Summary
Highlights
Stocks represent shares in the ownership of a company. Buying stocks makes you a shareholder or stockholder, meaning you own a percentage of the company. It's a form of equity financing where investors become part owners to raise capital for the company.
There are two main types of stocks: common stocks and preferred stocks. Both types receive dividends, which are shares of the company's earnings. When you invest, you receive certificates with the corporation's name, your name, the number of shares, and the par value per share.
Key terms include: stocks (ownership shares), dividends (share of company profits), dividend per share (ratio of dividends to number of shares), and stock market (where stocks are bought and sold). The Philippine Stock Exchange (PSE) governs the stock market in the Philippines.
Market value is the current price of a stock at which it can be sold. Stock yield ratio is the annual dividend per share divided by the market value per share. Par value is the per-share amount stated in the company's certificate, which is determined by the company and remains stable.
The video shows a sample stock certificate, highlighting components like the name of the company, certificate number, number of shares, shareholder's name, and authorized signatures.
A financial institution declared a 30 million dividend for 700,000 common shares. To find the dividend per share, divide the total dividend by the number of shares (30,000,000 / 700,000), resulting in 42.86 pesos per share.
A corporation declared a 3% dividend on a stock with a par value of 500 pesos. Mrs. Lingan owns 200 shares. The dividend per share is 3% of 500 pesos, which is 15 pesos. Mrs. Lingan's total dividend is 15 pesos/share * 200 shares = 3,000 pesos.
The video compares Corporation A (market value 52 pesos, dividend 8 pesos/share) and Corporation B (market value 95 pesos, dividend 12 pesos/share). The stock yield ratio for Corporation A is 15.38% (8/52), while for Corporation B it's 12.63% (12/95). Corporation A has a higher stock yield ratio, suggesting it's a better investment if all other factors are equal.