Module 5 Flashcards
shares of ownership
in a company. When you buy
stocks of a publicly listed
company, you become a
stockholder or shareholder of a
company. In other words, you
become a part-owner of that
company
stocks
Types of STOCKS
according to RIGHTS
according to OWNERSHIP
according to SECTORS
according to CHARACTERISTICS
according to RIGHTS
common stocks
preferred stocks
according to OWNERSHIP
class A
class B
– It is a security usually purchased for participation in the profits and
control of ownership and management of the company. are also known as “ordinary shares.”
common stocks
– It is a security whereby the holder has a higher claim on the assets
and earnings of the company. are also known as “preference shares.”
preferred stocks
These are stocks that can be exclusively traded by Filipino investors.
class a
These are stocks that can be bought and sold by both Filipino and
foreign investors.
class b
according to SECTORS
financial sector
industrial sector
holding firms sector
property sector
services sector
mining, and oil sector
includes companies engaged in mineral extraction, oil
exploration, extraction and production
mining and oil sector
– includes companies involved in the following:
a. Media
b. Telecommunications
c. Information Technology
d. Transportation Services
e. Hotel and Leisure
f. Education
g. Diversified Services
services sector
includes companies involved in land and property development
property sector
includes companies or firms that control or manage partial
or complete interest in another company or other companies. Usually, these companies
do not produce goods or services itself; rather, its purpose is to own shares of other
companies.
holding firms sector
includes companies involved in the following:
a. Electricity, Energy, Power, and Water
b. Food, Beverage, and Tobacco
c. Construction, Infrastructure, and Allied Services
d. Chemicals
e. Diversified Industrials
industrial sector
– includes companies engaged in banking, investments, and
finance.
financial sector
According to CHARACTERISTICS
blue chip stocks
income stocks
growth stocks
defensive stocks
cyclical stocks
speculative stocks
are those that rise quickly when economic growth is strong
and falls rapidly when growth is slowing down. is considered very risky because of its volatility. It increases or decreases rapidly depending on the economic conditions.
speculative stocks
are those sensitive to business conditions or cycles strongly tied
with the economy’s performance. These companies produce or offer services that are
low in demand during slowdown and increase when business peaks.
cyclical stocks
are shares that provide regular dividends and stable earnings,
regardless of the overall condition of the stock market. remain stable
under difficult economic conditions. Generally, these are stocks of food, oil, and utilities
companies, which are characterized by steady demand amidst hard times.
defensive stocks
also called “glamour stocks”, are shares of corporations whose
earnings are expected to grow at an above-average rate relative to the market. does not usually issue dividends as earnings are reinvested in capital
projects.
growth stocks
are shares of those companies with good dividend payment
history due to steady profits. Since they are stable, income stocks generally have a
lower level of volatility.
income stocks
are shares of well-established and financially
sound companies that have demonstrated their ability to pay dividends in both good
and bad times. They also exhibit more modest but dependable returns and are
relatively of lower risk.
blue-chip stocks
where stocks are bought and sold
to investors. Companies that need to raise funds for
business expansion to sell a minority part of its
ownership—also called stocks or shares—to the
public.
stock market
Why Invest in Stocks?
- Capital Growth/Price Appreciation
- Dividend Income
- Rights of Being a Company’s Part-Owner
Being a stockholder of a corporation earns one the right to vote in the election of the
Board of Directors in its annual stockholders’ meeting. Stockholders also receive a share
of the company’s remaining assets once it closes down.
- Rights of Being a Company’s Part-Owner
Most PSE-listed companies, especially the profitable ones, distribute a portion of their
earnings to their shareholders by paying dividends in the form of cash or free additional
shares of stock. Stock market investors generally receive dividends once or up to four
times per year.
- dividend income
Once you own a stock of a company, you can make money through the increase in the
market price of a stock. You buy the stock at a low price and then sell it when its price
This makes stock market investing ideal for long-term financial goals such as retirement.
The earlier you start, the higher the returns you’ll ge
- capital growth/price appreciation
is an instrument of
indebtedness of the bond issuer to the
holders.
bond
is a fixed income instrument that
represents a loan made by an investor to
a borrower (typically corporate or
governmental).
bond
There are two general types of bonds that you can acquire
government bonds
corporate bonds
are issued by the Philippine government through the Bureau of the
Treasury, and that explains that they are also known as treasury bonds. They are offered
in two different ways: through auction and directly to the investing public. In auctions, the
bonds are held up for bidding commonly to institutional investors who would then have
the option to make it available to the general public.
government bonds
are issued by private corporations that are publicly listed on the stock
exchange. Announcements are made in major broadsheets and newspapers in the
country, inviting investors who may want to get them.
corporate bonds
