LESSON 1: SIMPLE INTEREST VS.

TYPES OF STOCKS
COMPOUND INTEREST ● COMMON STOCKS – Represents a
share of company’s asset and profit.
● INTEREST - A charged for a borrowed Stockholders are the residual owners
money, generally a percentage of the and have the final claim on the
amount borrowed. corporation’s earnings and assets after
the firm/s obligations to creditors and
● SIMPLE INTEREST - Based on the preferred stockholders have been met.
principal amount of a loan or the first Although it yields higher return than
deposit in a savings account. A creditor other stocks, common shareholders lose
will only pay interest on the principal the most when a company goes
amount and a borrower would never bankrupt.
have to pay more interest in the ● PREFERRED STOCKS – An equity
previously accumulated interest. instrument that usually pays a fixed
dividend. A dividend is made by a
● Where: corporation to the shareholders based
Is = simple interest on the company’s profits.
P = principal amount
r = rate of interest BOND - An official document in which a
t = time government or company promises to pay back
F = future value or maturity value an amount of money that it has borrowed and to
pay interest in the borrowed money. It specifies
● Note: the principal, the interest, and the day on which
- Approximate Time/ Banker's Rule - 360 the debt must be repaid. It has fixed interest
days rate and has lower returns.
- Exact Time - 365 days - It a portal through which a corporate or
government body raises capital.
LESSON 2: MATHEMATICS OF FINANCE - A fixed- income instrument that
represents a loan made by an investor to
a borrower (typically corporate or
● CREDIT CARD - A small plastic card governmental).
that is used to buy things that you agree - Bond prices are inversely correlated with
to pay for later. interest rates: when rates go up, bond
- It has the owner’s information and prices fall and vice- versa.
authorizes the person whose name
appears on it to charge purchases or Types of Bond
services, and later on be billed to the
owner. It is simply a card authorizing ● GOVERNMENT BONDS - Also
purchase on credit. It has annual fees known as “sovereign debt” issued by
and finance charges. national governments as well as lower
STOCKS, BONDS, & MUTUAL FUNDS levels of government. It is issued to
subsidize programs, meet payrolls, or
even pay their bills, to support
● STOCKS – a share of the value of a government spending and obligations.
company which can be bought, sold or - Are often considered low- risk
traded as an investment. A share is any investments since the issuing
of the equal interests on rights into government backs them and typically
which the entire stock of a corporation pay low interest rates.
is divided and ownership of which is
regularly evidenced by one or more
certificates.
 ● CORPORATE BONDS - Make up a investments come with a fixed interest
larger portion of the overall bond rate and maturity date, it can be a great
market. They are issued by companies option for passive investors looking for
to help them with their expenses. regular income with minimal risks.
Corporate bonds have higher yields than 3. MONEY MARKET FUNDS – investors
government bonds. trade stocks in the trade market. The
- The term is usually applied to long- government runs it in association with
term debt instruments, with maturity of banks, financial institutions and other
at least one year. corporations by issuing money market
- The company’s physical assets may be securities like bonds, T- bills, dated
used as collateral. securities and certificates of deposits.
4. HYBRID FUNDS – “balanced funds” is
● ZERO- COUPON BONDS - A debt an optimum mix of bonds and stocks
security that does not pay interest but that is suitable for investors looking to
instead trades at a deep discount, take more risks for ‘debt plus returns’
rendering a profit at maturity, when the benefit rather that sticking to lower but
bond is redeem for its full face value. steady income schemes.
- It also known as “accrual bond”.
Because they offer the entire payment at BASED ON INVESTMENT GOALS
maturity, it tend to fluctuate in price.
- The interest earned is called as 1. GROWTH FUNDS – usually allocate a
“imputed interest”, meaning that it is an considerable portion in shares and
estimated interest rate for the bond and growth sectors, suitable for investors
not an establishes interest rate. who have a surplus of idle money to be
distributed in riskier plans or are
● MUTUAL FUND - An open- end positive about the scheme. It offers
investment company that invests money maximum capital appreciation but the
of its shareholder in a usually diversified investment will tenure of at least 5-10
group of securities of other corporations. years.
Mutual funs are operated by 2. INCOME FUNDS – belong to the family
professional money managers. They of debt mutual funds that distribute
allocate the fund’s investments and their money in a mix of bonds,
attempts to produce capital gains for the certificate of deposits and securities. It
investors. mainly focuses on producing regular
- Investors earn money in mutual funds income for the investors by investing in
by the dividend payments. Capital gain government securities, corporate bonds,
distributions and increased net asset money market instruments, certificate of
value per share (NAVPS). In mutual fund deposits and debentures. The rate of
you may lose some or sometimes all of returns ranges from 7% - 9%.
the money you invest. Dividends may 3. LIQUID FUNDS – invest in securities
change as the market condition vary. with residual maturity of up to 91
days. They are very low risk and provide
BASED ON ASSET CLASS moderate returns on investment.
4. TAX SAVING FUNDS or (ELSS) Equity-
1. EQUITY FUNDS – primarily invest in linked Savings Scheme – the majority
stocks. The invested money are from of investments of the total assets are
various investors from diverse made in equity and equity instruments.
backgrounds into shares/ stocks of It has a lock in period of 3 years with
different companies. tax exemption and has a returns at a
2. DEBT FUNDS – invest primarily in fixed- rate of 15% - 18%.
income instruments such as bonds, 5. PENSION FUNDS – they are ideal for
securities and treasury bills. Since the investors with a long term horizon. The
 main purpose of investment is to secure
a post- retirement income.
LESSON 3: LOGIC STATEMENTS &
QUANTIFIERS
Logic - The study of language and reasoning.
- It shows relationship among statements.
- It enforces critical thinking.
- The purpose of Logic is to enable the
logician to construct valid arguments
which satisfies the basic principle.
● Statement - Also called a proposition.
- It is defined as a declarative sentence
that is either true or false, but can’t be
both simultaneously.
● Predicate - A sentence that can be a
statement when variables are allowed to
take on a particular value.
● Quantification - The process of
making statements out of predicates
using quantifiers. The 2 fundamental
kinds of quantification are universal
quantification and existential
quantification.
● Truth Tables - Are used to determine
the truth or falsity of a complicated
statement based on the truth or falsity
of its simple components.