CONCEPTS ABOUT STOCKS || GRADE 11 GENERAL MATHEMATICS Q2

Summary

This video lesson explains the basics of stocks, including what they are, the different types (common and preferred), and how dividends work. It covers key concepts like stock ownership, dividend calculation, and stock yield ratios. Viewers learn how stockholders receive a share of company profits through dividends, and how to calculate the dividend per share based on market value or par value. The lesson concludes with examples comparing dividend yields of different corporations, helping investors make informed decisions. It's a valuable introduction for anyone looking to understand stock investments.

Takeaways

• 😀 Stocks represent ownership in a company, and owning stocks means having a share of that company's profits.
• 😀 There are two main types of stocks: Common Stocks (which offer voting rights and dividends) and Preferred Stocks (which offer higher priority for dividends but no voting rights).
• 😀 Dividends are a portion of the company's earnings distributed to shareholders as a reward for their investment.
• 😀 The stock market is where stocks are bought and sold, and in the Philippines, it is governed by the Philippine Stock Exchange.
• 😀 Market value is the current price at which a stock is traded, while par value is the nominal value stated on the stock certificate, typically used for accounting purposes.
• 😀 The stock yield ratio measures how much dividend an investor receives relative to the stock’s market value, helping assess the profitability of the investment.
• 😀 The dividend per share is calculated by dividing the total dividend by the total number of shares, providing investors with the earnings they can expect to receive for each share they own.
• 😀 When calculating dividends based on par value, investors can use the formula: Dividend Percentage × Par Value × Number of Shares.
• 😀 Higher stock yield ratios indicate that an investor is receiving a larger return in relation to the price they paid for the stock, making it a potentially better investment.
• 😀 In the examples given, Corporation A offers a higher stock yield ratio (15.38%) compared to Corporation B (12.63%), suggesting that Corporation A provides a better return on investment for shareholders.

Q & A

What are stocks, and how do they relate to company ownership?

Stocks are shares that represent ownership in a company. When an individual buys a stock, they own a portion of that company.

What is the difference between common stocks and preferred stocks?

Common stocks give shareholders voting rights and a share of the company’s profits, typically through dividends. Preferred stocks usually do not provide voting rights but offer a higher claim on dividends and assets in the case of liquidation.

What is the meaning of a dividend?

A dividend is a portion of a company’s profits that is distributed to shareholders, usually in the form of cash or additional shares.

How do stock certificates work?

A stock certificate is a physical document that proves an investor's ownership of a certain number of shares in a company. It includes details like the number of shares owned, the par value, and the company's name.

What is the par value of a stock?

The par value of a stock is the nominal value stated on the stock certificate. It is the minimum value of the stock, as determined by the company, and does not fluctuate with the market.

What is the stock market, and how is it regulated in the Philippines?

The stock market is a place where stocks can be bought and sold. In the Philippines, the market is regulated by the Philippine Stock Exchange (PSE).

What does 'market value' mean in the context of stocks?

Market value is the current price at which a stock can be bought or sold in the market. It fluctuates based on supply and demand, unlike the stable par value.

What is the stock yield ratio, and how is it calculated?

The stock yield ratio is the annual dividend per share divided by the market value per share. It is used to measure how much income an investor is receiving in relation to the stock's market price.

How do you calculate the dividend per share from the total dividend?

To calculate the dividend per share, divide the total dividend amount by the number of shares outstanding. For example, if the total dividend is 30 million and there are 700,000 shares, the dividend per share is 30 million divided by 700,000, which equals 42.86 pesos.

Which corporation offers a higher stock yield ratio, Corporation A or Corporation B?

Corporation A offers a higher stock yield ratio than Corporation B. For example, Corporation A's stock yield ratio is 15.38%, while Corporation B's is 12.63%, making Corporation A a more attractive investment for higher dividend returns.