Learning Objectives:

At the end of the lesson, the students will be able to:

1 distinguish difference between stocks and bonds;

2
describe the different markets for stocks and
bonds;

3 analyzes the different market indices for stocks

and bonds.
STOCKS and BONDS
DEFINITION
STOCKS BONDS

A form of equity instrument A form of debt instrument of

or raising money by allowing raising of money by borrowing
investors to be part owners of from investors
the company
ISSUERS
STOCKS BONDS

Government Institutions
Corporates
Financial Institutions
Companies, etc.
STATUS OF HOLDERS
STOCKS BONDS

Shareholders are the owners Bondholders are the lenders to

of the company the company
FORM OF RETURNS
STOCKS BONDS

Profits earned by the company Interest payments are made in

are paid in the form of the form of Coupon Payments
Dividends
RISK LEVEL
STOCKS BONDS

HIGH since it depends upon the Relatively LOW since

performance of the issuer, so bondholders are prioritized for
no guaranteed returns repayments
MAJOR RISK ASSOCIATED
STOCKS BONDS

Market Risk Interest Rate Risk

Business Risk Inflation Risk
ADDITIONAL BENEFIT
STOCKS BONDS

Shareholders get the right to Bondholders get the

vote preference in terms of
repayment and also on
liquidation
MARKET VALUE
STOCKS BONDS

When interest rates have When Market Interest Rates

fallen significantly, the decrease, the market value of
market stock value rises an existing bond increases
DRILL
TOCSK
Share in the ownership of the company
denivdid
Share in the company’s profit.
Denivdid rep resha
Ratio of the dividends to the numbers of
shares
SCTOS RETMAR
A PLACE WHERE STOCKS CAN BE
BOUGHT OR SOLD (pse)
RETMAR EUVAL
The current price of a stock at which it
can be sold
ckots ylide ioart
Ratio of the annual dividend per share
and the market value per share.
RAP EUVAL
It is determined by the company and
remains stable over time.
Different Markets
for Stocks and Bonds
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
stocks, how much is the dividend per share?

Given:
Total Dividend = ₱30,000,000
Total Shares = 700,000 𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆 =
𝑻𝒐𝒕𝒂𝒍 𝒄𝒐𝒎𝒎𝒐𝒏 𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅
𝑻𝒐𝒕𝒂𝒍 𝑺𝒉𝒂𝒓𝒆𝒔
Find: Dividend per share
𝟑𝟎, 𝟎𝟎𝟎, 𝟎𝟎𝟎
𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆 =
𝟕𝟎𝟎, 𝟎𝟎𝟎

𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆 = 𝟒𝟐. 𝟖𝟔

Example #2: Kash Corporation has 2,500,000
shares of common stock outstanding. If the
dividend pf 4,000,000 pesos declared by the
company directors last year, what are the
dividends per share of common stock? How
much would be your earning if you own 2,500
shares?
Example #3: The Corporation ni Jian
declared a dividend of 300,000 pesos. The
company has 30,000 pesos total preferred
dividend and 100,000 total common shares.
Calculate the dividend per share and your
earnings if you own 2,000 shares.
Example #4: A certain corporation declared a 3% dividend on a stock with a
par value of ₱500. Mrs. Lingan owns 200 shares of stocks with a par value
of ₱500. How much is the dividend she received?

Given:
Dividend Percentage = 3%
Par Value = ₱500
𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆 = 𝟓𝟎𝟎 𝒙 𝟎. 𝟑 = ₱𝟏𝟓
Number of Shares = 200
Since there are 200 shares, the total dividend is:
Find: Dividend
𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅 = 𝟏𝟓 𝒙 𝟐𝟎𝟎
𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅 = ₱𝟑, 𝟎𝟎𝟎
Stock yield Ratio
Shows what percentage of the market price
of a share a company annually pays to its
stockholders in the form of dividends.
𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆
Stock yield ratio=
𝒎𝒂𝒓𝒌𝒆𝒕 𝒗𝒂𝒍𝒖𝒆
Example #5: Corporation A, with a current market
value of ₱52 , give a dividend of ₱8 per share of
its common stock. Corporation B, with a current
market value of ₱95 , give 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.
Example #5: Corporation A, with a current market value of ₱52 , give a dividend of ₱8 per
share of its common stock. Corporation B, with a current market value of ₱95 , give 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.

𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆

Given: (Corporation A) 𝑺𝒕𝒐𝒄𝒌 𝒀𝒊𝒆𝒍𝒅 𝑹𝒂𝒕𝒊𝒐 =
𝑴𝒂𝒓𝒌𝒆𝒕 𝑽𝒂𝒍𝒖𝒆
Dividend per share = ₱8
Market Value = ₱52 Corporation A Corporation B
𝟖 𝟏𝟐
Given: (Corporation B) 𝑺𝒀𝑹 =
𝟓𝟐
𝑺𝒀𝑹 =
𝟗𝟓
Dividend per share = ₱12 𝑺𝒀𝑹 = 𝟎. 𝟏𝟓𝟑𝟖 𝑺𝒀𝑹 = 𝟎. 𝟏𝟐𝟔𝟑
Market Value = ₱95 𝑺𝒀𝑹 = 𝟏𝟓. 𝟑𝟖% 𝑺𝒀𝑹 = 𝟏𝟐. 𝟔𝟑%
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Example #1: Determine the amount of the semi-annual coupon for a bond
with a face value of ₱300,000 that pays 10% payable semi-annual for its
coupon.
Given: 𝑪𝒐𝒖𝒑𝒐𝒏 𝑨𝒎𝒐𝒖𝒏𝒕 = 𝑭𝒂𝒄𝒆 𝑽𝒂𝒍𝒖𝒆 𝒙 𝑪𝒐𝒖𝒑𝒐𝒏 𝑹𝒂𝒕𝒆
Face Value (F) = ₱300,000 𝑪𝒐𝒖𝒑𝒐𝒏 𝑨𝒎𝒐𝒖𝒏𝒕 = 𝟑𝟎𝟎, 𝟎𝟎𝟎 𝒙 𝟎. 𝟏𝟎
Coupon Rate = 10% 𝑪𝒐𝒖𝒑𝒐𝒏 𝑨𝒎𝒐𝒖𝒏𝒕 = 𝟑𝟎, 𝟎𝟎𝟎

Find: Amount of the Semi- 𝑪𝒐𝒖𝒑𝒐𝒏 𝑨𝒎𝒐𝒖𝒏𝒕(𝒔𝒆𝒎𝒊 − 𝒂𝒏𝒏𝒖𝒂𝒍) = 𝟑𝟎, 𝟎𝟎𝟎

annual Coupon 𝟐
𝑪𝒐𝒖𝒑𝒐𝒏 𝑨𝒎𝒐𝒖𝒏𝒕 𝒔𝒆𝒎𝒊 − 𝒂𝒏𝒏𝒖𝒂𝒍 = 𝟏𝟓, 𝟎𝟎𝟎
Example #2: Find the amount of the semi-annual coupon for a ₱200,000
bond which pays 5% convertible semi-annually coupons.

Given: 𝑪𝒐𝒖𝒑𝒐𝒏 𝑨𝒎𝒐𝒖𝒏𝒕 = 𝑭𝒂𝒄𝒆 𝑽𝒂𝒍𝒖𝒆 𝒙 𝑪𝒐𝒖𝒑𝒐𝒏 𝑹𝒂𝒕𝒆

Face Value (F) = ₱200,000 𝑪𝒐𝒖𝒑𝒐𝒏 𝑨𝒎𝒐𝒖𝒏𝒕 = 𝟐𝟎𝟎, 𝟎𝟎𝟎 𝒙 𝟎. 𝟎𝟓
Coupon Rate = 5% 𝑪𝒐𝒖𝒑𝒐𝒏 𝑨𝒎𝒐𝒖𝒏𝒕 = 𝟏𝟎, 𝟎𝟎𝟎

Find: Amount of the Semi- 𝑪𝒐𝒖𝒑𝒐𝒏 𝑨𝒎𝒐𝒖𝒏𝒕(𝒔𝒆𝒎𝒊 − 𝒂𝒏𝒏𝒖𝒂𝒍) = 𝟏𝟎, 𝟎𝟎𝟎

annual Coupon 𝟐
𝑪𝒐𝒖𝒑𝒐𝒏 𝑨𝒎𝒐𝒖𝒏𝒕 𝒔𝒆𝒎𝒊 − 𝒂𝒏𝒏𝒖𝒂𝒍 = 𝟓, 𝟎𝟎𝟎
Market Indices for
Stocks and Bonds
Stock Market Index
The measure of a portion of
the stock market

Example:
One example is the PSE Composite Index (PSEi). It is
composed of 30 companies carefully selected to represent the
general movement of market prices.
Sector Indices
Indices that representing a
particular sector.

Example:
Financial Institutions
Industrial Corporations
Holding Firms
Service Corporations , etc.
Stock Index Tables
Here is the example of the stock index table that shows how a
list of index values is typically presented:
Value – it refers to the value of
index
Chg – change of the index value
from the previous trading day
(difference between the value
today and value yesterday)
%Chg – ratio of chg to value
Stock Tables

The heading 52-WK-HIGH is the highest selling price of the

stock in the past 52 weeks.

The heading 52-WK-LOW is the lowest selling price of the

stock in the past 52 weeks.
Stock Tables

The heading STOCK is a three-letter symbol that company

using for trading. Example: AAA

The heading HIGH is the highest selling price of the stock

on the last trading day.
Stock Tables

The heading LOW is the lowest selling price of the stock on

the last trading day.

The heading DIV is the dividend per share last year.

Stock Tables

The heading VOL is the number of shares (in hundreds)

traded in the last trading day.

The heading CLOSE is the closing price on the last trading

days.
Stock Tables

The heading NETCHG is the net change between the last two
trading days. In the case AAA, the net change is 0.10. The
closing price the day before the last trading day is
₱70.25 - ₱0.10 = ₱70.15
Buying or Selling Stocks
To sell the stock is another way of a shareholder to earn an
income. A broker may be used to buy or sell stocks. Those
with accounts in online trading platforms may often
encounter a table such this:
Buying or Selling Stocks

Bid Size – the number of individual buy orders and the total
number of shares they wish to buy.

Bid Prize – the price that buyers are willing to pay for the stock
Buying or Selling Stocks

Ask Size – how many individual sell orders have been placed in the online
platform and the total number of shares these sellers wish to sell

Ask Prize – the price that sellers of the stock are willing to sell
Example

1. Give the highest and lowest prices for the past 52 weeks.
FFF GGG
52-WK-HIGH = ₱75 52-WK-HIGH = ₱118
52-WK-LOW = ₱69 52-WK-LOW = ₱100
Example

2. Give the highest and lowest prices for the last trading days.
FFF GGG
HIGH = ₱71.00 HIGH = ₱115.20
LOW = ₱67.90 LOW = ₱114.30
Example

3. What was the dividend per share last year?

FFF GGG

Dividend per share = ₱3.50 Dividend per share = ₱1.40

Example

4. What was the annual percentage yield last year?

FFF GGG

YLD% = 2.5% YLD% = 3.1%

Example

5. What was the closing price in the last trading day?

FFF GGG

Closing Price = ₱72.30 Closing Price = ₱115.00

Example

6. What was the closing price the day before the last trading day?
FFF GGG
Closing Price (the day before Closing Price (the day before
the last trading day) the last trading day)
₱72.30 - ₱0.30 = ₱72.00 ₱115.00 – (-₱0.10)
₱115.00 + ₱0.10 = ₱115.10
Example

7. How many shares were traded?

FFF GGG

190 shares x 100 = 19,000 10,500 shares x 100 = 1,050,000

Example

8. During the past 52 weeks, which stocks in the table sold at the highest
price? At the lowest price?

Answer: During the past 52 weeks, the GGG stock sold at the highest
price ₱118 and FFF stock sold at the lowest price ₱69
Example

9. Which stocks have the lowest shares were traded for the day?

Answer: The FFF stock has the lowest shares were traded with 190 shares
of 100 which is equal to 19,000 shares
REMINDERS !!!