Stocks and Bonds

General Mathematics
Stocks

 Stocks are called shares that a company sold to an individual or company.

 Stocks certificate serve as proof of ownership indicating the number of shares or stocks
he/she owns.
 The buyer of stocks is called stockholder.
Bonds

 Bond is a written promise to pay a sum of money together with the interest on the
specified date.
 The amount which the bond is bought is called par or face value.
Notes:

 In case of bankruptcy, the bondholder has the first claim on the assets over the
stockholder.
 Stocks and bonds may be sold to the highest bidder.
 Stocks or bonds bought at face or par value and later sold at premium is bought at a
higher price than the par value. If it is bought at lower value, it is called discount.
 Broker also earns thru commission on the trading.
Types of Stocks

 Preferred stock – the investor has the first rights over the common shareholders to the
dividends and assets.
 Common stock – the investor has the voting rights and shares straightly in the business.
Terms

 Dividend – a company’s profit that is distributed to the shareholders

 Shareholders – a person who owns a share of stocks
 Par value – a financial figure specified in the corporate charter printed in the stock
certificate
 Dividend in arrears – unpaid dividends at the end of the period, rather it accumulates
from period to period.
 Dividend per share – the amount of dividends the shareholder received on per share-basis
Computing for Dividends

 A corporation sold 300 000 shares of common stock to stockholders. The company
declared a dividend of Php 30 000 000 at the end of the year. How much dividends
per share of common stock.
Computing for Dividends

 The board of director declared a dividend of Php 20 000 000. The company has 50
000 shares of preferred stock that pays Php 50.00 per share and 90 000 shares of
common stock. Find the dividends due to the shareholders for preferred stocks and
dividend per share of common stock.
Computing for Dividends

 Suppose JFC Corporation has 300 500 shares of common stock in JCC Corporation.
JCC had 500 000 shares to stockholders. The dividend of Php 50 000 000 was
proclaimed by the board of directors last year. What is the amount of the common
dividend per share and what is the total common dividend JFC will receive?
Computing the Current Yield of Stock

 If JFC Corporation paid a dividend of Php 150.00 per share last year. The current
price is Php 2 500.00 per share; calculate the current yield on stock.
Computing the Current Yield of Stock

 Julieto is planning to sell his shares in the certain company. The dividend he received
was Php 85.00 per share and the price of the stock per share is Php 1 050.00 Solve for
the current yield on stock.
Computing the Price-earnings Ratio of Stock

 JJ is planning to invest in stocks. He checked two companies and thought which

company provides better earning. He computes for the price-earnings ratio.
a) JFC, price share Php 2 500.00, annual dividend per share php 77; and
b) CME, price share Php 1 800.00, annual dividend per share Php 65
Computing for Price of Bond

 Par or face value – value of the bond assigned to the bondholder

 Redemption value – the repayment of the face value of the issuer to the bondholder
 Coupon – the bond interest payment to the bondholder
 Bond rate – interest rate of the bond
 Yield rate – rate of the return on the maturity bond
Computing for Price of Bond

 Find the price of bond valued at Php 10 000 with interest at 5% payable quarterly and
will be redeemed in 5 years. Solve for the price of bond that yields 10% compounded
quarterly redeemable at par and if the redemption value of the bond at 120%
Computing for Price of Bond

 A Php 15 000.00 bond with interes at7% converted semi-annually is redeemable at 130%
in 15 years. Fiind the coupon payment, redemption value and price of bond that yields
4% interest compounded semi-annually.