A stock, also known as equity, is a security that represents the ownership of a fraction of the issuing corporation.

Stocks, Bond, Futures and Options

1. Stocks, Bonds, Futures and Options CHAPTER 22

2. National Anthem Chapter 22 Preliminary Motivation Bonds Stocks Future and Options Evaluation The Reporters

3. Preliminary Motivation The Reporters Chapter 22 Bonds Stocks Future and Options Evaluation Opening Prayer

4. Words to Ponder “An investment in knowledge pays the best interest.” - Benjamin Franklin - Motivation Preliminary Chapter 22 Bonds Stocks Future and Options Evaluation The Reporters

5. Time to Play! Preliminary Motivation Bonds Stocks Future and Options Evaluation The Reporters Chapter 22

6. 4 Pics, 1 Word Preliminary Motivation Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 S T S

7. 4 Pics, 1 Word Preliminary Motivation Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 O N D

8. 4 Pics, 1 Word Preliminary Motivation Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 M K T

9. The Group Reporters Motivation Rowena S. Agbulos Marijean C. Cea Gerald P. Frias Marissa S. Pe ñ alosa Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22

10. Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 Stocks

11. Motivation What are Stocks? A stock, also known as  equity , is a security that represents the ownership of a fraction of the issuing corporation. Units of stock are called shares, which entitle the owner to a proportion of the corporation’s  assets  and profits equal to how much stock they own. 1 Where are Stocks Bought and Sold? Stocks are bought and sold predominantly on stock exchanges and are the foundation of many individual investors’ portfolios. Stock trades have to conform to government regulations meant to protect investors from fraudulent practices. 2 Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22

12. Dow Jones Industrial Average Motivation The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The Dow Jones is named after Charles Dow, who created the index in 1896 along with his business partner, Edward Jones. Also referred to as the Dow 30, the index is considered to be a gauge of the broader U.S. economy. The DJIA is the second-oldest U.S. market index after the Dow Jones Transportation Average. The DJIA was designed to serve as a proxy for the health of the broader U.S. economy.  DJIA does not use a weighted arithmetic mean. The value of the index can also be calculated as the sum of the stock prices of the companies included in the index, divided by a factor, which is approximately 0.152 as of April 2024. Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22

13. Dow Jones Industrial Average Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 Source: https://www.google.com/finance/quote/.DJI:INDEXDJX?sa=X&ved=2ahUKEwjasrDegcWIAxUgsVYBHZcWErcQ3ecFegQILxAf

14. Motivation A  stock market  is a place where companies raise capital by selling shares of stock (also known as ' equity ') to investors. Stock ownership gives  shareholders  voting rights and a residual claim on corporate earnings in the form of capital gains and dividends. Stock markets also allow existing shares of publicly traded companies to change hands, where individuals and institutions can invest in companies to potentially profit from their success or speculate on shorter-term price movements. They play a crucial role in  price discovery , as the collective actions of buyers and sellers determine the market value of companies. Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 What is the Stock Market?

15. Motivation Stock markets work as organized platforms where buyers and sellers come together to trade  shares  of publicly listed companies. At their core, these markets operate on the principle of  supply and demand , with share prices fluctuating based on the perceived value of companies and overall market conditions. When more people want to buy a stock than sell it, the price typically rises, and vice-versa. St ock markets facilitate both a primary and a secondary market in stocks. The  primary market  is where new stocks are first issued through initial public offerings ( IPOs ). Here, companies sell shares directly to investors, raising capital for business operations or expansion. Once these shares are in circulation, they enter the  secondary market , where most daily trading occurs. In the secondary market, investors trade existing shares among themselves, with the company no longer directly involved in these transactions. Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 How the Stock Market Works?

16. Why do people buy stocks? Motivation The primary reason that investors own stock is to earn a return on their investment. That return generally comes in two possible ways: T he stock’s price appreciates, which means it goes up. You can then sell the stock for a profit if you’d like. The stock pays dividends. Not all stocks pay dividends, but many do. Dividends are payments made to shareholders out of the company’s revenue, and they’re typically paid quarterly. Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22

17. How to buy and sell stock? Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 What you want to buy or sell? How much you want to buy or sell? To buy or sell a stock , you need to know these four things: You may be able to place multiple trades on one order. Your advisor or investment firm will confirm your specific choices before placing your order. You may need to buy a minimum amount of the stock. If you’re buying or selling a large amount, you will be asked if you’re willing to do a partial trade if they can’t buy or sell the full amount at the price you want.

18. How to buy and sell stock? Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters The price you want to pay Chapter 22 This will determine the kind of order you place. Two common types of orders are: Market order – Stock is bought or sold at the latest price. Limit order – You set a price limit for the highest price you’re willing to pay or the lowest price you’re willing to sell at. The order will expire at the end of the trading day unless you specify a longer time limit. How you want to pay? You can use money from your cash account, or you can borrow to buy stocks. To buy or sell a stock , you need to know these four things:

19. How to read stock market page/charts? Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 https://youtu.be/BbsvIVjiVNY

20. How to read stock market page/charts? Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 Reading stock charts is an invaluable skill for any trader. A chart can reveal trends in a stock's price and if it's the right time to buy or sell. But technical analysis also has its shortcomings. "Unlike fundamental analysis, technical analysis lacks clear-cut rules, and its effectiveness under all market conditions isn't scientifically proven," Chen says. "While chart reading provides insights into the past, successful stock investing hinges on predicting future trends." For this reason, relying solely on technical indicators when making investment decisions isn't always wise. Instead, think of stock charts as one leg of the stool upon which to place your conviction. The more additional legs – like  fundamental analysis  – you combine it with, the stronger your conviction will be.

21. Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 Bonds

22. Motivation Components of a Bond Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 The word “ bond ” is often used to describe all types of interest-bearing securities. But in the Treasury market, short-dated ones are called “bills,” medium-term ones are “notes,” and the long ones are “bonds.” For simplicity, we’ll stick to the general ideas: Maturity Face Value or Par Value or Principal Coupon Payment or Coupon Rate

23. Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 This is the date on which the bond issuer pays back everything they owe to bondholders, including the initial investment and any outstanding interest payments. After that, the bond ceases to exist. If you shop for bonds, you’ll see all sorts of maturities on offer, from one month out to 30 years or more. Maturity

24. Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 This is also called the bond’s  par value , or  principal . It’s the amount of money that will be returned to you at maturity. The most common face value is $1,000, although you might see some face values of just $100, or as much as $10,000. Face Value

25. Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 The coupon is the interest payment that the issuer promises to pay you regularly until the bond reaches maturity. Expressed as an annual percentage, it’s called the  coupon rate , or  coupon yield . For example, suppose the coupon rate was 3% on a $1,000 bond. The issuer would pay you 3% per year, or $30. Most bonds are paid on a semiannual basis, so you would receive two coupon payments of $15, six months apart. Coupon Payment and Coupon Rate

26. Motivation What is a bond rating? Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 A bond rating is a way to measure the creditworthiness of a bond, which corresponds to the cost of borrowing for an issuer. These ratings typically assign a letter grade to bonds that indicate their credit quality. Private independent rating services such as Standard & Poor's, Moody’s Investors Service, and Fitch Ratings Inc. evaluate a bond issuer's financial strength, or its ability to pay a bond's principal and interest, in a timely fashion. To determine a  bond's rating , these agencies (Standard & Poor’s, Moody’s Investors Services, and Fitch Ratings Inc.) conduct a thorough financial analysis of a bond's issuing body, whether they are U.S. Treasuries or bonds from international corporations. Based on each agency’s individual set of criteria, analysts determine the entity’s ability to pay their bills and remain liquid, while also taking into consideration a bond's future expectations and outlook. The agencies then declare a bond's overall rating, based on the collection of these data points.

27. Motivation Bond prices and yields for interest rates Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 Bond price and bond yield are inversely related. As the price of a bond goes up, the yield decreases. As the price of a bond goes down, the yield increases. This is because the coupon rate of the bond remains fixed, so the price in secondary markets often fluctuates to align with prevailing market rates. When interest rates across the market go up, there will be more investment options offering higher interest rates. A bond that issues 3% coupon payments may now be "outdated" if interest rates have increased to 5%. To compensate for this, the bond will be sold at a discount in secondary market. Although the coupon rate will remain 3%, the lower price of the bond means the investor will earn a higher yield.

28. Motivation Common misconceptions about the coupon rate and yield (interest rate) types of bonds Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 #1 Bonds aren’t risky #2 The Coupon Rate Is Equal to the Rate of Return #3 The Price of a Bond is Equal to Its Face Value Bonds are riskier than certificates of deposit, with two main risks: default and interest rate risk. Default risk is when the issuer can't repay, while interest rate risk arises if rates increase, reducing bond value. Bonds are rated for quality, with AAA-rated bonds being the safest, like U.S. government bonds. Lower-rated bonds, including "junk" bonds, offer higher returns but come with greater risk. To analyze a bond, focus on its par value, maturity date, coupon rate, yield, and price. Par value is the principal amount, and the maturity date is when the bond repays this amount. The coupon rate is the interest paid, but zero-coupon bonds pay no periodic interest and are sold at a discount. Yield is the bond's annual return and can differ from the coupon rate if the bond is bought at a discount or premium. Bonds can be sold anytime before maturity to another investor. If interest rates rise, you may need to sell a bond at a discount. For example, a bond with a 6% coupon rate may sell for $705.32 when new bonds offer 9%, ensuring the buyer gets the market rate. Bond prices fall as interest rates rise and increase when rates drop. With current low rates, bond prices are near historic highs.

29. Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 How to read bond market page?

30. Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 How to read bond market page? Column 1 Column 4 Column 2 Column 5 Column 3 Issuer. This is the company, province (or state), or country that is issuing the bond. Coupon. The coupon refers to the fixed interest rate that the issuer pays to the lender. Maturity Date. This is the date on which the borrower will pay the investors their principal back. Typically only the last two digits of the year are quoted. Bid Price. This is the price someone is willing to pay for the bond. It is quoted in relation to 100, no matter what the par value is Yield. The yield indicates annual return until the bond matures. Usually this is the yield to maturity, not current yield.

31. Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 Risk and Return The concept of  risk and return  makes reference to the possible economic loss or gain from investing in securities. A gain made by an investor is referred to as a return on their investment. Conversely, the risk signifies the chance or odds that the investor is going to lose   money . In the case that an investor chooses to invest in an asset with minimal risk, the possible return then is often modest. In contrast, an investment with a high-risk component has a higher probability of generating larger profits. A  risk  is the chance or odds that an investor is going to lose   money . A gain made by an investor is referred to as a  return  on their investment.

32. Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 Futures and Options

33. Motivation Futures and Options Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 Futures and options are the major types of stock derivatives trading in a share market. These are contracts signed by two parties for trading a stock asset at a predetermined price on a later date. Such contracts try to hedge market risks involved in stock market trading by locking in the price beforehand. Future and options in the share market are contracts which derive their price from an underlying asset (known as underlying), such as shares, stock market indices,  commodities ,  ETFs , and more.  Futures and options basics provide individuals to reduce future risk with their investment through pre-determined prices.

34. Motivation Difference of Futures and Options Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 Future and option trading are different in terms of obligations imposed on individuals. While futures act a liability on an investor, requiring him/her to follow up on a contract by a pre-set due date, an options contract gives an individual the right to do so. A futures contract to buy/sell underlying security has to be followed up on the predetermined date at a contractual price. On the other hand, an options contract provides a buyer with a choice to do the same, if he/she profits from a trade.

35. Motivation Types of Futures and Options Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 While futures contract holds the same rules for both buyers and sellers of a contract, an options derivative can be divided into two types. Individuals entering an options contract to sell a particular asset at a pre-asserted price on a future date can do so by signing a put option contract. Similarly, individuals aiming to purchase a particular asset in the future can enter into a call option to lock in the price for future exchange.

36. Motivation Preliminary Bonds Stocks Future and Options Evaluation The Reporters Chapter 22 Evaluation: Define the following words: Stocks Stock Market Bo nds Risk and Return Futures and Options

37. Motivation Preliminary Bonds Stocks Evaluation The Reporters Future and Options Chapter 22 Share What You Learned What insights or new understandings did you gain fro m this lesson?

38. Thank You and God Bless! 

39. References: https://www.investopedia.com/terms/s/stock.asp https://www.investopedia.com/terms/d/djia.asp https://www.google.com/finance/quote/.DJI:INDEXDJX?sa=X&ved=2ahUKEwjasrDegcWIAxUgsVYBHZcWErcQ3ecFegQILxAf https://www.investopedia.com/articles/investing/082614/how-stock-market-works.asp#:~:text=Stock%20markets%20work%20as%20organized,companies%20and%20overall%20market%20conditions . https://www.nerdwallet.com/article/investing/what-are-stocks-how-they-work#:~:text=The%20primary%20reason%20that%20investors,profit%20if%20you'd%20like . https://www.getsmarteraboutmoney.ca/learning-path/stocks/how-to-buy-and-sell-stocks/ https://www.britannica.com/money/bond-market-basics https://www.investopedia.com/terms/b/bondrating.asp https://www.investopedia.com/articles/bonds/07/price_yield.asp https://www.investopedia.com/ask/answers/051215/what-difference-between-bonds-yield-rate-and-its-coupon-rate.asp https://www.nasdaq.com/articles/3-most-deadly-misconceptions-about-bonds-2010-08-24 https://www.disnat.com/en/learning/trading-basics/bond-basics/how-to-read-a-bond-table https://www.studysmarter.co.uk/explanations/macroeconomics/financial-sector/risk-and-return/#:~:text=have%20an%20account%3F-,Risk%20and%20Return%20Definition,is%20going%20to%20lose%20money . https://groww.in/p/what-is-futures-and-options https://youtu.be/BbsvIVjiVNY https://money.usnews.com/investing/articles/how-to-read-a-stock-chart