The document discusses stocks, bonds, commissions, and various financial terms. It provides definitions and formulas for commission, rate, and sales in relation to commission. Examples are given to demonstrate how to calculate commission earned by a salesperson, determine commission rate, and calculate total sales based on commission and rate. The key differences between stocks and bonds are explained. Stocks represent ownership in a company, while bonds are a form of loan where interest is paid periodically.

1. STOCKS
AND
BONDS

2.  Commission = Rate x Sales
 Rate = Commission
Sales
 Sales = Commission
Rate
Commission
Rate Sales

3. Commission
 A payment to an agent or sales person based
on the value of goods bought and sold;
 Is found by finding the percentage of a sale
 Broker’s fee or Brokerage fee
 is a fee charged by a broker(dealer) to
execute transactions or provide specialized
services.
 Examples include fees charged such as
financial services, insurance, real estate,
and delivery services.

4. Example :
A car salesman earns a 3% commission on
sales. If he sells a car for Php.27,990, how
much commission will he earn?
Given:
 Sales= Php.27,990
 Rate= 3% or 0.03
Solution:
 Commission= Php.27,990 × 0.03=
Php. 839.70

5. Rate
This is the percentage or fixed payment
associated with a certain amount of sale.
Can be written with symbol % or in
Decimal form
Solved through dividing sales from the
commission

6. Example :
Mia received a commission of Php.12,000 on a
sale of Php.250,000. What was her rate of
commission?
Given:
 Commission= Php.12,000
 Sales= Php.250,000
Solution:
 Rate=
𝑃ℎ𝑝.12,000
𝑃ℎ𝑝.250,000
= 0.048 or 4.8%
0.048 or 4.8%

7. Sales
A sale is a transaction between two
parties where the buyer receives goods
(tangible or intangible), services, and/or
assets in exchange for money.
Solved through dividing rate from the
commission

8. Example :
A wholesale food representative earns a 3.25%
commission on sales. If her commission is
Php.1,137.50, how much was her total sales?
Given:
 Rate= 3.25% or 0.0325
 Commission= Php.1,137.50
Solution:
 Sales=
𝑃ℎ𝑝.1,137.5
0.0325
=Php.35,000

9. SOLVE!!!
The Jones family
purchases Php. 350,000 in
life insurance from an
insurance broker. How
much will they pay the
insurance broker if she
charges a 2% commission?

10. Simple Interest
 an indicator of market sentiment that tells whether
investors expect a stock's price is likely to fall.
I = Prt
 Future Value- total amount of principal and interest
FV = P+I FV = P+Prt FV =P(1+rt)
Where: I= interest
P= principal
FV= future value, amount or maturity value
r= annual rate of interest
t= number of years

11. Loan
 Is an arrangement in which lender gives money (principal)to a
borrower in exchange for the future payment of the principal
along with interest or other finance charges
 Involves the flow of money from one party to another, the
return of money to its source, and the payment of a fee to the
source for the use of the money
 2 cases:
1. Deposit money in savings account- the depositor views it
as an investment, and bank views it as loan
2. Borrowing money to buy a house from a bank- the
borrower views the transaction as a loan and bank views it
as an investment

12. STOCKS
- An equity instrument carrying
ownership.
 Benefits from the growth of
the company.
 Profits are paid out in the form
of dividends
 Invests money in the company
 Receives ownership shares
from the company
- A debt interest with a promise
to pay back the money with
interest
 Benefits from the interest
amounts paid for the loan
 Interest payments are made in
the form of coupon payments
 Provides loan money in the
company
 Receives interest from the
company’s debt
BONDS

13. STOCKS VS. BONDS
Conduits for Capital
Invest Money Loan Money
Interest
Ownership
Share
STOCKS BONDS
COMPANY
NEEDS TO
RAISE
FINANCIAL
CAPITAL

14. an exchange is an institution,
organization, or association which hosts
a market where stocks, bonds, options
and futures, and commodities are traded.
STOCK EXCHANGE

16.  STOCK CERTIFICATE
- A paper issued to a shareholder which show
on its face the no. of shares it represents
 SHAREHOLDERS OR STOCKHOLDERS
- One who owns shares of corporation stock.
 DIViDEND
- Earnings distributed to a share holders
 CERTIFICATE NO.
- An accession of no. or place holder to keep
track of the no. of certificates.
 PAR VALUE
- The face value of a bond or stock

17.  NO-PAR STOCK/ ISSUED PRICE
- Stock issued without a stated value on the stated
certificate
 MARKET PRICE
- A price at which a stock on bond is sold
(No. of shares x Par Value = Market Price)
 PREFERRED STOCK
- Type of stock for which stock holders get first
choice in distributed profits.
 COMMON STOCK
- The ordinary stock of a corporation, paying no
specified rate or amount of dividend.
 INITIAL PUBLIC OFFERING (IPO)
- Stock sold before it is available on stock

18. Ratio of owned shares
𝒏𝒐. 𝒐𝒇 𝒔𝒉𝒂𝒓𝒆𝒔
𝒊𝒔𝒔𝒖𝒆𝒅 𝒔𝒉𝒂𝒓𝒆𝒔
IN THE EXAMPLE
Mr. Agbuya owns 100 shares of the Capital Stock of the
Exponent Corporation. Since the company has issued
40,000 shares and Mr. Agbuya owns 100 shares; thus,
he owns
𝟏𝟎𝟎
𝟒𝟎, 𝟎𝟎𝟎
= 𝟎. 𝟎𝟎𝟐𝟓 =
𝟏
𝟒
%
Of the company

19. When one buys a stock through a broker.
Formula:
Total Cost of Stock= Market Price + Commission
Total cost= (no. of shares x Par value) + (market price +
Commission)
Ex.
Rowena bought 100 shares of Paper Mill stock at ₱150.00 per
share. The broker charged he ₱750.00 commission. Find the
total cost of stock.
(100 x ₱150.00)+ ₱750.00 = ₱15,750.00 (total cost)

20. Answer the problem
Ms. Minchin Purchased 500 shares of
FGEN stock at ₱30.55 per share. The
broker charged her ₱763.50 commission.
Find the total cost of the stock.

21. Reading Stock Table
 is a way to gain insight into the performance
of a particular stock's performance. Viewing a
stock table can help you determine if you want
to invest in that stock or not.
 Stock table- shows the daily sales of the stock
exchange that is written on newspapers

22.  The heading STOCK gives the company name
Asia United Bank with its symbol (AUB).
Usually, heading SYM ( for symbol) is a
separate heading.
 The heading 52-WEEK HIGH gives the highest
price at which AUB stock traded during the
past 52 weeks. The price is Php.75.30 per
share and means that during the past 52
weeks, an investor paid Php. 75.30 for a share
of stock.

23.  The heading 52-WEEK LOW gives the lowest
price at which AUB stock traded during the
past 52 weeks. This price is Php. 68.00
 The heading OPEN stands for the opening
price at which AUB stock traded yesterday.
This number is 70. Yesterday, AUB stock
trading opening price was Php. 70.00 per
share.

24. The heading HIGH refers to the highest price at
which AUB stock traded yesterday. This no. is
70. Yesterday, AUB’s highest trading price was
Php. 70.00 a share.
The heading LOW refers to the lowest price at
which AUB stock traded yesterday. This no.
69.4. Yesterday, AUB’s lowest trading price
was Php. 69.4 a share.

25.  The CLOSE refers to the price at which shares
of AUB traded when the stock exchange
closed yesterday. This no. is 70. Yesterday,
AUB’s closing price was Php. 70.00 a share.
 The heading VOLUME refers to sales volume.
This is the number of shares traded yesterday.
This no. is 30,800. This means that yesterday,
there were 30,000 shares traded.

26. Other headings which are also part of a stock table are Yld%, Net Chg,
and PE.
The heading Yld% refers to percent yield. A
percent yield of 2%, means that the dividends
alone give the investors an annual return of
2%.
The heading Net Chg refers to net change. This
is the change in price from the market close
two days ago to yesterday’s market close.

28. Example:
Use the March 9, 2015 trading published by the Inquirer to answer the
following:
a. During the past 52 weeks, which stock in the table sold at the highest
price? at the lowest price?
= a. Security Bank Corp. stock sold at the highest price, Php. 172.00;
while the lowest price is Philippine Business Bank at Php. 24.40
b. How many shares of PBB were traded on March 9, 2015
= b. the number on the table is 131 600
c. For which stocks was the close price also the lowest and highest
price for the day?
= c. The Philippine Savings Bank(PSB) stock and the Union Bank of the
Philippines(UBP) stocks have close prices which are also the lowest
prices. The PBCOM, PSB, BPI stocks have close prices which are also
the highest prices...

29. Stock Income
 Dividends
The income stock holder receives from his
investments is the amount of dividend he
gets. The amount of dividends paid by the
company depends on the profit the
company makes. The dividends may be
shown either as a percent of the par value
of the stock or as an amount of money per
share.

30. Formulas
 Dividends x Par Value= dividend on one
share
 Shares x dividend on one share= rate of
income

31. Example :
 Ramon owns 75 shares of D&E common
stock, par value Php 400.00. If the
corporation declares a 𝟕
𝟏
𝟒
% dividend,
what is the total dividend that Ramon
should get?
Dividend per share: 𝟎. 𝟎𝟕
𝟏
𝟒
× 𝑷𝒉𝒑 𝟒𝟎𝟎 =
𝑷𝒉𝒑 𝟐𝟗 dividend on one share
Total dividend: 𝟕𝟓 × 𝑷𝒉𝒑𝟐𝟗 = 𝑷𝒉𝒑 𝟐, 𝟏𝟕𝟓. 𝟎𝟎

32. Rate of income
 Rate of income on a stock investment is the
ratio of the annual dividends to the total cost
of stock.
 Rate of Income=
𝐚𝐧𝐧𝐮𝐚𝐥 𝐝𝐢𝐯𝐢𝐝𝐞𝐧𝐝𝐬
𝐭𝐨𝐭𝐚𝐥 𝐜𝐨𝐬𝐭 𝐨𝐟 𝐬𝐭𝐨𝐜𝐤

33. Example:
 If Robert owns a share of stock that costs Php
960 and pays quarterly dividend of Php 22.40,
and the rate of income is 𝟗
𝟏
𝟑
%.
Rate of income=
𝟐𝟐.𝟒𝟎×𝟒
𝟗𝟔𝟎
=0.0933 or 𝟗
𝟏
𝟑
%

34.  Another way a shareholders earns an income is to
sell his stock. A broker is used to buy or sell stock.
The broker’s representatives take charges of the
investor’s order. However, selling stocks will
either make a profit, break-even, take a loss
depends on the total cost of the stock, the selling
price of the stock, and the expenses of selling the
stock. Some expenses to be considered the
commission of the broker, small SEC(Securities
and Exchange Commission) fees, and sometimes
transfer tax. After Deducting all the expenses from
the market price of the stock, the that you will
Selling Stocks

35. Example # 1:
Name of the
stock
Shares Held
Selling Price
Per Share
Expenses
(Commission,
Taxes, Fees)
Net Proceeds
Food
Corporation
100 ₱ 1 040.00 ₱ 2 640.00
Property
Holdings
250 ₱ 500.00 ₱ 1 720.00
Power
Consumption
80 ₱ 1 480.00 ₱ 1 880.00
Transportation
Consumption
300 ₱ 320.00 ₱ 2 240.00

36.  To calculate for the net proceeds, use:
Net Proceeds = Market Price – Expenses
Where ,
Market Price = No. Of Share x Selling Price
1.Net Proceeds = (100 x ₱1040) - ₱ 2 640 = ₱ 101 360.00
2.Net Proceeds = ( 250 x ₱ 500) - ₱ 1 720 = ₱ 123 280.00
3.Net Proceeds = ( 80 x ₱ 1 480) - ₱ 1 880 = ₱ 166 520.00
4.Net Proceeds = ( 300 x ₱ 320) - ₱ 2 240 = ₱ 93 760.00
Solution :

37. If you bought 500 shares of East West Banking
Corp. Stock at the 52-week low, ₱23.55 per share,
and sold at the 52-week high, ₱ 31.60 per share.
 How much money did you make on this
transaction( ignoring dividends)?
 Find the broker’s commission if the broker
charges 2% of the total sale price.
Example #2 :

38.  Calculate the difference between low price per share and
the high price per share.
₱ 31.60 - ₱ 23.55= ₱ 8.05
Thus, you made ₱ 8.05 per share. For 500 share you
made, ₱ 8.05 x 500 or ₱ 4 025.00.
 Because you are selling the stock at ₱ 31.60 x 500 or ₱
15 800.00 and the broker charges 2% of the total sale
price; thus,.
₱ 15 800.00 x 0.02 = ₱ 316
Broker received ₱316.00 as his commission.
Solution :

39. BONDS
Bond
 Is a form of a long-term investment issued by a
corporation or government where the purchaser
becomes a creditor of the company.
 Is a debt security, under which the issuer owes the
holder a debt and obliged to pay them interest or to
repay the principal at a later date, termed the Maturity
date
 Is very much like a loan
Bond Holder
 One who holds a corporation or government bond

40. Face Value
 amount paid to the holder at maturity, generally
$1,000. It is also known as "par value" or simply
"par.“
Bond Certificate
 a legal document describing the indebtedness of a
borrower and the terms under which that
indebtedness will be paid back to the investor.

42. The following should be considered when buying
bonds.
1. The price of the bond
2. The interest rate
3. Whether the bonds can or cannot be resold
4. The earnings record of the issuer
5. The credit history of the issuer
6. The business condition

43.  There are ratings for bonds which are based on a
company’s past performance and whether
analysts predict the company will do well or
poorly. Bonds are rated as:
 Aaa or AAA for the best and safest bonds
 Bbb or BBB for riskier bonds
 Ccc or CCC for very risky bonds
Bonds rated D are considered worthless.

44.  Two kinds of values of Bond
1. Par value- the nominal value of a bond, share
of stock, or a coupon as indicated in writing on
the document or specified by charter.
2. Market value- the amount for which something
can be sold on a given market. It may be
greater than or less than the amount of the par
value
If the market value is greater than the par value, then
the bond is selling at a premium. If the market value
is less than the par value, then the bond is selling at
a discount.

45.  Market Price of a Bond= par value × Percentage
Example :
If the banking house offers ACTS Corporation
bonds at 98, and the price of one of the
corporation’s Php. 1,000. what is the total market
Price of the bond?
 Given: Percentage= 98% or 0.98
par value= Php. 1,000
 Solution:
Market Price of a Bond= 1,000 × 0.98 = Php. 980

46. Bond Income
The interest given by the corporation as a
government unit who issued the bond serves
as the income from the bond. The interest of
the bond is based on the par value. Because
the par value serves as the principal, the
interest formula can be calculated as:
Interest = Par value × Rate × Time

47.  The interest for five years on a Php 1 000.00 par value,
10% bond would be Php 500.00.
Interest = 1 000 x 0.1 x 5 = Php 500.00
If the interest is paid semi-annually, the amount of each
interest for the said bond is 500/(2)(5) or Php 50 semi-
annual interest.
Example :
 Mr. Santos owns 45 bonds with a par value of Php 1 000
each and pays 8 1/2% interest. What annual income
does Mr. Santos get from these bonds?
 Solution:
Par value of 45 bonds: 45 x Php 1 000 = Php 45 000.00
Interest: Php 45 000 x 0.085 x 1 = Php 3 825.

48.  Before buying bonds, it is important to know what
rate of income you will receive from them. Hence,
this will help you compare bonds with other types of
investments.
 The rate of income is the ratio of the annual income to
the total investment.
 Formula:
Rate of Income = Annual Income/Investment
Note: Rate of income is often called "yield".

49. Example :
 Find the yield on Php 1 000, 9% ACTS bond priced at
94 plus Php 10 commission.
 Solution:
Annual income: Php 1 000 x 0.09 x 1 = 90
Amount invested: Market Price + Commission (0.94 x
Php 1 000) + Php 10 = Php 940 + Php 10 = Php 950
Yield (rate of income) = 90/ 950 =0.0947 = 9.47%
 The yield on the investment is 9.47% or ACTS
Corporation bond yields 9.47%.

50.  What are the differences between Stocks
and Bonds?
 What is the importance of stocks and
Bonds in business?