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LABASAN
CBE Instructor
Money market is a component of
financial markets for assets involved in
short-term debt instruments. They consist
of a network of institutions and facilities
for trading debt securities with a maturity
of one year or less.
Preference shares
Bonds
Common stocks is a security that
represents ownership in a corporation.
Holders of a common stock exercise control
by electing a board of directors and voting
on corporate policy.
Common stocks, also known as equity
securities, represent ownership shares in a
corporation. Each share of common stocks
entitles its owners to one vote of any
matters of corporate governance.
The two most important
characteristics of common stock as an
investment are its residual claim and its
limited liability features.
Preferred stocks has features similar
to both equity and debt. Like a bond, it
promises to pay to its holder a fixed stream
of income each year.
A preferred stock is a class of
ownership in a corporation that has a
higher claim on its assets and earnings than
a common stock. Preferred shares generally
have a dividend that must be paid out before
dividends to common shareholders.
A Bond is a debt investment in which
an investor loans money to an entity,
typically corporate or governmental which
borrows the funds for a defined period of
time at a variable or fixed interest rate.
Characteristics of bonds
Face value
Coupon rate
Coupon date
Maturity
Issue date
Types of bonds
Fixed rate bonds
Zero coupon bonds
Convertible bonds
Floating rate bonds
Straight bonds
Income bonds
• OFFERS FOR SALE
In a capital market, the company sells
the entire issue of shares to an issue house
or merchant banker at an agreed price,
which is normally below the par value. The
shares are then resold by the issue house or
merchant banker to public.
• Private Placing/ Private Placement
The capital issue is sold directly to a
small group of investors like insurance
companies, banks, mutual funds, few
private investors.
• Sale by Tender
Sale by tender is like a silent auction.
The capital issue is marketed for sale with
or without a guide price and there is a
deadline for all offers.
An initial public offering (IPO) is the
first time that the stock of a private
company is offered to the public. IPOs are
often issued by smaller, younger companies
seeking capital to expand, but they can also
be done by large privately owned companies
looking to become publicly traded.
• Right Issue
In capital market, rights issue means
selling securities in primary market by
issuing shares to the existing shareholders.
Organized securities markets/
exchange markets is where tradable
securities, commodities, foreign exchange
are sold and bought.
(book) Elements of Finance by Norma Dy
Lopez-Mariano Ph.D.
(book) Essentials of Investment 3rd
Edition by Irwin McGraw-Hill
Investopedia.com
www.treasury.gov.ph
wikipedia
businessdictionary.com
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