Stock and Bonds

STOC
KS• Shares of ownership of a company
• A from equity financing or raising money by
allowing investors to be part owners of company
 Bonds
• A fixed-income instrument that represents a
loan made by investors to a borrower (typically
corporate or governmental )
• Investors are guaranteed interest payments and
return of their money at maturity date.
 Stocks
Advantages and
• ADVANTAGES Disadvantages • DISADVANTAGES
High rate of High maintenance .
return.

Simple and cheap to buy. High Risk.

Can buy and sell

anytime.
 Bonds
Advantages and
• ADVANTAGES Disadvantages• DISADVATAGES
Receive income through the Bonds pay out lower returns
interest payment. than stock.
Hold the bond to maturity and get all Companies can
principal back. default
on your
bonds .
You can profit if you
resell the bond at a higher price.
Bond yields can fall
 Stock Example : A XYZ financial company
declared a 5,000,000 dividend for common stocks.
If there are a total of 80,000 shares of common
stock, how much is the dividend per share.
Given: Total Dividend = 5,000,000
Total Share=80,000
Find the Dividend per share= Total Dividend
=5,000,000 = 62.5
Total Share 80,000

Therefore, the dividend per share is ₱62.5

 Bonds Example: Determine the amount of the
semi-annual coupon for a bond with a face
value of 500, 000 that pays 20%, payable semi-
annually for its coupons.
Given: Face Value F= 500, 000
Coupon rate r = 20%
Find: Amount of the semi-annual coupon
Annual coupon amount : 500, 000(0.20) = 100,
000
Semi-annual coupon amount : 100, 000(½) = 50, 000
Thus, the amount of the semi-annual is ₱50, 000.
Thank You