GENERAL MATHEMATICS

WORKSHEET #3
Stocks, Bonds And Loans

What you are expected to learn:

At the end of the lesson, the learners should be able to:
1. Illustrate stocks and bonds
2. Distinguish between stocks and bonds
3. Illustrate business and consumer loans
4. Distinguish between bonds and consumer loans
5. Solve problems involving business and consumer loans (amortization,
mortgage)

Directions:
To answer the pretest, activities and assessment, use a separate sheet. Write
legibly. Do not forget to write tour name, grade and strand and the worksheet
number. Let your parents affix their signature at the last part of the paper you will
submit.

Pre-test:
Multiple choice: Choose the letter of the best answer.

_____ 1. It is a form of debt financing, or raising money by borrowing from

investors
a. bonds b. loans c. stocks d. none of the choices
_____ 2. It has higher risk but with a possibility of higher returns.
a. bonds b. loans c. stocks d. none of the choices
_____ 3. If P = F, the bond is purchased at __________
a. A discount b. par c. premium d. none of the choices
_____ 4. A resort company gave out P 11 dividend per share for its common
stock. The market value of the stock is P 17. Determine the stock yield
ratio.
a. 0.64 b. 0.65 c. 1.54 d. 1.55
_____ 5. It is a loan secured by a collateral, that the borrower is obliged to pay at
specified terms.
a. Chattel mortgage c. outstanding balance
b. Mortgage d. stocks

General Mathematics Worksheet # 3 1

LESSON 1: STOCKS AND BONDS

STOCKS
Some corporations may raise money for their expansion by issuing stocks. Stocks
are shares in the ownership of the company. Owners of stocks may be considered
as part owners of the company. There are two types of stocks: common stock and
preferred stock. Both will receive dividends or share of earnings of the company.
Dividends are paid first to preferred shareholders.
Stocks can be bought or sold at its current price called the market value. When a
person buys some shares, the person receives a certificate with the corporation’s
name, owner’s name, number of shares and par value per share.

BONDS
Bonds are interest bearing security which promises to pay amount of money on a
certain maturity date as stated in the bond certificate. Unlike the stockholders,
bondholders are lenders to the institution which may be a government or private
company. Some bond issuers are the national government, government agencies,
government owned and controlled corporations, non-bank corporations, banks and
multilateral agencies. Bondholders do not vote in the institution’s annual meeting
but the first to claim in the institution’s earnings. On the maturity date, the
bondholders will receive the face amount of the bond. Aside from the face amount
due on the maturity date, the bondholders may receive coupons
(payments/interests), usually done semi-annually, depending on the coupon rate
stated in the bond certificate.

Comparison of Stocks and Bonds

Stocks Bonds
A form of equity financing or raising A form of debt financing, or raising money by borrowing
money by allowing investors to be part from investors
owners of the company.
Stock prices vary every day. These Investors are guaranteed interest payments and a return of
prices are reported in various media their money at the maturity date
(newspaper, TV, internet, etc).
Investors can earn if the stock prices Investors still need to consider the borrower’s credit rating.
increase, but they can lose money if the Bonds issued by the government pose less risk than those
stock prices decrease or worse, if the by companies because the government has guaranteed
company goes bankrupt. funding (taxes) from which it can pay its loans
Higher risk but with possibility of higher Lower risk but lower yield
returns
Can be appropriate if the investment is Can be appropriate for retirees (because of the guaranteed
for the long term (10 years or more). fixed income) or for those who need the money soon
This can allow investors to wait for stock (because they cannot afford to take a chance at the stock
prices to increase if ever they go low. market)
General Mathematics Worksheet # 3 2
Definition of Terms in Relation to Stocks

Stocks – share in the ownership of a company

Dividend – share in the company’s profit
Dividend Per Share – ratio of the dividends to the number of shares
Stock Market – a place where stocks can be bought or sold. The stock market in
the Philippines is governed by the Philippine Stock Exchange (PSE)
Market Value – the current price of a stock at which it can be sold
Stock Yield Ratio – ratio of the annual dividend per share and the market value
per share. Also called current stock yield.
Par Value – the per share amount as stated on the company certificate. Unlike
market value, it is determined by the company and remains stable over
time

Example 1. A certain financial institution declared a P30,000,000 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 = P 30,000,000
Total Shares = 700,000
Find: Dividend per share
Solution:

= 42.86
Therefore, the dividend per share is P 42.86

Example 2. A certain corporation declared a 3% dividend on a stock with a par

value of P500. Mrs. Lingan owns 200 shares of stock with a par value of P500.
How much is the dividend she received?
Given: Dividend Percentage = 3%
Par Value = P500
Number of Shares = 20
Find: Dividend
Solution.
The dividend per share is: P500 x 0.03 = P15.
Since there are 300 shares, the total dividend is:
P15/share x 200 shares = P3,000
In summary,
Dividend = (Dividend Percentage) x (Par Value) x (No. of Shares)
= (0.03) (500) (200)
= 3,000
Thus, the dividend is P3,000.
General Mathematics Worksheet # 3 3
Definition of Terms in Relation to Bonds

Bond – interest-bearing security which promises to pay (1) a stated amount of

money on the maturity date, and (2) regular interest payments called
coupons.
Coupon – periodic interest payment that the bondholder receives during the time
between purchase date and maturity date; usually received
semiannually
Coupon Rate – the rate per coupon payment period; denoted by r
Price of a Bond – the price of the bond at purchase time; denoted by P
Par Value or Face Value - the amount payable on the maturity date; denoted by
F.

Term of a Bond – fixed period of time (in years) at which the bond is redeemable
as stated in the bond certificate; number of years from time of purchase
to maturity date.
Fair Price of a Bond – present value of all cash inflows to the bondholder.

Example 3. Determine the amount of the semi-annual coupon for a bond with a
face value of P300,000 that pays 10%, payable semi-annually for its
coupons.
Given: Face Value F = 300,000
Coupon rate r = 10%
Find: Amount of the semi-annual coupon
Solution.
Annual coupon amount: 300,000(0.10) = 30,000.

Semi-annual coupon amount:

Thus, the amount of the semi-annual coupon is P15,000.

General Mathematics Worksheet # 3 4

Example 5. Suppose that a bond has a face value of P100,000 and its maturity
date is 10 years from now. The coupon rate is 5% payable semi-annually. Find the
fair price of this bond, assuming that the annual market rate is 4%.

ACTIVITY 1:
A. Identification: Identify the word that best describes the following phrases.
__________ 1. Share in the company’s profit
__________ 2. The current price of a stock at which it can be sold
__________ 3. Periodic payment that the bondholder receives between
purchase date and maturity date
__________ 4. Share in the ownership of a company
__________ 5. The price of the bond at purchase time
B. Solve the given problem. Show your solution to each problem.

Stockholder A got 4500 shares of stocks from XYZ Corporation. The par value
is P 150. How much is the dividend if the percentage is 3%?
General Mathematics Worksheet # 3 5
LESSON 1: BUSINESS AND CONSUMER LOANS
Definition of Terms
Business Loan – money lent specifically for a business purpose. It may be used to start a business
or to have a business expansion
Consumer Loan – money lent to an individual for personal or family purpose
Collateral – assets used to secure the loan. It may be real-estate or other investments
Term of the Loan – time to pay the entire loan

In Examples 1-5, identify whether the following is a consumer or business loan.

Example 1.
Mr. Agustin plans to have a barbershop. He wants to borrow some money from the bank in order for
him to buy the equipment and furniture for the barbershop.
Solution. Business loan
Example 2.
Mr. and Mrs. Craig wants to borrow money from the bank to finance the college education of their
son.
Solution. Consumer loan
Example 3.
Mr. Alonzo wants to have some improvements on their 10-year old house. He wants to build a new
room for their 13-year old daughter. He will borrow some money from the bank to finance this plan.
Solution. Consumer loan
Example 4.
Mr. Samson owns a siomai food cart business. He wants to put another food cart on a new mall in
the other city. He decided to have a loan to establish the new business.
Solution. Business loan
Example 5.
Roan has a computer shop. She owns 6 computers. She decided to borrow some money from the
bank to buy 10 more computers.
Solution. Business loan

ACTIVITY 2:
Identify the following whether the following illustrates a business loan or a consumer loan.
_____ 1. Mr. Lim wants to have another branch for his cellphone repair shop. He decided to apply
for a loan that he can use to pay for the rentals of the new branch.
_____ 2. Mr. Trillas runs a trucking business. He wants to buy three more trucks for expansion of his
business. He applied for a loan in a bank.
_____ 3. Mrs. Alonzo decided to take her family for a vacation. To cover the expenses, she decided
to apply for a loan.
_____ 4. Glenn decided to purchase a condominium unit near his workplace. He got a loan worth
P2,000,000.
_____ 5. Mr. Galang renovated her house for P80,000. This was made possible because of an
approved loan worth P75,000.
General Mathematics Worksheet # 3 6
LESSON 3. Solving Problems on Business and Consumer Loans

Definition of Terms
Amortization Method – method of paying a loan (principal and interest) on
installment basis, usually of equal amounts at regular intervals
Mortgage – a loan, secured by a collateral, that the borrower is obliged to pay at
specified terms.
Chattel Mortgage – a mortgage on a movable property
Collateral – assets used to secure the loan. It may be a real-estate or other
investments
Outstanding Balance – any remaining debt at a specified time

Example 1.
Mr. Garcia borrowed P1,000,000 for the expansion of his business. The effective
rate of interest is 7%. The loan is to be repaid in full after one year. How much is
to be paid after one year?
Given: P = 1,000,000 j = 0.07 n=1
Find F.
Solution. F = P(1 + j)n = 1,000,000 (1 + 0.07)n = 1,070,000

An amount of P 1,070,000 must be paid after one year.

Example 2 (Chattel mortgage).

A person borrowed P1,200,000 for the purchase of a car. If his monthly payment
is P31,000 on a 5-year mortgage, find the total amount of interest.
Given: P = 1,200,000 Monthly payment = 31,000
Solution.
The total amount paid is given by
Total Amount = (31,000)(12 months)(5 years)
= 1,860,000

Thus, the total interest is the difference between the total amount paid and the
amount of the mortgage;
Total Interest = 1,860,000 – 1,200,000
= 660,000

Example 3.
If a house is sold for P3,000,000 and the bank requires 20% down payment, find
the amount of the mortgage.
Solution.
Down payment = down payment rate x cash price
= 0.20(3,000,000)
General Mathematics Worksheet # 3 7
= 600,000
Amount of the Loan = cash price - down payment
= 3,000,000 – 600,000
= 2,400,000

The mortgage amount is P2,400,000.

Reference: Content of this activity sheet were obtained from the modules provided by Department
of Education Self-Learning Modules and examples can also be found in the General Mathematics
Learner’s Manual.
Prepared by:

RACHEL R. PUNO/ MICHAELA C. MADAMECILA

Subject Teachers

ASSESSMENT:
A. Multiple choice: Choose the letter of the best answer.
_____ 1. It is a form of debt financing, or raising money by borrowing from
investors
a. bonds b. loans c. stocks d. none of the choices
_____ 2. It has higher risk but with a possibility of higher returns.
a. bonds b. loans c. stocks d. none of the choices
_____ 3. If P = F, the bond is purchased at __________
b. A discount b. par c. premium d. none of the choices
_____ 4. A resort company gave out P 11 dividend per share for its common
stock. The market value of the stock is P 17. Determine the stock yield ratio.
b. 0.64 b. 0.65 c. 1.54 d. 1.55
_____ 5. It is a loan secured by a collateral, that the borrower is obliged to pay at
specified terms.
c. Chattel mortgage c. outstanding balance
d. Mortgage d. stocks

B. Solve the given problem. Show your solution to each problem.

A business loan of P1,000,000 is to be repaid in full after 3 years. If the

interest rate is 7% per annum. How much should be paid after 3 years?

General Mathematics Worksheet # 3 8