The document defines several financial terms: - A cash flow refers to cash inflows or outflows over time, with inflows represented as positive numbers and outflows as negative. - The fair market value of a cash flow on a given date is equivalent to its value on that focal date. - A deferred annuity is an annuity whose payments start after a period of deferral rather than immediately. - Stocks represent shares of ownership in a company, while dividends are shares of company profits. Other stock terms are also defined. - Bonds are interest-bearing securities that promise payment of principal and regular coupon payments, with terms like coupon rate, par value, and maturity defined.

2. • A cash flow is a term that refers to payments received (cash inflows) or
payments or deposits made (cash outflows). Cash inflows can be represented by
positive numbers and cash outflows can be represented by negative numbers.
• The fair market value or economic value of a cash flow (payment stream) on a
particular date refers to a single amount that is equivalent to the value of the
payment stream at that date. This particular date is called the focal date.
• Deferred Annuity - an annuity that does not begin until a given time interval has
passed - are series of payments, but will start on a later date
• Period of Deferral - time between the purchase of an annuity and the start of
the payments for the deferred annuity

3. Example of Deferred Annuity
• Credit card company offering its clients to purchase today but to start
paying monthly with their choice of term after 3 months.
• A real estate agent is urging a condominium unit buyer to purchase
now and start paying after 3 years when the condominium is ready for
occupancy.
• A worker who has gained extra income now and wants to save his
money so that he can withdraw his money monthly starting on the day of
his retirement from work.

5. 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)

6. • 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.

7. Definition of terms in relation to BONDS.
• Bond – interest bearing security which promises to pay
(a.) a stated amount of money on the maturity date, and
(b.) regular interest payments called coupons
• Coupon – periodic interest payment that the bondholder receives during
the time between purchase date and maturity date; usually received semi-
annually
• Coupon Rate – the rate per coupon payment period; denoted by r

8. Definition of terms in relation to BONDS.
• Price of a Bond – the price of the bond at a purchase time; denoted by P
• Par Value or Face Value – the amount payable on the maturity date;
denoted by F.
• Term (or Tenor) 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

9. Definition of terms in relation to BONDS.
Bid Size – the number of individual buy orders and the total number of shares that
they wish to buy
Bid Price – the price these buyers are willing to pay for the stock
Ask Price – the price the sellers of the stock are willing to sell the stock
Ask Size – how many individual sell orders have been placed in the online platform
and the total number of shares these sellers wish to sell

11. Examples in Relation to Stocks
Example 1. A certain financial institution declared a ₱30,000,000.00 dividend for the common
stocks. If there is a total of ₱700,000.00 shares of common stock, how much is the dividend per
share?
Given:
Total Dividend = ₱30,000,000.00 Total Shares = ₱700,000.00
Find: Dividend per Share

12. Example 2. A certain corporation declared a 3% dividend on a stock with a par value of ₱500.00.
Mrs. Ramos owns 200 shares of stock with a par value of ₱500.00. How much dividend she
received?
Given: Dividend Percentage = 3% Par Value = ₱500.00 Number of Shares = 200
Find: Dividend
Solution:
The dividend per share is ₱500 x 0.03 = ₱15.00.
Since there are 200 shares, the total dividend is: ₱15/share x 200 shares = ₱3,000.00
In summary,
Dividend = (Dividend Percentage) (Par value) (Number of Shares)
= 0.03(₱500.00) (200) = ₱3,000
Therefore, the dividend is ₱3,000

13. Examples in Relation to Bonds
Example 1. Determine the amount of the semi-annual coupon for a bond with a face
value of ₱300,000.00 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: ₱30,000 (1/2) = ₱15,000
Thus, the amount of the semi-annual coupon is ₱15,000.00

14. Example 2: Ms. Martinez bought fifty ₱1,500.00 ACTS bonds at 1.03.
What is her total investment in ACTS bonds?
Solution:
Market Price of 1 bond: 1.03 x ₱1,500 = ₱1, 545.00
Total investment: ₱1,545 x 50 = ₱77, 250.00
Thus, the amount total investment is ₱77, 250.00
When bonds are bought and sold through a broker, the broker charges a broker’s commission or brokerage fee. Hence,
the amount investment becomes the market price of the bonds plus the broker’s commission.

16. Loan – debt provided by one entity (an individual or an organization) to another entity at an
agreed interest rate.
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. Term of the Loan
– time to pay the entire loan.
Amortization Method – method of paying a loan (principal and interest) on installment basis,
usually of equal amounts at regular intervals.
Mortgage - is a business loan or a consumer loan that is secured with a collateral.
Chattel Mortgage – a mortgage in a movable property
Collaterals - are assets that can secure a loan. It may be a real estate or other investments.
Outstanding Balance – any remaining debt at a specified time

17. Examples in Relation to Bonds
Example 1. Determine the amount of the semi-annual coupon
for a bond with a face value of ₱300,000.00 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: ₱30,000 (1/2) = ₱15,000 Thus, the
amount of the semi-annual coupon is ₱15,000.00