L4

• What are stocks also called?

  Shares
• What does a stock certificate indicate?

  Number of shares owned
• Who is referred to as a stockholder?

  Buyer of the stocks
• What is a dividend?

  Company's profit distributed to shareholders
• What does the term 'coupon' refer to?

  Interest rate paid periodically
• Who are shareholders?

  People who own shares of stocks
• What is par value in bonds?

  Bond's face value assigned by issuer
• What is the role of a broker?

  Arranges transactions for a commission
• What does 'dividend in arrears' mean?

  Unpaid dividends accumulating over periods
• What is 'dividend per share'?


  Dividends received on a per share basis
• What happens when stocks or bonds are sold at a premium?

  Sold at a higher price than par value
• What is a discount in stock transactions?

  Sold at a lower price than par value
• How does a broker earn money?

  Through commission on trading
• What are the types of stocks based on market capitalization?

  • Small-cap stock: Small/growing companies
  • Mid-cap stock: Fairly established companies
  • Large-cap stock: Well-established companies
• What are the types of stocks based on dividend payments?

  • Income stock: Higher dividends (e.g., PLDT)
  • Growth stock: Reinvests profits, lower dividends (e.g., AYALA)
• What are the types of stocks based on risk?

  • Blue-chip stock: Stable, well-established companies
  • Beta stock: Measures risk; higher beta means riskier
• What are the types of stocks based on price trends?

  • Cynical stock: Relies on economic trends
  • Defensive stock: Not affected by the economy
• What are the types of stocks based on ownership?

  • Preferred stock: First rights to dividends and assets
  • Common stock: Voting rights and shares in business
• What is a bond?

  Written promise to pay money with interest
• What is the par or face value of a bond?

  Amount for which the bond is bought
• What happens to bondholders in case of bankruptcy?

  First claim on assets over stockholders
• What are the types of bonds?

  • Government bonds: Issued by national government
  • Municipal bonds: Issued by local government
  • Corporate bonds: Issued by companies
  • Mortgage bonds: Pledged against specific assets
• What is the purpose of loans?

  Finance purchases, investments, or expansion
• What is a secured loan?

  Loan backed by collateral assets
• What is an unsecured loan?

  Loan not secured against borrower's assets
• What is an open-ended loan?

  Loan that can be borrowed repeatedly
• What is a closed-ended loan?

  Loan that cannot be borrowed again once repaid
• What are common types of loans?

  • Consumer loans: For personal use
  • Business loans: For business purposes
• What is a mortgage?

  Common type of debt for housing
• What is a student loan?

  Loan to help pay for college education
• What is a personal loan?

  Loan granted to an individual
• What is a demand loan?

  Unconventional loan for a short time
• What are the 6 C's of credit?

  • Credit Score: Measure of repayment ability
  • Character: Borrower's credit history
  • Capacity: Borrower's ability to repay
  • Condition: Economic conditions affecting loan
  • Capital: Borrower's valuable assets
  • Collateral: Security for the lender
• What is amortization?

  Combined payment of principal and interest
• What is outstanding principal?

  Remaining liability or balance
• What is the formula for present value of ordinary simple annuity?

  $PV =$$\frac{R(1 - (1 + i)^{-n})}{i}$
• What is the formula for periodic payment of amortization?

  $R =$$\frac{PV(i)}{1 - (1 + i)^{-n}}$
• What are the steps in constructing an amortization schedule?

  1. Determine loan amount and terms
  2. Calculate periodic payment
  3. Create a table for payments
  4. Track interest and principal amounts
  5. Update outstanding balance
• What is the periodic payment for Kevin's loan of ₱50,000 at 10% interest?

  $₱9,850.87$
• What does an amortization schedule show?

  • Amount paid each period
  • Interest applied
  • Outstanding principal balance