What is all about Stocks and Bonds?

*Stocks and bonds signify the world of business

(Much of the world's business activity would be

impossible without stocks and bonds)

*Stocks and bonds are certificates that are sold to

raise money for starting a new company or for
expanding an existing company.

*Stocks and bonds are also called securities, and

people who buy them are called investors.
Differences between Stocks and Bonds

Stocks are certificates of ownership. A person who buys

stock in a company becomes one of the company's owners.
As an owner, the stockholder is eligible to receive
a dividend, or share of the company's profits. The amount of
this dividend may change from year to year depending on the
company's performance. Well-established companies try to
pay stockholders as high a dividend as possible.
 EXAMPLE

Corporations sell stock (or ownership in the company) in return

for cash to run their businesses. Much of the time, only a few people
(the founders of the company, for example, who have put their
life savings into the company) own the company. But when several
owners want to cash out their investments or the company needs
more cash for whatever reason, the corporation might "go public,"
meaning that it sells some of, all of or more of its shares to the general
public via a stock exchange.

TWO TYPES
Common
OF STOCKS stock and
Preferred
stock
Common stock
May vote for company directors and attend
annual stockholders' meetings. At these
meetings they have the chance to review the
company's yearly performance and its future
plans, and to present their own ideas.

Preferred stock
Do not usually have voting rights or the right
to attend stockholders' meetings. They do,
however, have priority when dividends are
paid. The dividends on preferred stocks are
paid according to a set rate, while the
dividends on common stocks fluctuate
according to the company's performance. If
the company does well, however, preferred
stocks do not usually gain in value as much
as common stocks. If a company goes out of
 A bond is a debt investment in which an
investor loans money to an entity (typically
corporate or governmental) which borrows the
funds for a defined period of time at a variable
or fixed interest rate. Bonds are used by
companies, municipalities, states and sovereign
governments to raise money and finance a
variety of projects and activities. Owners of
bonds are debtholders, or creditors, of the
issuer.
A bond, also known as a fixed-
income security, is a debt instrument
created for the purpose of raising capital.
They are essentially loan agreements
between the bond issuer and an investor, in
which the bond issuer is obligated to pay a
specified amount of money at specified
future dates.

EXAMPLE

When an investor purchases a bond, they are

"loaning" that money (called the principal) to the
bond issuer, which is usually raising money for
some project. When the bond matures, the issuer
repays the principal to the investor. In most cases,
the investor will receive regular interest payments
from the issuer until the bond matures.
Consumer Credit

Consumer credit is a debt that a person

incurs when purchasing a good or service.
Credit given by shops, banks and other financial
institutions to consumers so that they can buy
goods.
Consumer credit is also known as consumer
debt.

Ex.

The most common form of consumer credit

is a credit card.
 Business Loan
businbbusiness loa

A business loan is borrowed capital that

companies apply toward expenses that
they are unable to pay for themselves.
Some business owners use business loans
to pay for salaries and wages until their
new company gets off the ground, while
other companies put borrowed funds
toward office supplies, inventory or
business projects. Lenders want to know
how the business intends to use the
borrowed monies, so business owners
must make sure to have a clear outline for
how the money will be spent.
 Commercial Loans

Commercial loans are granted to a

variety of business entities, usually to
assist with short-term funding needs for
operational costs or for the purchase of
equipment to facilitate the operating
process. In some instances, the loan may
be extended to help the business meet
more basic operational needs, such as
funding for payroll or to purchase smaller
supplies that are used in the production
and manufacturing process.
 EXAMPLE

Business A is very promising in the

business world. However, they do not
have the needed equipment's for the
business to be launch. They will get a
business loan from a financial institution
to fund for those needed equipment’s.
 Mathematical logic
Mathematical logic is the part
of mathematics concerned with
the study of formal languages,
formal reasoning, and the nature
of mathematical proof, provability
of mathematical statements,
computability, and other aspects
of the foundations of mathematics.
Example:
Negation- Sometimes in
mathematics it's important to
determine what the opposite
of a given mathematical
statement is. This is usually
referred to as "negating" a
statement. One thing to keep
in mind is that if a statement is
true, then its negation is false
(and if a statement is false,
then its negation is true).
Negation is an operator which
gives the opposite statement
of the previous statement. It is
also known as NOT, denoted
by ∼∼. It is an operation
that gives the opposite result.
If input is true then output is
false. If input is false then
output is true. It has one input
and one output.
 Axiom

An Axiom Example:
(a proposition regarded as
A proposition is
self-
a mathematical
evidently true without proof)
statement such as
is a proposition that is
"3 is greater than
assumed to be true. With
4," "an infinite set
sufficient information,
exists," or "7 is
mathematical logic can
prime."
often categorize a
proposition as true or false,
although there are various
exceptions.
 Amortization

Example:
Let's assume Company XYZ
owns the patent on a piece of
Amortization is technology, and that patent
an accounting term that
lasts 15 years. If the
refers to the process of
allocating the cost of company spent 15 million
an intangible asset(For pesos to develop the
example, goodwill, patents, technology, then it would
trademarks and copyrights
record 1 million pesos
are intangible assets. None of
these assets can be each year for 15 years
physically touched, but they as amortization expense on
can still have value.) Over a its income statement.
period of time it also refers to
the repayment Alternatively, let's assume
of loan principal over time. Company XYZ has a 10
million
pesos loan outstanding. If
Company XYZ repays
500,000 pesos of
that principal every year, we
would say that 500,000 pesos
Things to Remember:

1. A mortgage is a loan, secured by the collateral (Collateral is a

property or other asset that a borrower offers as a way for a lender
to secure the loan. If the borrower stops making the
promised loan payments, the lender can seize the collateral to
recoup its losses). That the borrower is obliged to pay back with a
predetermined set of payments. Mortgages are used by individuals
and businesses to make large real estate purchases without
paying the entire value of the purchase up front.
2. Over a period of many years, the borrower repays the loan, plus
interest, until he/she eventually owns the property free and clear
(A slang phrase describing the situation of someone when he or
she gains outright ownership of an asset, such as when it is
completely paid off and no creditor has a claim on the property).
3. Mortgages are also known as "liens against property" or "claims
on property." If the borrower stops paying the mortgage, the bank
can foreclose (take possession of a mortgaged property as a
result of the mortgagor's failure to keep up their mortgage
payments.).

Example:

Rhexnielle needs to buy a real estate (property consisted of land and

buildings) but he’s a little short of money. He will now enter to an
agreement (mortgage) with a lender (a bank). Over a period of many years,
rhexnielle will repay the loan, plus interest, until he eventually owns the
property free and clear.
Submitted by:

Jan Maverick Domingo

Judy Ann Tumamao
Lavlee Genina Gallardo