Common Stocks, Preferred Shares & REITs Overview

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Questions and Answers

What is a key characteristic of common stocks in a liquidation scenario?

Common stockholders receive whatever assets remain after all other parties are paid. (correct)

Common stockholders have guaranteed returns in case of liquidation.

Common stockholders receive dividends before preferred stockholders.

Common stockholders are paid before bondholders.

Which of the following best describes preferred shares?

They are typically less risky and pay dividends before common stock. (correct)

They are always traded at a premium compared to common shares.

They pay dividends after common stock dividends.

They can only be bought in the primary market.

What is a common method through which investors can make money from common stocks?

Capital Appreciation and Dividends (correct)

Initial Public Offerings

Bond Interest

Real Estate Gains

What is a primary requirement for Real Estate Investment Trusts (REITs) by law?

They must pay at least 90% of their income as dividends. Signup and view all the answers

How do investors generally buy common stocks?

Via an Online Stock Brokerage Account Signup and view all the answers

What is the primary function of the stock market?

To facilitate the buying, selling, and trading of company shares Signup and view all the answers

What type of stocks are classified as growth stocks?

Stocks expected to increase in value due to rising earnings. Signup and view all the answers

Which statement accurately describes the Philippine Stock Exchange (PSE)?

It ensures a transparent and orderly market for securities trading Signup and view all the answers

Which of the following factors can affect the volatility of the stock market?

Public sentiment and foreign fund flows. Signup and view all the answers

What advantage do well-diversified portfolios provide to investors?

Reduced exposure by owning stocks from various sectors. Signup and view all the answers

What significant event occurred on December 23, 1992, in the Philippine Stock Exchange?

The merger of the Manila and Makati Stock Exchanges Signup and view all the answers

Which of the following is NOT a characteristic of the stock market?

It guarantees profits for investors in the short term Signup and view all the answers

Where is the headquarters of the Philippine Stock Exchange located as of 2018?

Taguig City in Bonifacio Global City Signup and view all the answers

What role does the stock market play for corporations?

It provides a means to raise capital for various needs Signup and view all the answers

Which of these statements is TRUE regarding investor participation in the stock market?

Increased investor participation generally enhances market liquidity Signup and view all the answers

What does the unification of the Manila and Makati Stock Exchanges represent?

A transformation into a more competitive structure Signup and view all the answers

Study Notes

Session Objectives

Understanding assets listed in the Philippine Stock Market.
Identifying characteristics of each asset type.
Incorporating equities and REITs into an investment portfolio.

About the Author

Roberto Marcon: Relationship Manager at Unionbank, Private Banking Department.
Licensed in multiple financial sectors: Equities Securities Salesman, Certified Investment Solicitor, Fixed Income Market Salesman.
Certified Trust Professional and UITF Sales Personnel.
Financial Markets Professional certification from Bloomberg.
Part-Time Professor at Ateneo de Davao University; accredited program instructor.
Academic background includes a Master's in Business Administration and a BS in Industrial Engineering from Ateneo de Davao University.

Stock Market Overview

Comprises investors buying, selling, and trading shares collectively reflecting company value and performance.
Used by companies to raise capital for expansion, acquisitions, and refinancing.

Philippine Stock Exchange (PSE)

A self-regulatory organization ensuring a fair, efficient, and orderly market for securities.
Traces its origins to the Manila Stock Exchange (1927) and Makati Stock Exchange (1963), unified in 1992.
Relocated to Bonifacio Global City in 2018 to enhance investor participation and liquidity.

Available Assets in the PSE

Common Stocks
Preferred Shares
Real Estate Investment Trusts (REITs)

Common Stocks

Represents ownership in a corporation; stockholders are last to receive assets in liquidation.
Includes value stocks (lower in price vs. fundamentals) and growth stocks (increase in value with earnings).
Can be bought in the Primary Market (IPO) or Secondary Market (Stock Market).
Profit generated through capital appreciation and dividends.
A diversified portfolio includes stocks from various industries.

Preferred Shares

Stock type with dividends paid before common stocks.
Suitable for risk-averse investors and callable by the issuer.
Shares can also be sold in the secondary market.

Real Estate Investment Trust (REIT)

A corporation that owns income-generating real estate such as apartments, offices, and shopping centers.
Provides returns from rental income of the real estate assets.
Legally required to distribute at least 90% of income as dividends; dividend form can be cash, property, or stock.

Purchasing Assets

Retail Investors: Open a stock brokerage account and choose from various online brokers based on technology and aftersales.
Corporations: Can open a brokerage account or utilize a trust account.

Considerations for Investment

The stock market is volatile, with significant fluctuations.
Influenced by public sentiment, foreign fund inflows, and economic performance.
Long-term growth trend shows an approximate compound annual growth rate (CAGR) of 8% per annum.

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Description

Explore the various assets listed in the Philippine Stock Market, focusing on common stocks, preferred shares, and REITs. This quiz will help you understand the characteristics of each asset and the importance of incorporating them into your investment portfolio.