INTEREST- this is the amount that a person gets or pays on top of the original investment or loan.

LENDER/CREDITOR- This refers to the party lending money or extending credit.

BORROWER/DEBTOR- Refers to the party using the money or credit
PRINCIPAL- refers to the amount of money extended for credit or the amount of money deposited in a bank
for safekeeping. These are the money that has been borrowed.
INTEREST RATE- Refers to the charged amount for using the money over a certain period. Commonly
expressed in percentage.
TIME OF INTEREST- refers to the period covered from the time that the money(principal) is borrowed until
its due date. (ex: One year, 3years,)
Maturity Date- This is the due date of the payment of the principal.
SIMPLE INTEREST- is the interest charged on the principal alone for the entire length of the loan.
FORMULA: I=Prt
I- the interest amount, P- the principal amount, r is the simple interest rate, and t is the time
Example: tony borrowed 100,000 from a bank to finance his new business venture. How much
interest will Tony pay if the bank charged him a 4% simple interest rate for the loan payable in two
years?
Given: I=? P= 100,000, r=4% or 0.04 t=2
I=Prt
I= (100,000)(0.04)(2)
I=8,000
MATURITY VALUE- refers to the sum of the principal and interest; sometimes called the future value of the
principal amount. In order to get the maturity value, you need to find the value of interest first.

FORMULA: M= P+I; since I=Prt, we have M= P+Prt or M= P(1 + rt)

1. Steve placed his money worth 150,000 in an investment instrument that earns 6% simple interest rate per
year. How much will his money be after 4 years?

GIVEN: P(principal amount) = 150,000 Interest rate(r)=6% or 0.06 Time(t) = 4

I= Prt M= P + I alternative to get the M is this

I= (150,000)(0.06)(4) M= 150,000 + 36,000 M=P(1+rt)

I=36,000 M=186,000 M=150,000 [1+(0.06)(4) = M= 186,000

COMPOUND INTEREST- The interest calculated on the total of the principal and previously calculated interest.

COMPOUNDING PERIOD-The time interval it takes for money to earn interest in a year.
(Annually,Semi,Quarterly)

NOMINATE RATE- The annual interest rate that does not take into account the compounding period.

ex: If a loan earns an interest of 12% and is compounded quarterly per annul, then 12% is the nominal rate.

PERIODIC RATE- The interest rate per compounding period. This is equal to the nominal rate divided by the
number of compounding periods in a year.
ex: If a loan earns an interest of 12% and is compounded quarterly per annul, the 12% divided by 4= 3% is
the periodic rate.

COMPOUND AMOUNT- this is the accumulated value of the principal and all interests from prior periods. This is
usually calculated first before determining the net interest on the original loan or investment.

Formula: C = P (1+r/m)^mt, where P is the principal amount, r is the nominal rate, m is the frequency of the
compounding period, and t is the time in years.
ex: What is the compounded amount of a 10,000 loan with an interest rate of 10% compounded semiannually
in 1 year?

2.How much will the interest be if 200,000 is to be invested for 5 years at 5% interest rate compounded
semiannually?

STOCK AND BONDS

STOCK- represents ownership of the company

STOCKHOLDER- a person who has shares in a company.

COMMON STOCK- a type of stock that represents ownership of a company and is sometimes accompanied by
dividends on a portion of profits. In common stock, investors gets one vote for every share to elect board members
who oversee management.

PREFERED STOCK- it is a type of stock that represents ownership in a company but does not usually come with
voting rights. in preferred stock, investors are normally guaranteed dividends as long as the investor holds ownership
of shares. In the event of liquidation, preferred stockholder are paid off before the common shareholders.

BONDS- It is a debt financing instrument. It is an interest-bearing security that promises to pay an amount of
money on a certain maturity value as stated in the bond certificate.

GOVERNMENT BONDS- It is a bond issued by governments to fund programs, meet payrolls and playbill. There
are times when the government issued bond publicly. They are sometimes referred to as "notes"

CORPORATE BOND- A bond issued by businesses to help them pay expenses. Although these pose a higher risk
than government bonds, businesses still can earn a lot more in corporate bonds. These bonds may be traded over-
the-counter or privately between the borrower and the lender.

ZERO-COUPON BOND- it is a bond that makes no coupon payments but is issued at a considerable discount to
par value. these bonds generate a return once the bondholder is paid the face value when the bond matures.

STOCK MARKET

-it is a marketplace wherein publicly listed companies are issuing a trading shares of stock through exchange or
brokers. EX: Philippine Stock Exchange(PSE) and New York Stock Exchange(NYSE)

DIVIDEND- It is a share in a company's profit.

a. CASH DIVIDEND- money given to shareholders based on the number of shares they own during the dividend
declaration for the year. This is the most common dividend.

b.STOCK DIVIDEND is made in the form of giving more shares. Some investors prefer this dividend over cash
dividends because it is tax-free.

STOCK APPRECIATION - it is the increase in the value of a stock from its first purchased value. When you buy a
stock and ell it at a higher price, you use stock appreciation to earn money.
BOND MARKET- It is a financial market where insurance and trading of debt securities take place. It is also called
the debt market.

CORPORATE BONDS- give dept securities to be able to raise money for different reasons.
GOVERNEMENT BONDS- are issued by national governments.. This is more commonly availed by conservative
investors.

COUPON- It is an interest payment received by the bondholder under a periodic system during the time between
the purchase date and maturity date of the bond.
BOND HOLDER- gets an interest depending on the agreed time interval. It can be annual, semiannual, quarterly, or
monthly.

TENOR OR TERM OF A BOND- It is a fixed period of time in years after which the bond is redeemable as
stated in the bond certificate. This is the time from the purchase date to the maturity date.

FAIR PRICE OF A BOND- It is the present value of all cash inflows of the bondholder. This is the value of the
cash flows the bond is expected to generate.

PAR VALUE/FACE VALUE- It is the amount payable on the maturity date of the bond. This is the amount the
issuer promises to pay the bondholder on the maturity date. A bond may be bought at par(fair price equals face
value), discount(fair price is less than face value), or premium (fair price is greater than face value).

REQUIRED YIELD- It is the return a bond must offer for an investment to be worthwhile. This is set by the market
and sets a precedent for how current bond issues will be priced.

STOCK YIELD RATIO- It is the ratio of the annual dividend to the current market value per share of the stock. It is
usually expresses in percent. This is used to interpret the profitability of a stock with respect to its market value.
Market Value of a stock is the current price at which it can be sold.

Example 1: A company declared 2,000,000 dividend for common stock. The number of share issued is 50,000.
How much is the dividend per share?

2,000,000/50,000 = 40. Therefore, the dividend per share is 40 pesos.

Example 2: Calculate the price of a bond with a face value of 400,000 to be paid in four years with a semi-
annual coupon at a rate of 6% and a required yield of 5%. Determine if the bond is selling t par,discount, or
premium.

Lesson 14.3

STOCKHOLDER- It is a person who has shares in a company.

MARKET INDEX- It is a hypothetical portfolio of investment holdings that showcases a segment of the financial
market.

STOCKBROKERS- This is professional that transacts on behalf of his clients in executing buy and sell orders for
stocks and other securities; usually associated with a brokerage firm.

CHARGES AND FEES IN BUYING OR SELLING STOCKS- Buying or selling stocks in stock market yields
some transaction fees on top of the gross trade amount before a buy or a sell can be made. Stock Analysis- This
involves the evaluation of trading instruments, an investment sector, or the market. This is used to make buying and
selling decisions.

Types of Market analysis

a.FUNDAMENTAL ANALYSIS- an analysis of various public information about a stock. Investor look at the
financial statements of the companies of their interest.
b.TECHNICAL ANALYSIS- is an analysis of patterns of historical stock prices.

TYPES OF STOCK CHARTS

a.CANDLESTICK CHARTS - are used by analysts to predict potential price movement based on past patterns. It
reflects the market's daily open, high,low, and closing prices.

b.BAR CHART- is collection of price bars showing the open, high, low, and close prices over a specified period of
time.

c. LINE CHART-the most basic type of chart that represents the price history that connects a a series of data points
with a continues line.

Example 1: How much will be the total transaction fee for buying 3,000 shares of a stock with a market value
of 34.27?

Gross trade amount= (market value)(number of shares)

GTA= 3,000 x 34.27 = 102, 810

next step: to know the total transaction fee, we need to determine the broker's commission,value added tax, PSE
transaction fee, and clearing fee then add them to the gross trade amount.

a. Broker's commission c. PSE transaction Fee

BC= 0.0025 x 102,810= 257.03 PSE TF= 0.00005 x 102, 810 =5.14 pesos

b.Value added tax d. Clearing Fee

VAT= 0.12 x 257.03= 30.84 CF= 0.00001 x 102 810 = 10.28

then add the gross trade amount and the additional charges to determine the transaction fee.

102,810+257.03 + 30.84 + 5.14 + 10.28= 103,113.29 therefore the total transaction fee is 103,113.29.

Example 2: How much will the net amount be received in selling 2500 shares of a stock with a market value of 10.24
pesos?

GTA= market value x no. of shares

GTA= 2,500 x 10.24 = 25,600

next step: to know the total transaction fee, we need to determine the broker's commission,value added tax, PSE
transaction fee, and clearing fee then add them to the gross trade amount.

a. BC= 0.0025 x 25, 600= 64 pesos c. PSE TF= 0.00005 x 25, 600= 1.28 pesos

b. VAT= 0.12 x 64 = 7.68 pesos d. CF= 0.00001 x 25, 600 = 2.56 pesos

e. Sales Tax ST= 0.005 x 25,600 =128

third step, determine the net amount; subtract the other charges from the gross trade amount.

25,600- (64 + 7.68+1.28+2.56+128) = 25,396.48; Therefore, the net amount to be received is 25, 396.48 pesos

LOAN-this is a debt provided by one entity(an individual or an organization) to other entity at an agrd interest rate.
(Ex: Personal loan,mortgages, government bonds, and bank loans.

CONSUMERS LOAN- These are given to individuals for personal or family purposes. (EX: educational loan,
bank loans for personal purposes such as gadgets, tuition fees, cars and housing loans.)FFFFF

BUSINES LOAN- these are given to individuals or groups of people for business purposes. (EX: Bank loans to start
or expand a business and to buy equipment for the business.)

MORTGAGE- This is a business loan or a consumers loan that is secured with collateral.
REGULAR PAYMENT OF AN ORDINARY ANNUITY

EXAMPLE: A loan worth 1,000 is to be repaid using quarterly payments for one year at 10% interest
compounded quarterly. What is the regular payment?

AMORTIZATION- The payment scheme wherein the loan is repaid through regular equal payments.

AMORTIZATION SCHEDULE- This is a complete table of periodic loan payments, showing the amount of
principal and the amount of interest that comprise each payment until the loan is paid off at the end of its term. For
interest payment, use the previous outstanding principal or outstanding balance and multiply it by the periodic rate.
For principal, repayment, deduct the interest payment from that period's payment. For outstanding principal , deduct
the principal repayment from the previous outstanding balance. If the outstanding balance has an excess or missing
centavo at the end of the amortization table, adjustments can be made on the payment and the principal repayment
so that the final outstanding balance becomes 0.

EXAMPLE: A loan worth 1,000 is to be amortized for one year at 10% interest compounded quarterly and
quarterly payment of 265.82. Construct an amortization schedule.

EXAMPLE 1: A loan worth 50,000 is to be repaid in two years at 8% compounded monthly. What is the
monthly payment?

EXAMPLE 2: A mortgage is amortized for two years at an interest rat of 6% compounded monthly and a
monthly payment of 3,000. What is the original value of the mortgage?

CONSUMERS LOAN- loans given to individual for personal or family use.

EXAMPLE 1: On June 1, 2017, Mira loaned 10,000 at 6% compounded quarterly. How much will she pay if
she settled this loan on June 1, 2019.
Example 2: Ara wants to buy a phone that requires 3,000 down payment and monthly installment of 1,200 for
one year. What is the actual price of the phone if the prevailing interest rate is 6% compounded monthly?

SOLVING PROBLEMS INVOLVING BUSINESS LOANS

BUSINESS LOANS- These are loans for business purposes.

ex: There are banks that offer business loans such as food cart franchise.

OUTSTANDING BALANCE- It is the remaining unpaid amount of loan or financial obligation as of particular date.
It can be computed using the prospective method or the retrospective method.

ex: Annika borrowed money from the bank to be used for the expansion of her business amounting to
500,000 at 9% interest compounded semiannually. It is to be repaid by equal payments of 38,438.07 every 6
months for 10 years. After two years her REMAINING DEBT OR HER OUTSTANDING BALANCE is now
431,813.88.

PERSPECTIVE METHOD-It is used when all regular payments are equal. It calculates the outstanding balance as
a present value of the future payments to be made. The formula in computing for the outstanding balance under
prospective method is

Example: Annika borrowed money from the bank to be used for the expansion of her business amounting to
500,000 at 9% interest compounded semiannually. It is to be repaid by equal payments of 38,438.07 every 6
months for 10 years. What is the outstanding balance after 2 years?

RETROSPECTIVE METHOD-This is used if there is an irregular payment; that is, the final payment is not
equal to the regular payment. It calculates the loan balance as the accumulated value of the loan at a
particular date minus the future value of the regular payments made at a particular date. This computes the
future value and is used when nt is not known.
Example: Elisse borrowed money from the bank to be used for the expansion of her business amounting to
500,000 at 9% interest compounded semiannually. It is to be repaid by equal payments of 38,438.07 every 6
months. What is the outstanding balance after 2 years?

Example 1: Mr. Mondragon made a loan from a bank to be used for the equipment of his business amounting
to 300,000 at 9% interest compounded semiannually. If this is to be repaid by equal payment every 6months
for 4 years, find the semi-annual payments.

Example 2: Lou obtains a loan of 2,00,000 at 8.5% compounded quarterly in a bank to finance his new
restaurant. He plans to settle the loan by paying 100,000 every end of three months. What is the outstanding
principal after two years?

-the retrospective method is used because mt is not known. The problem has not provided the time to complete the
paying method.

LESSON 6.1

PROPOSITION- These are the statement that express a belief, opinion, or knowledge. It is a declarative sentence
that is either true or false but not both. A proposition has exactly one truth value: true, which denoted as T; or False,
which is denoted by F.

example 1: 5+2=10 is a proposition, and its truth value is false.

SIMPLE PROPOSITION- this is a proposition that expresses a single thought. it is not composed of any other
propositions. like a simple sentence, it only has one subject and one predicate.

Ex: The sky is blue. (2) The measure of a right angle is 90 degree.

NEGATION- This is a simple proposition that denies the truth of the given proposition. The negation statement is
false whenever the given statement is true, and it is true whenever the statement is false. uses the word "not"

Example: Proposition- The sky is blue. Negation- The sky is NOT blue.

COMPOUNDED PROPOSITION-this contains two or more simple propositions that are put together using logical
connective words such as and, or, if, then, and only if.

Example: The angle measures 90 degree IF AND ONLY if it is a right angle. (2) if today is Tuesday, then
tomorrow is Wednesday.

CONJUNCTION- this is a proposition formed by combining two proposition called conjuncts with the word 'and'.
Example: Proposition 1: 7 is a prime number. Proposition 2: 3 is an odd number. Then the Conjunction: 7 is a
prime number, AND 3 is an odd number.

DISJUNCTION- This is a proposition formed by combining two proposition(called disjuncts) with the word 'or'.

Example: P1: 7 is a prime number. Proposition 2: 3 is an odd number. Then the Conjunction: 7 is a prime
number, OR 3 is an odd number.

IMPLICATION- this is a proposition that claims a given proposition(called the antecedent) that entails anther
proposition(called the consequent). Implications are also known as conditional propositions.

Example; Implication: If today is Tuesday, then tomorrow is Wednesday. Antecedent: today is Tuesday

Consequent: tomorrow is Wednesday.

The above implication can also be written as "Today is Tuesday implies that tomorrow is Wednesday."

BICONDITIONAL PROPOSITION- this is a conjunction of two implications formed by exchanging their

antecedents and consequents.

Example: Implication 1; If x=1, then x+1=2. Implication 2: If x+1=2 then x=1.

Biconditional: If x=1 , then x+1=2, and if x+1=2, then x= 1.

To remove the redundancy in the above biconditional proposition, it may be written as "x=1 IF AND ONLY IF x+1=2."

PROPOSITIONAL FORM- This is an expression involving propositional variables and logical connectives.

Example: Proposition:7 is a prime number, and 3 is an odd number. let p be "'7 is a prime number", let q be
"3 is an odd number."

The propositional form of the statement will be p^q

PROPOSITIONAL VARIABLES - These are variables that represent propositions, just as letters are used to
denote numerical variables. The conventional letters used for propositional variables are p,q,r,s, and so on.

-These are the symbols for the logical connectives:

~ denotes NOT, ^ denotes AND, v denotes OR, --> denotes IMPLIES OR IF...THEN, <--> denotes if and only if

- If p and q are simple propositions, then we denote the different compound propositions as follows.

~p denotes negation and is read as "NOT p" p-->q denotes implication(conditional) read as "p implies q"

p^q denotes conjuction and read as "p AND q" p <--> q denotes biconditional and read as "p if and only if q"

pVq denotes disjunction and read as "p OR q"

EXAMPLE 1; IDENTIFY WHETHER THE STATEMENT IS A PROPOSITION AND IF IT IS SIMPLE OR

COMPOUND.

a. Elephant can fly. (PROPOSITION,SIMPLE)

b. Are you and mom coming to the game tonight? (NOT A PROPOSITION, BCZ IT IS A QUESTION)

EXAMPLEE 2; DETERMINE THE NEGATION OF THE FOLLOWING.

a. I love Travelling. (I dont love travelling)

b. a=3. (a is not equals to 3)

c. you are not a musician. (you are a musician)