STOCKS &

BONDS
 MOST ESSENTIAL LEARNING
COMPETENCIES
M11GM-IIe-1: Illustrate stocks and bonds.
M11GM-IIe-2: Distinguishes between stocks and
bonds.
M11GM-IIe-3: Describes the different markets for
stocks and bonds.
M11GM-IIe-4: Analyzes the different market indices for
stocks and bonds.
Table of contents

01 STOCKS
02 BONDS

03 MARKETS
04 INDICES
 Do you want to be part owner of the big
companies in the Philippines? Have you ever
thought that you could fund big companies or
even the government?
 What are Stocks and
Bonds?
The heartbeat of the economy.
Stocks and bonds are certificates that are sold to
raise money for starting a new company or for
expanding an existing company.
Stocks and bonds are also called securities, and
people who buy them are called investors.
01
STOCKS
STOCKS

Stocks are shares in the ownership of the company.

Owners of stocks may be considered as part owners of the

company.
STOCK MARKET
Stock Market provides an
orderly trading place for
stock wherein prices or
market value vary from day
to day and within a day.
STOCK MARKET
Only stockbrokers who
specialize in work in the
stock market are allowed to
trade on the floor. The
broker receives a
commission for the services
of both buying and selling
stocks.
Other Terms related to Stocks
● Dividend – share in the company
● Dividend Per Share – the ratio of the dividends to the number of
shares
● Stock Market – a place where stocks can be bought or sold
● Market Value – the current price of a stock at which it can be sold
● Stock Yield Ratio (Current Stock Yield) – the ratio of annual dividend
per share and the market value per share.
● Par Value – the per-share amount as stated on the company certificate.
It is determined by the company and remains stable over time.
EXAMPLE 1:
A certain financial institution declared a ₱30,000,000 dividend for the common
stocks. If there are a total of 700,000 shares of common stock, how much is the
dividend per share?

Given: Total Dividend = ₱30,000,000

Total Shares = 700,000
Find: Dividend per share
Solution:

Therefore, the dividend per share is ₱42.86.

EXAMPLE 2:
A certain corporation declared a 3% dividend on a stock with par value of ₱500.
Mrs. Lingan owns 200 shares of stock with a par value of ₱500. How much is the
dividend she received?

Given: Dividend Pecentage = 3%

Par Value = ₱500
Number of Shares = 200
Find: Dividend
Solution:
The dividend per share is: ₱500 x 0.03 = ₱15
Since there are 200 shares, the total dividend is:
₱15/share x 200 shares = ₱3, 000

In summary,

Thus, the dividend is ₱3, 000.

 EXAMPLE 3:
Corporation A, with a current market value of ₱52, gave a dividend of ₱8 per share for its
common stock. Company B, with a current market value of ₱95, gave a dividend of ₱12
per share. Use the stock yield ratio to measure how much dividends shareholders are
getting in relation to the amount invested

Corporation A: Corporation B:
Given: Dividend per share = ₱8 Given: Dividend per share = ₱12
Market value = ₱52 Market value = ₱95
Find: stock yield ratio Find: stock yield ratio

Corporation A has a higher stock-yield-ratio than Corporation B. Thus, each peso would earn you
more if you invest in Corporation A than in Corporation B
02
BONDS
BONDS

A bond is a form of long-term investment issued by a corporation or

government where the purchaser becomes a creditor of the company.

Bonds are a loan from you to a company or government. There’s no

equity involved, nor shares to buy.

Put simply, a company or government is in debt to you when you buy a

bond, and it will pay you interest on the loan for a set period, after which it
will pay back the full amount you bought the bond for
BONDS
It represents a promise from
the company to pay the face
amount to the bond owner
at a future date, along with
interest payments at a
stated rate. The company,
state, or municipality that
issues the bond is called the
issuer.
 The annual interest paid by
BONDS the issuer to the lender
(bondholder) on the bond is
referred to as the coupon.

The coupon rate is the

annual payout as a
percentage of the bond’s par
value.

Bonds have two kinds of

values. These are called par
value and market value.
 Types of Bond Values

PAR VALUE MARKET VALUE

The par value of the The market value of a

bond is the same as bond is the price at
its face value. which the bond is
being sold.
Other terms in relation to Bonds
● Coupon – periodic interest payment that the bondholder receives during the
time between purchase date and maturity date, usually received semi-annually
● Coupon Rate, r – the rate per coupon payment period
● Price of a Bond, P – the price of a bond at the purchase date
● Par Value or Face Value, F – the amount payable on the maturity date
○ If P = F, the bond is purchased at par.
○ If P < F, the bond is purchased at a discount.
○ If P > F, the bond is purchased at a premium
● Term of a Bond – fixed period of time (in years) at which the bond is
redeemable as stated in the bond certificate; the number of years from the time
of purchase to the maturity date.
● Fair Price of a Bond – the present value of all cash inflows to the bondholder
EXAMPLE 4:
Determine the amount of the semi-annual coupon for a bond with a face value of
₱300, 000 that pays 10%, payable semi-annually for its coupons.

Given: Face Value, F = ₱300, 000

Coupon rate, r = 10%
Find: Amount of Semi-annual Coupon

Solution:

Annual coupon amount: 300,000(0.10) = 30,000

Semi-annual coupon amount: 30,000(1/2)=15,000

Thus, the amount of the semi-annual coupon is ₱15,000.

 EXAMPLE
52 weeks  
5:          
HIGH LOW STOCK DIV YLD% VOL(100s) CLOSE NETCHG
120 105 GGG 3.5 2.8 4050 118.50 -0.50
16 12 HHH 0.9 1.1 1070 15.80 0.10

For stocks GGG and HHH: GGG GGG

1. What was the lowest price of the stock for the last 52 weeks? ₱105 ₱12
2. What was the dividend per share last year? ₱3.50 ₱0.90
3. What was the annual percentage yield last year? 2.8% 1.1%
4. What was the closing price in the last trading day? ₱118.50 ₱15.80
5. What was the closing price the day before the last trading ₱119.00 ₱15.70
day?
ACTIVITY NO. 1
Directions: Solve the following problems.
1. A financial institution declared a dividend of ₱75,000,000 for its
common stock. Suppose there are 900,000 shares of common stock,
how much is the dividend per share?
2. The ABC corporation gave out ₱38 dividend per share for its
common stock. The market value of the stock is ₱108. Determine
the stock yield ratio.
3. Find the amount of the semi-annual coupon for a ₱200,000 bond
which pays 5% convertible semi-annually for its coupons.
4. Determine the amount of semi-annual coupon paid for a 3% bond
with a face value of ₱100,000 which matures after 8 years. How
many coupons are paid?