
Coupon Rate r = 15.3%
Find: Amount of the semi-annual coupon
Solution:
Annual coupon amount = 550,000(0.153) = Php 84,150.00.
Semi-annual coupon amount = 30,000(½) = 42 075
Thus, the amount of the semi-annual coupon is Php 42,075.00.

Example 5. Suppose that a bond has a face value of Php 125,000.00 and its maturity
date is 20 years from now. The coupon rate is 6% payable semi-annually. Find the
fair price of this bond, assuming that the annual market rate is 3%.
Given: Coupon rate r = 6%, payable semi-annually
Face Value = Php 125,000.00
Time to Maturity = 20 years
Number of Periods = 2(20) = 40
Market Rate = 3%
.06
Solution: Amount of Semi-annual coupon: 125,000( ) = 3, 750
2
Thus, the bondholder receives 40 payments of Php 3,750.00 each and
Php 125,000.00 at t=20.
 ACTIVITIS

I. Identification. You may write your answers on a piece of paper.

A. Identify the parts of a Stock Certificate.
[ 1 2
3

4 5
B. Identify the parts of a bond certificate.

https://brilliant.org/problems/probability-of-default/
II. Matching Type.

Match the words in column A to its meaning in column B. You may write the
letter of the correct answers on a piece of paper.
Column A Column B
1. Stock a. the investors who buy a shares of stocks
2. Investors b. earnings distributed to the shareholders of the
corporation
3. Stockholders c. loans provided to an organization
4. Dividend d. are shares of ownership in a company
5. Par Value e. value of a bond is the price at which the bond
is being sold
6. Bonds f. people who buy stocks and bonds
7. Market value g. the day by which the borrower must repay the
bond’s principal in full
8. Maturity Date h. the amount printed on the face of the bond
which the borrower promises to pay on the due
date
9. Bondholders i. investors who buys bonds
10. Face Value j. the value of the stock printed in the certificate

WRAP-UP

Can you summarize our lesson for today? Yes, it’s all about Stocks and
Bonds. Can you differentiate it?
The Venn diagram below will give you a summary on the lesson of stocks
and bonds.

Stocks Bonds

• Equity • Debt financing

financing • Certificate • Bondholders
• Stockholders or • Investment • Guaranteed
shareholders • Can be bought interest payments
• Dividends are or sold • Lower risk but
not guaranteed • Issued to raise lower yield
• Higher risk but money to • Appropriate for
with possibility expand retirees and those
of higher operations or who need money
returns engage in soon
• Appropriate if special projects
the investment company
is for long terms
 VALUING

Soon you will be an investor. What securities do you want to invest that will
provide you an opportunity for a decent savings as well as big returns once in a
while? Is it stocks or is it bonds? Why?

POSTTEST

Read the statement carefully. Write S if the statement describes Stocks

and write B for Bonds. You may write your answers on a piece of paper.

1. Owners of this security is the part owner of the company.

2. The issuer provides a certificate that promises to pay a specified rate of
interest in a period of time.
3. If the company profits, the investor profits as well.
4. This security is classified into two, preferred and common.
5. The investors who buy shares are called stockholders.
6. The purchaser of this security is lending money to the
government/corporation.
7. The dividend is dependent on the performance of the company.
8. It has two kinds of values, the par value and the market value.
9. A certificate where information such as face value, maturity date and coupon
are detailed.
10. It has higher risk but higher also in return.

KEY TO CORRECTION
Php5,250.00 5.
Php2,000.00 4.
Coupon 3. loan of Mr. Delmo
Bonds 2. Php107,088.20 – Present value of the
Stocks 1.
RECAP
PRE-TEST

Corporation/Government Issuing
6. Coupon Rate Corporation/Government Issuing
5. Face Value Certificate
Issuing the Certificate 5. j 10. hthe
B. 4. Corporation/ Government 4. b 9. i
3. Certificate Number 3. a 8. g
2. Number of Shares 2. f 7. e
A. 1. Shareholder or Stockholder 1.d 6. c

ACTIVITY I ACTIVITY II
 https://brilliant.org/problems/probability-of-default/
Mutya Publishing House, Inc. 2016.
Zorilla, Roland S. et al. General Mathematics for Senior High School. Malabon City:
2016.
Versosa, Debbie Marie B. et al. General Mathematics. Pasig City: Lexicon Press Inc.
2017.
Oronce, Orlando A. General Mathematics. Quezon City: Rex Printing Company, Inc.
Mathematics. Brilliant Ceations Publishing, Inc.
Belecina, Alvin B. et al. Senior High Conceptual Math & Beyond General
Inc. 2016.
Albay, Eduard M. et al. General Mathematics. Makati City: Diwa Learning Systems
REFERENCES
POST-TEST
1. S 2. B 3. S 4. S 5. S
6. B 7. S 8. B 9. B 10. S
ACTIVITY III
III 1. Given: Dividend Percentage = 3.5%
Par Value = Php 125.00
Number of Shares = 3500
Find the Dividend
Solution
Dividend = (Dividend Percentage)x(Par Value) x(No. of Shares)
= (0.035)(3500)(125)
= Php 15,312.50
Thus, the dividend is Php 15,312.50.
2. Given: Face Value F = Php 45,000.00
Coupon Rate r = 2.25%
Find: Amount of the semi-annual coupon
Solution
Annual coupon amount: 45,000(0.0225) = Php 1,012.50
Semi-annual coupon amount = 1,012.50(½) =506.25.
Thus, the amount of the semi-annual coupon is Php 506.25.