STOCKS and BONDS

Lesson 6
01 DISCUSSION
 Definition of Terms
• Stocks – known as equity, is a security that represents the ownership of
a fraction of a corporation. This entitles the owner of the stock to a
proportion of the corporation's assets and profits equal to how much
stock they own.
• 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 a corporation.
• Certificate Number ­– An accession number or placeholder to keep
track of the number of certificates.
• Initial Public Offering (IPO) – Stock sold before it is available on stock
exchange
 Definition of Terms
• Par Value – The face value of a bond or stock.
• No - par Stock – Stock issued without a stated value on its 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 or amount of dividend.
 Stock Certificate

Certificate
No. of Shares
Number

Par Value

Corporation Shareholder or
Issuing the Stockholder
certificate

Signatures of
Corporation
Stock Income
Dividends
Selling Stocks
 BONDS
• 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 the
corporation from which they buy the bond.
• When a corporation is selling a bond, it is really an IOU,
which is a promise to payback the buyer his money, plus
interest at a particular time.
 BONDS
The following should be consider when buying bonds
1. The price of the bond
2. The interest rate
3. Whether the bonds can or cannot be resold
4. The earning record of the issuer
5. The credit history of the issuer
6. The business condition
 BONDS
Bond Values
• Par Value – same as the face value in which an amounted
printed on the face of the bond which the borrower promises
to pay the bond holder on the due date.
• Market Value – 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.

– If the market value is less than the par value,

then the bond is selling at a discount