LESSON 9

Value of Bonds and

Common Stocks
CHARLENE MAE B.
GUALVEZ

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A - Certificate number
B - Number of Shares
C -Name of the corporation issuing the certificate
D- Par Value of each share
E - Name of the shareholder
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TOTAL COST OF STOCK

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FORMULA

Total Cost of Stock =

Market Price + Commission

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Rowena bought 100 shares of Per Mill stock at

P 150.00 per share.
The broker charged her P 750.00 commission.
Find the total cost of the stock.

Market Price: 100 x P150 = P 15 000 (no. of shares x par value)

Broker’s Commission P 750 (market price + commission)

TOTAL COST: P 15 000 + P 750 = P 15 750.00

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Find the total cost of each stock purchase below.

No. of Shares Name of Stock Market Price per Commission

Share
1 000 ANI P 1.75 P 75.00
2 000 COAL P 0.94 P 94.00
500 FGEN P 30.55 P 763.50
100 FPH P 106.00 P 530.00
750 SMC P 74.45 P 2 792.00
300 URC P 215.00 P 3 225.00
Market Price + Broker’s Commission Total Cost
(No. of Shares x Market
Price/Share
1 000 x P1.75 = P 1 750.00   P 75.00 P 1 825.00
2 000 x P 0.94 = P 1 880.00   P 94.00 P 1 974.00
500 x P 30.55 = P 15 275.00   P 763.50 P 16 038.50
100 x P 106.00 = P 10 600.00   P 530.00 P 11 130.00
750 x P 74.45 = P 55 837.50   P 2 792.00 P 58 629.50
300 x P 215 = P 64 500.00   P 3 225.00 P 67 725.00
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STOCK INCOME

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DIVIDENDS
The income the stockholder receives from his investment is the amount
of the dividend he gets.

The amount of dividends paid by the company depends on the profit the
company makes. The dividend may be shown either as a percent of the
par value of the stock or as an amount of money per share.

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Find the yearly income Mr. Reyes will receive from an investment in 1
000 shares of ABC stock if a dividend of P 14.80 per share is paid
quarterly.

Dividend for one quarter: 1 000 x P 14.80 = P 14 800

Yearly income: 4 x P 14 800 = P 59 200

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RATE OF INCOME

•the ratio of the annual dividends to the total cost of

stock.

FORMULA

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SELLING STOCKS

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NET PROCEEDS

•After deducting all the expenses from the market price of the stock,
the money that you will receive is called the net proceeds.

FORMULA

NET PROCEEEDS = Market Price - Expenses

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Find the net proceed of the stocks on the table below.

Name of Stock Shares Selling Price per Expenses Net Proceeds

Held Share (Commission, taxes, and fees)

Food Corporation 100 P 1 040.00 P 2 640.00  

Property Holdings 250 P 500.00 P 1 720.00  

Power Corporation 80 P 1 480.00 P 1 880.00  

Transportation 300 P 320.00 P 2 240.00  

Corporation
NET PROCEEDS = Market Price – Expenses
Where Market Price = No. of Shares x Selling Price
a.Net Proceeds = (100 x P 1 040) – P 2 640 = P 101 360.00
b.Net Proceeds = (250 x P 500) – P 1 720 = P 123 280.00
c.Net Proceeds = (80 x P 1 480) – P1 880 = P 116 520.00
d.Net Proceeds = (300 x P 320) – P 2 240 = P 93 760.00

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BE CAREFUL! STOCK PRICE

INVESTIGATE! 70
YOU CAN LOSE 60
MONEY OR MAKE 50
40
PROFIT IN THE 30
20
STOCK MARKET
 

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In the above bond certificate, Ms. Janelle Catalig, the bond holder lent ACTS
Corporation one thousand pesos (P 1 000.000) with interest rate of 10% per
annum. Hence, on March 1, 2020. ACTS Corporation must pay Ms. Catalig
whether it made profit or not. However, AXTS Corporation has no
shareholder to share the corporation’s profit. If the loan is not repaid, the
bond holders may take the corporation’s equipment, buildings, or land. This
guarantee Is an agreement made between the corporation and a bank or trust
company, called the trustee. The trustee is appointed by the corporation to
represent the bond holders as a group in their transaction with the
corporation.

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The following should be considered

when buying bonds.
a.The price of the bond
b.The interest rate
c.Whether the bonds can or cannot be resold
d.The earnings record of the issuer
e.The credit history of the issuer
f.The business condition
 

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Aaa or AAA for the best and safest bonds

Bbb or BBB for riskier bonds
Ccc or CCC for very risky bonds
Bonds rated D are considered worthless.

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Par value
BONDS
Market value

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Find the market price of one P 1 000.00 bond at each quotes price.

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Ms. Johanna Vistan bought fifty P 1 000.00 ACTS bonds at 103.

What is her total investment in ACTS bonds?

Market Price of 1 bond: 1.03 x P 1 000 = P 1 030.00

Total Investment: 1 030 x 50 = P 51 500.00

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John Alfonso bought five P 1 000.00 MacQue Outback Corporation bonds

at 92 plus P 10.00 commission per bond through a broker. What is John’s
amount of investment?

Market Price of 1 bond: 0. 92 x P 1000 = P 920.00

Market Price of 5 bonds: P 920 x 5 = P 4 600.00
Commission on 5 bonds: P 10 x 5 = P 50.00
Total investment: P 4 600 + P 50 = P 4 650.00

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FORMULA

INTEREST = Par Value x Rate x Time

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Par Value of 45 bonds: 45 x P 1 000 = P 45 000.00

Interest: P 45 000 x 0.085 x 1 = P 3 825
 
The annual income for one year is P 3 825.00.

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FORMULA

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Find the yield on P 1 000, 9% ACTS bond priced at 94 plus

P 10 commission.

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