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    General Mathematics: Activity #5 2 Quarter

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    Chosen Josiah Huerta
    This document provides information about stocks and bonds. It defines bonds as a loan given to an entity that promises to repay the principal plus interest. It describes different types of bonds. It defines stocks as shares of ownership in a corporation that are sold to raise capital. It discusses the differences between common and preferred stocks. It also covers dividends and the theory of efficient markets, which has three levels from weak to strong form efficiency. The learning targets are to illustrate and distinguish stocks from bonds, describe their markets, analyze indices, and interpret efficient market theory.

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    General Mathematics: Activity #5 2 Quarter

    Uploaded by

    Chosen Josiah Huerta
    54 views18 pages
    This document provides information about stocks and bonds. It defines bonds as a loan given to an entity that promises to repay the principal plus interest. It describes different types of bonds. It defines stocks as shares of ownership in a corporation that are sold to raise capital. It discusses the differences between common and preferred stocks. It also covers dividends and the theory of efficient markets, which has three levels from weak to strong form efficiency. The learning targets are to illustrate and distinguish stocks from bonds, describe their markets, analyze indices, and interpret efficient market theory.

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    5th-topic-GM-2nd-quarter

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    This document provides information about stocks and bonds. It defines bonds as a loan given to an entity that promises to repay the principal plus interest. It describes different types of bonds. It defines stocks as shares of ownership in a corporation that are sold to raise capital. It discusses the differences between common and preferred stocks. It also covers dividends and the theory of efficient markets, which has three levels from weak to strong form efficiency. The learning targets are to illustrate and distinguish stocks from bonds, describe their markets, analyze indices, and interpret efficient market theory.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    54 views18 pages

    General Mathematics: Activity #5 2 Quarter

    Uploaded by

    Chosen Josiah Huerta
    This document provides information about stocks and bonds. It defines bonds as a loan given to an entity that promises to repay the principal plus interest. It describes different types of bonds. It defines stocks as shares of ownership in a corporation that are sold to raise capital. It discusses the differences between common and preferred stocks. It also covers dividends and the theory of efficient markets, which has three levels from weak to strong form efficiency. The learning targets are to illustrate and distinguish stocks from bonds, describe their markets, analyze indices, and interpret efficient market theory.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 18

    General Mathematics

    Activity #5
    2nd Quarter
    What are Bonds?

    What are Stocks?


    Based from the videos presented:
    • What do you learn from the video?

    • Are those terms common to you?


    I just want to know…
    • What comes to your mind when you
    encounter the financial term bonds?

    • What do you think is the difference


    between stocks and bonds?
    Learning Targets
    • Illustrate stocks and bonds.
    • Distinguish between stocks and bonds.
    • Describe the different markets for stocks
    and bonds.
    • Analyze the different market indices for
    stocks and bonds.
    • Interpret the theory of efficient markets.
    Essential Question

    • Why is it important to have knowledge


    about stocks and bonds?
    Content:

    “Bonds and Stocks”


    What are bonds?
    • When a potential depositor wants to save or invest, he or
    she gives the investable funds to a party of interest which
    could be either a financial institution or a retail or
    corporate borrower. The common investments are in the
    form of a deposit to a bank or a paluwagan contribution to
    a cooperative or credit union. The concept of bond is
    almost the same. When you purchase a bond, you are
    lending money to a government, city, corporation or any
    other entity known as an issuer. In return for that money,
    the issuer provides you with a bond in which it promises to
    pay a specified rate of interest during the life of the bond,
    and to repay the face value of the bond (the principal)
    when t matures or comes due. Bonds can also be referred
    to as bills, notes, debt securities, or debt obligations.
    The various types of bonds, and they are defined
    according to their functions as follows:
    1. Corporate bonds are bonds issued by the most
    established corporations. In the Philippines, most
    bond issuers are from the banking sector, real estate
    and telecommunications industry. The corporations
    are leveraging on the funds raised to finance their
    operational and capital expenditures.

    2. Secured bonds are bonds that are backed up by


    corporate collaterals that have substantial value such
    as property, plant or equipment. Collateral is a
    valuable asset of a borrower that is pledged as a
    security for a loan which will be automatically
    transferred to the lender in case of borrower’s default.
    3. Unsecured bonds are not collateralized by any
    substantial corporate asset. Also known as debenture
    bonds, these bonds are only issued with good faith.

    4. Convertible bonds are bonds that can be interchanged


    with shares of stock. These are also a hybrid type of
    bond because of their debt or equity features.

    5. Callable bonds are bonds that can literally be recalled


    or redeemed by the issuer even before the bonds
    mature. This situation usually happens when there is
    fluctuation in interest rates, and the issuer can resort
    to issue new bonds at lower rate.
    What are stocks?
    • Financial analysts and advisors often say that the stock
    market is the measure of a country’s economy or the world
    economy for that matter. Why do you think so?
    • Stocks are defined as shares of ownership in a corporation.
    Most of the corporations listed in a stock exchange house
    are the top tier corporations. Stocks, as compared to bonds,
    are almost the same in nature except that stocks are limited
    only to investment in corporations. These corporations sell
    their stocks for raising capital funds or to finance the
    expansion and operational requirements. Stocks are
    classified as common stock and preferred stock.
    • The common stockholders’ major difference
    over preferred stockholders is that they have the
    voting rights as to who they feel should be part
    of the company’s board of directors. Most of the
    time, the voting rights of common stockholders
    are equivalent to the number of shares they own.
    • The preferred stockholders’ advantage, on
    the other hand, is that they get preference in
    dividend payments; however, they do not have
    the voting rights. Dividends are a portion of the
    company’s earnings distributed among its
    stockholders.
    Dividends may be classified according to their characteristics and features.

    • Classification of dividends

    1. Cash dividend. From the term itself, it is a type of dividend that


    is paid through cash. There are various dates in cash dividend
    that should be noted. First is the date of declaration. This is
    where the board of directors, decides to pay a certain dividend
    amount in cash to those investors holding the company’s stocks
    on specific date. Second is the date of record, which is the date
    on which dividends are allocated to the company’s stockholders.
    The last one is the date of payment, the date when the
    company issues cash dividend payments to its stockholders.

    2. Stock dividend. This is the issuance of the company of its stock


    to its stockholders. Stock dividends usually occur when a
    company does not have sufficient cash.
    3. Property dividend. Aside from cash and stock, a company may
    also opt to issue a nonmonetary dividend or property to the
    stockholders.

    4. Scrip dividend. Similar to stock and property dividends, a


    certain company may not have enough liquidity to distribute cash
    dividends in the near future; so instead they issue scrip
    dividends. A scrip dividend is essentially an obligation to pay or
    simply a promissory note (which may include interest) to pay
    stockholders at a specific date.

    5. Liquidating dividends. This occurs when the company’s board


    of directors wishes to return the stock investment which was
    originally contributed by the stockholders in the form of a
    dividend. A liquidating dividend is usually a glaring sign that the
    company is already winding down its business. Thus, the
    company already fully distributes its assets to the rightful owners
    including the stockholders.
    Theory of Efficient Market
    • Stock prices by their nature fluctuate, “good
    news” is theoretically the result of an increasing
    stock price, while “bad news” entails decline in
    stock price. An investor, aside from the
    dividends earned from the corporation he or she
    invested, also earns money by buying the stocks
    at lower price (or when supply is high and the
    demand is low) and sells them at higher price (or
    when the demand is high).
    Three levels of Theory of Efficient Market

    1. Weak – form efficiency


    2. Semi – form efficiency
    3. Strong – form efficiency
    Size-up Activity
    • Individual Activity
    • Copy and Answer

    1. Differentiate stocks and bonds.

    2. What is your learning about theory of efficient


    market?
    Gospel Values
    • Perseverance
    • “But as for you, brothers, do not grow weary in
    well-doing.”
    -2 Thessalonians 3:13

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