General Mathematics

Quarter 2 – Module 9:
Different Markets for
Stocks and Bonds
General Mathematics
Alternative Delivery Mode
Quarter 2 – Module 8: Stocks and Bonds
First Edition, 2020

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General Mathematics
Quarter 2 – Module 9:
Different Markets for
Stocks and Bonds
Introductory Message
For the facilitator:

Welcome to the General Mathematics Grade 11 Alternative Delivery Mode (ADM)

Module on Different Markets for Stocks and Bonds!

This module was collaboratively designed, developed and reviewed by educators both
from public and private institutions to assist you, the teacher or facilitator in helping
the learners meet the standards set by the K to 12 Curriculum while overcoming
their personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st century skills while taking into consideration their
needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to manage
their own learning. Furthermore, you are expected to encourage and assist the
learners as they do the tasks included in the module.

ii
For the learner:

Welcome to the General Mathematics Grade 11 Alternative Delivery Mode (ADM)

Module on Different Markets for Stocks and Bonds!

The hand is one of the most symbolized part of the human body. It is often used to
depict skill, action and purpose. Through our hands we may learn, create and
accomplish. Hence, the hand in this learning resource signifies that you as a learner
is capable and empowered to successfully achieve the relevant competencies and
skills at your own pace and time. Your academic success lies in your own hands!

This module was designed to provide you with fun and meaningful opportunities for
guided and independent learning at your own pace and time. You will be enabled to
process the contents of the learning resource while being an active learner.

This module has the following parts and corresponding icons:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in the
module.

What I Know This part includes an activity that aims to

check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip this
module.

What’s In This is a brief drill or review to help you link

the current lesson with the previous one.

What’s New In this portion, the new lesson will be

introduced to you in various ways such as a
story, a song, a poem, a problem opener, an
activity or a situation.

What is It This section provides a brief discussion of the

lesson. This aims to help you discover and
understand new concepts and skills.

What’s More This comprises activities for independent

practice to solidify your understanding and
skills of the topic. You may check the
answers to the exercises using the Answer
Key at the end of the module.

What I Have Learned This includes questions or blank

sentence/paragraph to be filled in to process
what you learned from the lesson.

What I Can Do This section provides an activity which will

help you transfer your new knowledge or skill
into real life situations or concerns.

iii
 Assessment This is a task which aims to evaluate your
level of mastery in achieving the learning
competency.

Additional Activities In this portion, another activity will be given

to you to enrich your knowledge or skill of the
lesson learned. This also tends retention of
learned concepts.

Answer Key This contains answers to all activities in the

module.

At the end of this module you will also find:

References This is a list of all sources used in developing

this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of the
module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.

We hope that through this material, you will experience meaningful learning and
gain deep understanding of the relevant competencies. You can do it!

iv
 What I Need to Know

Have you ever heard stocks and bonds? Have you ever experienced to borrow money
from your parent or friend and had to pay it back with interest?

This module was designed and written for learners like you to describe how stocks
and bonds work. This lesson will also prepare you to be financially independent and
succeed in the near future.

In this topic, learners are expected to demonstrate understanding of basic concepts

of stocks and bonds. Learners should also be able to use appropriate financial
instruments involving stocks and bonds in formulating conclusions and making
decisions. After going through this module, you are expected to:
1. solve problems involving stock valuation,
2. solve for the face value and redemption value of bonds, and
3. solve for the bond premium and discount on bonds.

1
 What I Know

Choose the letter of the best answer. Write the chosen letter on a separate sheet of
paper.
1. The interest rate the bond issuer will use in computing the interest payment,
usually expressed in percent.
a. Coupon Date
b. Dividend
c. Dividend Rate
d. Maturity Date

2. The ratio of the annual dividend per share and the market value per share.
a. Coupon Amount
b. Dividend Rate
c. Market Value
d. Stock yield ratio

3. The periodic interest payment that the bondholder receives during the time.
a. Coupon Amount
b. Coupon Rate
c. Face Value
d. Market Value

4. The rate per coupon payment period; denoted by r.

a. Coupon Amount
b. Coupon Rate
c. Face Value
d. Market Value

5. A certain financial institution declared a ₱ 30,000,000.00 dividend for the

common stocks. If there are a total of 700,000.00 shares of common stocks,
how much is the dividend per share?
a. ₱ 42.86
b. ₱ 52.86
c. ₱ 62.86
d. ₱ 72.86
6. A certain corporation declared a 3% dividend on a stock with a par value of
₱500.00 Mrs. Lingan owns 200 shares of stocks with a par value of ₱ 500.00
How much is the dividend she received?
a. ₱ 2000.00
b. ₱ 2500.00
c. ₱ 3000.00
d. ₱ 3500.00

2
For numbers 7,8 and 9.
Corporation A, with a current market value of ₱ 52.00, give a dividend of ₱8
per share of its common stock. Corporation B, with a current market value of ₱ 95.00,
give a dividend of ₱ 12.00 per share.
7. Find the stock yield ratio for Corporation A.
a. 12.38%
b. 13.38%
c. 14.38%
d. 15.38%

8. What is the stock yield ratio for Corporation B?

a. 11.63%
b. 12.63%
c. 13.63%
d. 14.63%

9. In which corporation will you invest your money? Why?

a. Corporation A, because each peso will earn you more if you invest in A
than in B.
b. Corporation A, the lower the share the higher the stock yield ratio.
c. Corporation B, because each peso will earn you more if you invest in B
than in A.
d. Corporation B, the lower the stock yield ratio the more you earn.

10. Determine the amount of the semi-annual coupon for a bond with a face value
of ₱ 300,000.00 that pays 10% payable semi-annual for its coupon.
a. ₱ 12,500.00
b. ₱ 15,000.00
c. ₱ 17,500.00
d. ₱ 20,000.00

For numbers 11, 12 and 13.

Suppose that a bond has a face value of ₱ 100,000.00 and its maturity date is
10 years from now. The coupon rate is 5% payable semi-annually. Assuming that
the annual market rate is 4%.

11. Find the amount of the semi-annual coupon.

a. ₱ 2500.00
b. ₱ 2750.00
c. ₱ 3000.00
d. ₱ 3250.00
12. Find the present value of ₱ 100,000.00
a. ₱ 67,556.42
b. ₱ 62,452.81
c. ₱ 57,332.21
d. ₱ 52,112.54

3
 13. Find the fair price of the given bond.
a. ₱ 102,445.12
b. ₱ 104,182.56
c. ₱ 106,912.89
d. ₱108, 512.43

14. A bank declared a dividend of ₱ 27.00 per share for the common stock. If the
common stock closes at ₱ 93.00, how large is the stock yield ratio on this
investment?
a. 0.26
b. 0.29
c. 0.32
d. 0.35

15. Determine the amount of semi-annual coupon paid for a 3% bond with a face
value of ₱ 100,000.00 which matures after 8 years. How many coupons are
paid?
a. 10 times
b. 13 times
c. 16 times
d. 19 times

Lesson
Different Markets for Stocks
1 and Bonds
Many of us deal with stocks and bonds (or want to!) but have no idea what are their
worth. Maybe you want to try investing. You may want a better understanding of
your investments. Or, if you work for a big corporation, your employer may sell
shares, and you need to determine whether it’s worth the price. Either way, it is good
to know the difference between stocks and bonds and have a basic understanding of
how they are valued.

What’s In

It’s Puzzle Time!

Good day learners! Before we start our new learning experience today, let us have
an activity. There are 10 words from the puzzle hidden vertically, horizontally and
diagonally. Write the words below using the clue then give a meaningful definition
for each.

4
 A T O W G L V O T O L E I M E Q
I F I S S U E R X G I H K A U D
D F A E S T B D B W I O G R A O
I G I S O U O R K R E A H K I N
S M C T A Z N C A S C J R E C I
C V L O I H F I K D A U P T X R
O I H C M L K M I B P N Q V E M
U E Q K S M B V L R R Y E A U L
N H K E A W I F J F L O U L L D
T S E O A D O S V Z O T K U A O
Y C H Y E P R I I W P O C E V A
O B C N I K D C B O S I H O R R
Q A D U R D E O B O N D A M A A
E C O U P O N R A T E U E J P N
U Z J A O G W T A X I V F O L E

1. S = ______________________________________________________.

2. B = ______________________________________________________.

3. C = ______________________________________________________.

4. M = ______________________________________________________.

5. P = ______________________________________________________.

6. I = ______________________________________________________.

7. C = ______________________________________________________.

8. S = ______________________________________________________.

9. D = ______________________________________________________.

10. D = ______________________________________________________.

5
 Notes to the Teacher
This module will help you to teach your students the
importance of stocks and bonds and how will you
positively influence them on investment decisions and to
be financially literate. You can also prepare additional
activities, resources, videos to feed additional inputs as
you may feel appropriate that will deepen the learners
understanding.

What’s New

This is an activity that will test your decision prowess. Given 2 scenarios below,
answer questions given.

Scenario 1.

Your grandparents gave you ₱ 175,000.00 on your 16th birthday. You were instructed
to invest the money so that the earnings can be used to pay for your tuition fee in
college. Having heard about the risks and rewards of the stock market from your
parents, you become interested in buying stocks in a particular company. Below are
the options given to you by your parents:

Option1: Company ABC’s selling stock is ₱ 1,500.00 per share that will have
a dividend of ₱ 200.00 per year. The stock can be sold after two years
at ₱ 2,000.00 and the market requires a rate of return of 15%.

Option2: Company XYZ’s selling stock is ₱ 1,000.00 per share that will have
a dividend of ₱ 180.00 per year. The stock can be sold after two years
at ₱ 2,000.00 and the market requires a rate of return of 7%.

In which company will you invest your money? Why?

__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________

6
Scenario 2.

Suppose that you withdraw ₱ 1,500 from your savings account. Over the weekend,
several people want to borrow money from you. Read the stories and decide to whom
you will lend your money.

Story1. Your younger sister is having a garage sale. She needs cash to make
change for the day. She will sell you a bond for ₱ 1,000.00. You will
keep the bond for a week, and she promises to pay you back.

Story2. Your older brother has a small business idea but doesn’t have any
money. He wants to borrow your ₱ 1,500.00 and promises to pay you
back ₱ 1,800.00 in four weeks.

Story3. Your best friend at school, whom you know very-well, wants to borrow
your ₱ 1,500.00 to buy cupcakes. She plans to sell at a higher price
and promises to pay you back ₱ 1,700.00 in two weeks.

Whose bonds will you buy? Why?

__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________

What is It

Before we proceed to our next activity, let us recall some different terms in stocks.

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).

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
 Stock valuation are considered to have high value if the stockholder gets
higher dividend at present and in the future, otherwise the stock is considered to
have a low value. The computation of the stock value is necessary in order to know
if the stock market value is cheap or expensive at a given time.

Example 1:

A certain financial institution declared a ₱ 30,000,000 dividend for the common

stocks. If there are a total of 700,000 shares of common stocks, how much is the
dividend per share?

Given: Total Dividend = ₱ 30,000,000.00

Total Shares = 700,000
Find: Dividend per share
Solution:
Total Dividend
Dividend per share =
Total Shares
30,000,000
=
700,000
= 42. 86
Therefore, the dividend per share is ₱ 42.86

Example 2:
A certain corporation declared a 3% dividend on a stock with a par value of ₱ 500.00
Mrs. Lingan owns 200 shares of stocks with a par value of ₱ 500.00 How much is
the 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
Since there are 300 shares, the total dividend is: ₱15/share x 200 shares =
₱ 3,000.00
In summary,
Dividend = (Dividend Percentage) x (Par Value) x (No. of Shares)
= (0.03)(500)(200)
= 3,000
Thus, the dividend is ₱ 3,000.00

8
Example 3:
Corporation A, with a current market value of ₱ 52.00, give a dividend of ₱ 8.00 per
share of its common stock. Corporation B, with a current market value of ₱ 95.00,
give a dividend of ₱ 12.00 per share. Use the stock yield ratio to measure how much
dividends shareholders are getting in relation to the amount invested.
Solution.
Given: Corporation A:
Dividend per share = ₱ 8
Market Value = ₱ 52
Find: Stock yield ratio

dividend per share

Stock yield ratio =
market value
𝟖
=
𝟓𝟐

= 0.1538 = 15.38%
Given: Corporation B
Dividend per share = ₱ 12.00
Market Value = ₱ 95.00
Find: Stock yield ratio

dividend per share

Stock yield ratio =
market value
12
=
95

= 0.1263 = 12.63%

Corporation A has a higher stock-yield-ratio than Corporation B. thus, each peso will
earn you more if you invest in corporation A than in corporation B. If all other things
are equal, then it is wiser to invest in Corporation A.
As example 3 shows, the stock yield ratio can be used to compare two or more
investments.
Definition of Terms in Relation to stocks

Bond – interest-bearing security which promises to pay (1) stated amount

of money on the maturity date, and (2) regular interest payments called
coupons.
Coupon – periodic interest payment that the bondholder receives during
the time between purchase date and maturity date; usually receive semi-
annually.
Coupon Rate – the rate per coupon payment period; denoted by r.
Price of a bind – the price of the bond at purchase time; denoted by P.

Par Value or Face Value – the amount payable on the maturity date;
denoted by F. 9
If P = F, the bond is purchase at par.
If P < F, the bond is purchased at a discount.
Example 4: Determine the amount of the semi-annual coupon for a bond with a
face value of ₱300,000.00 that pays 10% payable semi-annual for its coupon.
Given: Face Value F = 300,000
Coupon Rate = 10%
Find: Amount of the semi-annual coupon

Solution:
Annual Coupon amount: 300,000(0.10) = 30,000
1
Semi-Annual Coupon Amount: 30,000 ( ) = 15,000
2
Thus, the amount of semi-annual coupon is ₱ 15,000.00

Note: The coupon rate is used only for computing the coupon amount,
usually paid semi-annually. It is not the rate at which money grows. Instead
current market conditions are reflected by the market rate, and it will be
used to compute the present value of future payments.

Example 5:
Find the value of a ₱ 20,000.00 bond with interest of 14% compounded semi-
annually which is redeemable at 108% in 5 years that yields the purchaser 6%
converted semi-annually.

Solution:
Finding the purchase price of the bond requires us to determine first the
coupon payment and the redemption value of the bond. Using the information given
in the problem, substitute the values to the respective formulas. Thus, we have
Fv = ₱ 20,000 rb = 0.14 m=2

rR = 1.08 t = 5 years ry = 0.06

0.14 0.06
b= = 0.07 n = 5(2) = 10 i= = 0.03
2 2
Substitute these values to compute the following:
Coupon payment: c p = (20,000 )(0.07 ) = ₱ 1,400

Redemption Value: Rv = (20,000 )(1.08) = ₱ 21,600

Purchase Price:

1 − (1 + i) − n 
p = Rv (1 + i) −n + c p  
 i 

10
 1 − (1 + 0.03) −10 
p = (21,600)(1 + 0.03) −10 + 1,400  = ₱ 28,014.71
 0.03 
Therefore, the investor who pays ₱28,014.71 is investing the money.

What’s More

Activity 1.1. Complete the table below by supplying the correct dividend, shares
and dividend per share.

Dividend per
Dividend Shares
share
1 ₱ 10,000.00 750
2 1,000 ₱ 15.25
3 ₱ 2,000,000.00 ₱ 200.00

Activity 1.2. Complete the table below by supplying the correct dividend, shares
and dividend per share.

Dividend
Par Value Shares Dividend
Percentage
1 5% ₱ 700.00 200
2 ₱ 500.00 50 ₱12,000.00
3 3% 100 ₱ 3000.00
4 7.5% ₱ 350.00 ₱ 5000.00

Activity 1.3. Solve the following problems.

1. A financial institution declared a dividend of ₱ 75,000,000.00 for its common
stock. Suppose there are 900,000 shares of common stock, how much is the
dividend per share?

2. The ABC Corporation give out ₱ 38.00 dividend per share for its common stock.
The market value of stock is ₱ 10800. Determine the stock yield ratio.

11
3. A bank declared a dividend of ₱27.00 per share for the common stock. If the
common stock closes at ₱ 93.00, how large is the stock yield ratio on this
investment?

4. Find the amount of the semi-annual coupon for a ₱ 200,000.00 bond which pays
5% convertible semi-annually coupons.

5. Determine the amount of semi-annual coupon paid for a 3% bond with a face
value of ₱ 100,000.00 which matures after 8 years. How many coupons are paid?

What I Have Learned

Complete the following statements by writing the correct word or phrase.

1. _____________________ is the share in the company’s profit.
2. The ratio of the dividends to the number of shares is the _______________________.

3. _____________________ is the per share amount as stated on the company

certificate. Unlike market value, it is determined by the company and remains
stable over time.

4. _____________________ is ratio of the annual dividend per share and the market
value per share. Also called current stock yield.
5. The rate per coupon payment period; denoted by r is ______________________.

6. The present value of all cash inflows to the bondholder is ____________________.

7. The price of the bond at purchase time; denoted by P is _____________________.

8. A certain financial institution declared a ₱ 10,000,000.00 dividend for the common
stocks. If there are a total of 300,000 shares of common stocks, then the dividend
per share is ______________.
9. Corporation Gen. Math, with a current market value of ₱ 95.00, give a dividend of
₱ 15.00 per share of its common stock. The stock yield ratio is _______________.

10. The amount of the semi-annual coupon for a bond with a face value of ₱
100,000 .00 that pays 15% payable semi-annual for its coupon is
________________

12
Reflection. Going back to our first problem, it is time to review our answers. You
can now decide correctly after this learning experiences.

Scenario 1.
Your grandparents gave you ₱ 175,000.00 on your 16th birthday. You were
instructed to invest the money so that the earnings can be used to pay for your
tuition fee in college. Having heard about the risks and rewards of the stock
market from your parents, you become interested in buying stocks in a
particular company. Below are the options given to you by your parents:

Option1: Company ABC’s selling stock is ₱ 1,500.00 per share that will have a
dividend of ₱ 200.00 per year. The stock can be sold after two years at ₱2,000.00
and the market requires a rate of return of 15%.

Option2: Company XYZ’s selling stock is ₱ 1,000.00 per share that will have a
dividend of ₱ 180.00 per year. The stock can be sold after two years at ₱2,000.00
and the market requires a rate of return of 7%.

In which company will you invest your money? Why?

_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________

Scenario 2.

Suppose that you withdraw ₱ 1,500.00 from your savings account. Over the
weekend, several people want to borrow money from you. Read the stories and
decide to whom you will lend your money.

Story1. Your younger sister is having a garage sale. She needs cash to make
change for the day. She will sell you a bond for ₱ 1,000.00 You will keep the
bond for a week, and she promises to pay you back.

Story2. Your older brother has a small business idea but doesn’t have any
money. He wants to borrow your ₱ 1,500.00 and promises to pay you back ₱
1,800.00 in four weeks.

Story3. Your best friend at school, whom you know very-well, wants to borrow
your ₱ 1,500.00 to buy cupcakes. She plans to sell at a higher price and
promises to pay you back ₱1,700.00 in two weeks.

Whose bonds will you buy? Why?

_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________

13
 What I Can Do

Perform the task below.

Stocks and bonds are efficient ways to help businesses grow. For businesses,
alternative ways to raise money for growth, such as saving and reinvesting its profits,
can take a very long time. Create a poster showing the importance of stocks and
bonds for you as an individual, for the community and for the nation.

Rubrics for Poster-making

Description 5 4 3 2 1

All but 1
The poster All
of the
includes all required Several
The poster required
Competence required elements required
includes all elements
Required elements as are elements
required are
Elements well as included were
elements. included
additional on the missing.
on the
information poster.
poster.

All graphics
All graphics are related All Graphics
are related to the topic graphics do not Graphics do
to the topic and most of are related relate to not relate to
and make it it are easier to the the topic. the topic.
easier to to topic. One or Several
Graphics
understand. understand. Some two borrowed
Relevance
All borrowed All borrowed borrowed graphics do
graphics borrowed graphics graphics not have a
have a graphics have a have a source
source have a source source citation.
citation. source citation. citation.
citation.

The poster
The poster
The poster is is
The poster The is
exceptionally acceptably
is attractive poster is distractingly
attractive in attractive
in terms of attractive messy or
Attractiveness terms of in terms of
design, though it very poorly
design, design,
layout, and may be a designed. It
layout, and layout,
neatness. bit messy. is not
neatness. and
attractive.
neatness.

14
 Assessment

Choose the letter of the best answer. Write the chosen letter on a separate sheet of
paper.
1. The periodic interest payment that the bondholder receives during the time.
a. Coupon Amount
b. Coupon Rate
c. Face Value
d. Market Value

2. A certain corporation declared a 4.5% dividend on a stock with a par value of

₱ 400.00. Mr. Reyes owns 100 shares of stocks with a par value of ₱ 400.00
How much is the dividend she received?
a. ₱ 1500.00
b. ₱ 1600.00
c. ₱ 1700.00
d. ₱ 1800.00

3. A certain financial institution declared a ₱ 80,000,000.00 dividend for the

common stocks. If there are a total of 500,000 shares of common stocks, how
much is the dividend per share?
a. ₱ 140.00
b. ₱ 150.00
c. ₱ 160.00
d. ₱ 170.00

4. It is the rate per coupon payment period; denoted by r.

a. Coupon Amount
b. Coupon Rate
c. Face Value
d. Market Value

5. It is the interest rate the bond issuer will use in computing the interest
payment, usually expressed in percent.
a. Coupon Date
b. Dividend
c. Dividend Rate
d. Maturity Date

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 6. It is the ratio of the annual dividend per share and the market value per share.
a. Coupon Amount
b. Dividend Rate
c. Market Value
d. Stock yield ratio

7. A bank declared a dividend of ₱ 35.00 per share for the common stock. If the
common stock closes at ₱ 98.00, how large is the stock yield ratio on this
investment?
a. 0.36
b. 0.39
c. 0.63
d. 0.66

8. Determine the amount of semi-annual coupon paid for a 3% bond with a face
value of ₱ 100,000.00 which matures after 8 years. How many coupons are
paid?
a. 10 times
b. 13 times
c. 16 times
d. 19 times

For numbers 9, 10 and 11.

Corporation M, with a current market value of ₱ 65.00, give a dividend of
₱ 11.00 per share of its common stock. Corporation N, with a current market value
of ₱ 75.00, give a dividend of ₱ 15.00 per share.

9. Find the stock yield ratio for Corporation M.

a. 14.56%
b. 15.76%
c. 16.92%
d. 17.08%

10. What is the stock yield ratio for Corporation N?

a. 18%
b. 20%
c. 22%
d. 24%

11. In which corporation will you invest your money? Why?

a. Corporation M, because each peso will earn you more if you invest in
M than in N.
b. Corporation M, the lower the share the higher the stock yield ratio.
c. Corporation N, because each peso will earn you more if you invest in N
than in M.
d. Corporation N, the lower the stock yield ratio the more you earn.

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 12. Determine the amount of the semi-annual coupon for a bond with a face value
of ₱ 450,000.00 that pays 12% payable semi-annual for its coupon.
a. ₱ 27,000.00
b. ₱ 24,000.00
c. ₱ 21,000.00
d. ₱ 18,000.00

For numbers 13, 14 and 15.

Find the value of a ₱ 50,000.00 bond with interest of 12% compounded semi-
annually which is redeemable at 105% in 3 years that yields the purchaser 8%
converted semi-annually.

13. Find the amount of the semi-annual coupon.

a. ₱ 2500.00
b. ₱ 2750.00
c. ₱ 3000.00
d. ₱3250.00

14. Find the redemption value of ₱ 50,000.00

a. ₱ 52,500.00
b. ₱ 55,200.00
c. ₱ 56,500.00
d. ₱ 59,200.00

15. Find the fair price of the given bond.

a. ₱ 55,319.56
b. ₱ 57,217.92
c. ₱ 59,034.12
d. ₱ 61,491.41

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 Additional Activities

Perform what is being asked in the following:

1. What will you pay today for a stock that is expected to make a ₱ 45.00 dividend
in one year if the expected dividend rate is 5% and you require a 12% return
on your investment?

2. XYZ Company’s preferred stock is selling for ₱ 60.00 a share. If the required
return is 8%, what will the dividend be two years from now?

3. Your broker is trying to sell you a stock with a current market price of
₱ 2,160.00 The stock’s last dividend was ₱ 53.25, and earnings and dividends
are expected to increase at a constant growth rate of 10%. Is the stock fairly
valued if the return is 13%? Explain why or why not.

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 19
Assessment What’s More What I Know
1. A 1. C
2. D Activity 1.1 2. D
3. C 1. ₱13.33 3. A
4. B 4. B
2. ₱15,250.00
5. C 5. A
6. D 3. 10,000 6. C
7. A 7. D
8. C Activity 1.2 8. B
9. C 1. ₱7,000.00 9. A
10. B 10. B
2. 48%
11. C 11. A
12. A 3. ₱1000.00 12. A
13. C 4. ₱190.48 13. D
14. A 5. 14. B
15. B Activity 1.3 1. C
1. ₱83.33
2. 0.35
3. 0.29
4. ₱5,000.00
5. 16 times
Answer Key
References

Aoanan, Grace O., Plarizan, Ma. Lourdes P., Regidor, Beverly T., Simbulas, Lolly J.
General Mathematics for Senior High School. Quezon City: C&E Publishing,
Inc. 2016.

Buzon, Olivia N., Lapinid, Minie Rose C., Nivera, Gladys C. Geometry: Patterns and
Practicalities. Makati City: Salesiana Books by Don Bosco Press. 2007

Orines, Fernando B., Esparrago, Mirla S., Reyes, Nestor V. Advanced Algebra,
Trigonometry, and Statistics. Second Edition/ Orines, Fernando B. Quezon
City: Pheonix Publishing House. 2008.

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