BONDS, STOCKS, AND
LOANS
PSO- PHILIPPINE STOCK EXCHANGE
“INVESTING IS THE MOST
EFFECTIVE WAY TO BUILD YOUR
PERSONAL WEALTH AND SECURE
YOUR FINANCIAL FUTURE.”
3.1 BONDS
-These are CONTRACTS.
-In purchasing a bond, you are
LENDING money to an entity known as
the ISSUER
-example: Pondo ng Pinoy Projects
LENDER
-Lends money with specified interest.
ISSUER
-Purchases bonds.
-Promises to pay a specified interest
during the life of the bond.
2 TYPES OF PAYMENTS
1. COUPON BOND
-These are PERIODIC PAYMENTS .
-is the annual interest payment that the
bondholder receives from the bond's
issue date until it matures.
2. ZERO COUPON BOND
-Is a bond that makes no periodic
interest payments and is sold at a deep
discount from face value.
- There is NO need for PERIODIC
PAYMENTS
-1 time payment + interest
3.1.1 TYPES OF BONDS
1. CORPORATE BONDS
-issued by the most established
CORPORATIONS.
-Banking sectors, Real Estate,
Telecommunication Industry.
-Usually issued to expand
projects/ capital of a corporation.
2. SECURED BONDS
-Backed up by corporate
COLLATERALS that have
substantial value
COLLATERALS 3.2 STOCKS

-Valuable assets of a borrower that is -are pieces/ share of ownership in a

pledged as a security for a loan which company.
will be automatically transferred to the
lender in case of a borrower’s default. -raise money.

STOCK MARKET

3. UNSECURED BONDS - are places where stocks are bought and

- Bonds that are not characterized sold.
by any substantial corporate
asset. .2.1 TYPES OF STOCKS
- are issued by “GOOD FAITH”.
The lender has the issuer’s
promise to repay but has no claim
1. Common Stock
on specific collateral.
- The interest is usually higher -represents ownership in a corporation.
due to the risk.

 Voting Rights
4. CONVERTIBLE BONDS  Dividends
-Bonds that can be interchanged
with the shares of stock.
2. Preferred Stock

5. CALLABLE BONDS - represents some degree of ownership

-can be recalled before the bonds
mature.
-Happens when the fluctuation in
interest rates and the issuer can
resort to issue new bonds at a
lower interest rate.
in a company but usually doesn't come
with the same voting rights.
- In the event of liquidation preferred
shareholders are paid off before the
common shareholder

 Voting Rights
 Dividends
 THE STOCKHOLDER

DIVIDEND
When to know?
- Profit of the company that goes to the
shareholders.  Purchases the stock of a company
 Has a main purpose of saving/
investing his/ her excess money or
FORMS OF DIVIDENDS investable funds to a company that
he/ she believes will increase in value
 CASH or provide sufficient dividends.
–paid through cash (most  Not limited to invest in only one
common) company.
 STOCK  Is advised to put their funds on
-additional stock (insufficient diversified investment for risk
cash) reduction process.
 PROPERTY  Carry a certificate of ownership
-property to shareholder. called “stock certificate.”
 SCRIP
-issues promissory note (not
enough liquidity) THE MARKET
 LIQUIDATING
-last dividend because it is the 1. The Bond Market
glaring sign that the company is
already winding down its - the largest issuer of Philippine Bondsn
business. is the Bureau of Treasury.

TREASURY BONDS
FAIR MARKET VALUE
-mature over 1 year or beyond. It has 5
-value of the property recorded in the maturities.
company’s balance sheet.
RETAIL TREASURY BONDS

- designed to make the government

securities available for retail investors.

-Safe, high yielding & affordable savings

instrument.

-risk free (issued by government for

small investors)
2. The Stock Market

-where stocks are bought and sold

PHILIPPINE STOCK EXCHANGE

(PSE)

-governs the local market.

-locations: BGC & ORTIGAS

DISTINGUISHING STOCKS & BONDS

STOCKS BONDS

A form of equity fnancing or allow raising Form of debt financing or raising money by
money by allowing investors to be part borrowing from investors.
owners of a company.
Prices vary everyday Fixed amount of interest and you know
when will you be paid and what amount to
receive.
Investing in stocks involve some Uncertainty only appears when issuer is
uncertainties. unable to pay
Higher risk but possibility of higher returns. Lower risk but lower return

Appropriate for long term (10 years or Appropriate for retirees because of the
more) guaranteed fixed income. Also appropriate
for those who need money soon.

PSEi

-fixed basket of 30 common listed Inc. –Incorporated

companies, carefully selected to
represent the general movement of the Corp.- Corporation
stock market. Blue Chips- Expensive Stocks
-selected by the PSE to represent the
general movement of stock market.
SECURITIES AND EXCHANGE
COMISSION (SEC)
- protects and maintains the integrity of
the capital market.
4PARTICIPANTS IN THE STOCK
MARKET
1. PSE
2. Publicly Listed Corporation
3. Trading Participant or Stock
brokers
4. Stockholder/ Investors
MOST COMMON RISKS
 Market Risk
-most difficult risk to analyze &
calculate.
-encompasses events not just
domestically but also
internationally.
 Default Risk
-chance that companies/
individuals will be unable to do
the required payments on their
debt obligations
- usually happens when you put
your investment in one basket.
 Guarantee of Principal Risk
-risk than an investment will
decline in value below the
amount one invested.
- possibility an investment will be
worth less when it is sold than
when it was purchased.
 Inflationary Risk & Interest
Rate Risk
-chance that the cash flows from
an investment wont be as much
in the future.
-risk than an investment value
will changedue to change in the
absolute level of interest rate.
.3 LOANS
CONSUMER CREDIT
-type of loan offeref to business and
individuals or other retail customers.
-regular payments/ installments with
imputed interest (method of paying)
2 TYPES OF INSTALLMENT
LOANS
1. CLOSED-END Credit
- Principal amount and interest
borrowed are repaid in a specific
number of payments.
2. OPEN-END Credit
- no fixed amount borrowed or
number of payments. Regular
payments are made until loan is
paid off.
5CHARACTERISTICS OF CREDIT
 Character
-Credit History, Knowledge &
Training, Experience, Financial
Competency, and Plans for the
future.
-This is your REPUTATION AS A
BORROWER.
 Capacity
- ability of the borrower to repay
the loan by assessing the income
against the debt of a borrower.
 Capital
-what is left behind the borrower
when the liabilities are deducted
from the assets.
 Collateral
-Lender’s security in a loan
transaction.
 Conditions
-commercial terms of a loan
transaction such as the principal
amount, interest rate, and the
term of the loan.
R.A. 3765 “TRUTH LENDING ACT”
-Governement- mandated regulation
that requires lending institutions to
declare all the necessary details of a loan
transactions that a borrower should be
aware of.
.3.1 BUSINESS & CONSUMER
LOANS
BUSINESS LOANS
-money lent specifically for business.
TYPES OF BUSINESS LOANS
 CORPORATE LOANS
-availed by the top corporation
whose purpose is to finance their
projecrts or expand their
respective business.
 COMMERCIAL LOANS
-not as big as the top 1000
companies.
-availed by commercial
businesses.
  SME LOANS
-Small & Medium Enterprises
Loan
-availed by SMEs which are
usually entrepreneurs or start-up
businesses.
 AUTO OR CAR LOANS
- Another common kiab product
wherein the purpose of the loan is
to finance a brand bew car or a
second hand car.

COLLATERALS ACCEPTED BY
PHILIPPINE BANKS
 SALARY OR PERSONAL LOANS
 Investment
 Real Estate - a loan being offered to
 Deposit Account employed individuals.
 StandBy Letter of Credit
 Updated Financial Statements
 CREDIT CARD

-A credit facility that major banks

CONSUMER LOANS
- Is when a person borrows money from
a lender, either unsecured or secured.
-lend to an individual for personal of
family use.
are offering to qualified
individual or corporations.
-the credit limit varies depending
on your background. If you are
rich and able to pay, they are
increasing your credit limit to
encourage you to borrow money
from them more.

TYPES OF CONSUMER LOANS

 HOUSING OR MORTGAGE
LOANS

-Its purpose is to finance a new

house & lot or condominium unit
for residential purposes.