STOCKS AND BONDS

Sample Problem: Rang-Ay Corporation issued 250 125 shares of stocks to its investors. Forty percent of this is preferred stocks and the rest, common stocks. a. How many common stocks were issued? b. How many preferred stocks were issued? Solution: a. Common stocks = 100% - 40% - 60% = 0.6 250 125 x 0.6 - 150 075 Common Stocks b. Preferred stocks = 40% = 0.4 250 125 x 0.4 - 100 050 Preferred StocksSTOCKS 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 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 (DepEd General Mathematics Learner's Module - 2016). Sample Problem: Rang-Ay Corporation issued 250 125 shares of stocks to its investors. Forty percent of this is preferred stocks and the rest, common stocks. a. How many common stocks were issued? b. How many preferred stocks were issued? Solution: a. Common stocks = 100% - 40% = 60% = 0.6 250 125 x 0.6 = 150 075 Common Stocks b. Preferred stocks = 40% = 0.4Bonds are interest bearing security which promises to pay an 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 LU_General Mathematics_Module13 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. (DepEd General Mathematics Learner's Module - 2016). Sample Problem: A government owned corporation issued bond certificates bearing 6.25% annual interest. Mrs. Dela Cruz, a retired teacher, invested Php1.25 Million. How much will her investment be after a year?Activity 1 Namnama Corporation is planning to have a business expansion, but they are short of capital. Because of this, the Board of Directors agreed to offer their shares of stocks to possible business partners. Aside from that, they will also issue Bond Certificates at 6.25% annual interest to interested investors. If you want to invest your money to Namnama Corporation, which will you prefer, to be their Stockholder or Bondholder? Justify your answer.Sample Problem: A government owned corporation issued bond certificates bearing 6.25% annual interest. Mrs. Dela Cruz, a retired teacher, invested Phpl.25 Million. How much will her investment be after a year? Solution: 6.25% = 0.0625 Interest - Phpl 250 000 x 0.0625 - Php78 125 Total Investment after 1 year = Phpl 250 000 + Php78 125 - Php1 328 125 The Stock Index can be a standard by which investors can compare the performance of their stocks. This is being reported in the business section of newspapers, magazines or even online (DepEd General Mathematics Learner's Module - 2016) The table below is an example of how a list of index value is presented (values are hypothetical). Index Val Che Chg PSEi 6 253 .84 -15.22 -0.24 Financials 4 075.22 4.28 0.11 Holding Firms 6 925.32 2.87 0.04 Industrial 12 298.21 252.53 2.05 Property 2 125.82 -10.97 -0.52 Services 2 584.33 287.32 11.12 Mining and Oil 12 947. 82 29.21 0.23