Organization and Functions of Securities PDF

ORGANIZATION AND FUNCTIONS OF SECURITIES CHAPTER 1 T YPE S O F I N V E ST M E N T V E H I CLE S FINANCIAL ASSETS REAL ASSETS PRIVATE SECURITY / EQUITY PUBLICLY (publicly traded) SECURITIES PRIVATE SECURITY / EQUITY NOT A PRIVATE SECURITY / EQUITY  MAJOR TY...

ORGANIZATION AND FUNCTIONS OF SECURITIES CHAPTER 1 T YPE S O F I N V E ST M E N T V E H I CLE S FINANCIAL ASSETS REAL ASSETS PRIVATE SECURITY / EQUITY PUBLICLY (publicly traded) SECURITIES PRIVATE SECURITY / EQUITY NOT A PRIVATE SECURITY / EQUITY  MAJOR TYPES OF SECURITIES THAT TRADE IN ORGANIZED MARKETS 1. FINANCIAL SECURITIES SECURITIES – The term "security" refers to a fungible, negotiable financial instrument that holds some type of monetary value. TYPES EQUITY SECURITIES DEBT SECURITIES  TYPES EQUITY SECURITIES DEBT SECURITIES  TYPES STOCKS BONDS ❑ Once you buy stocks from a company, ❑ A bond is like a loan. When you buy a bond, you’ll automatically be considered as a co- you’re lending money to a company or owner. government, and they promise to pay you back with interest over time. ❑ Unlike stocks, bonds are fixed in nature. Sis, pahiram akong P1k pang puhunan sa sari-sari store. In return, bibigyan kitang P50 per month + yung P1k na ni-lend mo. Weh? May trust issues na ako sayo sis. Pero sige, last na yan ah.  Sis, pahiram akong P1k pang puhunan sa sari-sari store. In return, bibigyan kitang P50 per month + yung P1k na ni-lend mo. Weh? May trust issues na ako sayo sis. Pero sige, last na yan ah.  STOCKS BONDS – represent ownership in a firm Two types of bond investment Ex. common stock, preferred 1. Government bond stock, etc. 2. Corporate bond  BONDS ❑ The Bureau of the Treasury Two types of bond investment (BTr) of the Philippines 1. Government bond offered Retail Treasury Bonds (RTBs) with a 6.25% interest rate per year in February 2024. The interest was paid quarterly. Explanation The RTBs were issued on February 28, 2024, with a maturity date of February 28, 2029. The bonds were sold in minimum denominations of Php 5,000.  BONDS Two types of bond investment ❑ The Bank of the Philippine 2. Corporate bond Islands (BPI) offers bonds with a variety of interest rates, depending on the type of bond. ❑ BPI RISE Bonds Interest rate: 5.75% per year, payable quarterly Term: 1.5 years ❑ Retail Treasury Bonds Interest rate: 4.875% per year, payable quarterly Minimum investment: Php 5,000 2. Real Assets 4. Publicly traded securities (sold by publicly listed companies) the counterpart of this is the so-called “private equity” these are not publicly listed companies so they do not have the power to sell shares publicly. 4. Publicly traded securities (sold by publicly listed companies) the counterpart of this is the so-called “private equity” these are not publicly listed companies so they do not have the power to sell shares publicly.  F I N A N C I A L I N T E R M E D I A R R I E S Block Investment Brokers Exchange Brokers Banks Depositary Insurance Clearing Arbitrageurs Institution companies Houses  BROKER ❑ A stockbroker is like a financial bridge between people who want to invest in the stock market and the Philippine Stock Exchange (PSE). They help investors buy and sell shares of companies listed in the PSE. ❑ Stock trading is exclusive only between an investor and publicly listed companies.  BLOCK BROKER ❑ specializes in facilitating large- scale stock transactions, often referred to as "block trades." These transactions involve buying or selling a significant number of shares.  INVESTMENT BANKS ❑ Investment banks in the Philippines are financial institutions that help businesses, governments, and other organizations raise money, manage risks, and make strategic financial decisions.  EXCHANGE ❑ the main organization in the Philippines where stocks (shares of ownership in companies) are bought and sold. It is like a marketplace, but instead of physical goods, people trade pieces of companies.  DEPOSITARY INSTITUTION ❑ a government-owned and controlled corporation (GOCC) that protects bank depositors by insuring their deposits in case a bank fails or closes. ❑ PDIC insures deposits in banks up to ₱500,000 per depositor per bank. This means that even if the bank closes, depositors can recover their money up to this limit. INSURANCE COMPANIES ❑ are financial institutions that provide protection against financial losses due to unforeseen events like accidents, illness, death, natural disasters, or property damage. ❑ PDIC insures deposits in banks up to ₱500,000 per depositor per bank. This means that even if the bank closes, depositors can recover their money up to this limit. ARBITRAGEURS ❑ Someone who takes advantage of price differences in two or more markets buy buying a product, currency, or asset. MARKET A. P50/KG MARKET B. P70/KG ARBITRAGEURS CLEARING HOUSES ❑ financial intermediary that ensures the smooth and secure processing of financial transactions between buyers and sellers. It plays a vital role in the financial system by managing the transfer of funds, securities, or financial instruments, ensuring that both parties fulfill their obligations in a trade.  T YPE S O F F IN AN CIAL M A R K E T S ❑ These are places, people, or institutions where a company / person can raise funds. CAPITAL MARKETS – long term MONEY MARKETS – short term TRADITIONAL INVESTMENT MARKETS ALTERNATIVE MARKETS BASIC INVESTMENT OBJECTIVES 1. SECURITY 2. LIQUIDITY 3. YIELD Central to any Because we may Yield is best investment have to convert described as the objective, we our investment net return out of have to basically back to cash or any investment. ensure the safety funds to meet our of the principal. unexpected One can afford to demands and lose the returns needs, our at any given point investment of time but s/he should be highly can ill afford to liquid. lose the very principal itself. FEATURES / CHARACTERISTICS OF INVESTMENTS Risk Return Safety Liquidity Marketability MARKETABILITY FEATURES / CHARACTERISTICS OF INVESTMENTS Concealability Security from investment barriers Capital Growth Appreciation of investment Purchasing Power Buying capacity of investment Stability of Income Constant return from investment Tax Benefits Some tax liabilities of the investor will be disregarded due to the decrease in overall wealth. T YP E S O F IN V E ST O R S CONSERVATIVE -they put their money in interest bearing savings accounts, money market accounts, mutual funds MODERATE --moderate investors often also invest in real estate, providing that it is low risk real estate. AGGRESSIVE -They tend to invest in business ventures as well as higher risk real estate. These people are considered as high risk takers.