Types of Investments:

Republic of the Philippines 1. Fixed Income and Equities

Department of Education
2. Alternatives to fixed income and equities
Region III – Central Luzon
SCHOOLS DIVISION OF CITY OF BALANGA 3. Other investment assets
BATAAN NATIONAL HIGH SCHOOL – SENIOR HIGH SCHOOL
City of Balanga, Bataan Fixed Income and Equities - is a type of investment security
that pays investor fixed interest payments until its maturity date.
NAME:___________ Year &Section:___________
Stocks
“Type of security that signifies ownership in a corporation and
LECTURE IN BUSINESS FINANCE GRADE 12 represents a claim on part of the corporation's assets and
SECOND SEMESTER earnings.”
SECOND QUARTER (WEEK 1)
Bank Deposits
COMPETENCY: “Money placed into a banking institution for safekeeping”
1. Compare and contrast the different types of
investments (ABM_BF12-IVm-n-23) Bonds
“Debt investments where an investor loans money to an entity
Objectives: which borrows the funds for a defined period of time at a
1. Compare and contrast the different types of variable or commonly, fixed interest rate”
investments
2. Classify investment according to its type, features and Alternatives to fixed income and equities -that does not fall into
advantages and disadvantages. one of the conventional equity/income/cash categories. Private
3. Appreciate the importance of having investment at a equity or venture capital, hedge funds, real property,
young age. commodities and tangible assets.

Table 1. Comparison of Investment Types Over Time with Other investment assets - are tangible or intangible items
Sample Results. obtained for producing additional income or held for
speculations in anticipation of future increase in value.

This table presents the different types of investment,

specifically, time deposits, stocks and mutual funds. Gain on
these investments varies how long and how much interest offers
per investment. The highest interest gains reflected here are
from stocks gaining as much as 32,000% if held for about 12
years, safe to assume that having this kind of investment will
eventually provide a good return to investors. But of course, it is
not guaranteed, for purposes of presentation, these are merely,
assumptions. It will always depend on how the investors
perceived risk.
How would you access them?
Table 2. The decline of Monetary Values of Material Items. • Stocks –
Go to a stock brokerage firm (i.e. COL Financial, AB Capital
Securities, etc.) or a bank with a stock brokerage arm (i.e. BPI
Trade, First Metro Securities, etc.) and open a stock market
account by signing the necessary account opening forms. You
will be required to deposit a minimum capital, for BPI, it’s
P5000.

While on this Table 2. Presents that other possessions of

material items such as smart phones, vehicles and the like, they
may not be considered as investment on the basis that its value
does not appreciates rather it value after how many years may
not be as high as you purchase the item.

Investment is an asset or item acquired with the goal of

generating income or appreciation. Appreciation refers to an
increase in the value of an asset over time. When an individual
purchases a good as an investment, the intent is not to consume
the good but rather to use it in the future to create wealth. An
investment always concerns the outlay of some asset today—
time, money, or effort—in hopes of a greater payoff in the future
than what was originally put in. (Investopedia.com)

1
2nd Semester, 4th Quarter, Week 1
Activity 1

Look for a website, like bank, insurance company, or other

investment source site. List at least 5, which do you prefer of
the investment type you wish to put your savings. Rank your
choices from most to least prefer, and why do you choose
those based on the characteristics presented above.

Investment Where to invest? Why do you choose

Type (Provide company) this investment?

But before answering above,

Bank Deposits – https://www.ecomparemo.com/quiz-what-type-of-investor-
Go to a bank (BDO, BPI, Metrobank, etc.) and open a bank are-you, lets categorize your investor’s profile. Screenshot
account (savings, time deposit, etc.) by signing the necessary your profile. Then answer above requirement.
account opening forms. Minimum amounts will also be required
depending on which bank and the type of bank deposit they
want to open. LECTURE IN BUSINESS FINANCE GRADE 12
SECOND SEMESTER
SECOND QUARTER (WEEK 2)

COMPETENCY:
Measure and list ways to minimize or reduce investment risks in
simple case problems (ABM_BF12-IVm-n-25)

“Risk is the chance that an investment’s actual return will be

different than expected. Risk includes the possibility of losing
some or all of the original investment.”

• Bonds –
Same as bank deposits, go to a bank and sign the necessary bond
acquisition forms. Minimum purchase of bonds is normally
higher relative to stocks and bank deposits.

Clients may also view their bond’s performance online

depending from which bank they bought it from.

Guide on β interpretation
=1 – investment’s price will have the same volatility as the PSEi
>1 – investment’s price will be more volatile than the PSEi
<1 – investment’s price will be less volatile than the PSEi

Let’s Practice! Compute for the volatility of the following stocks

(equity investments):
LEARNING ACTIVITY SHEET IN BUSINESS FINANCE
GRADE 12 How to Calculate Volatility
2
 Find the mean of the data set. ...
 Calculate the difference between each data value
and the mean. ...
 Square the deviations. ...
 Add the squared deviations together. ...
 Divide the sum of the squared deviations by the
number of data values.

URC DMC
Year Stock Price Return (x) x xx
1/31/2014 116.00 160.33 -44.33 1965.1489
2/28/2014 139.00 161.33 -22.33 498.6289
3/31/2014 141.00 162.33 -21.33 454.9689
4/30/2014 145.00 163.33 -18.33 335.9889
5/31/2014 148.00 164.33 -16.33 266.6689
6/30/2014 153.00 165.33 -12.33 152.0289
JFC
Year Stock Price Return (x) x xx 7/31/2014 161.00 166.33 -5.33 28.4089
1/31/2014 152.00 182.66 -30.66 940.0356 8/31/2014 161.00 167.33 -6.33 40.0689
2/28/2014 171.00 183.66 -12.66 160.2756
3/31/2014 171.00 184.66 -13.66 186.5956 9/30/2014 186.00 168.33 17.67 312.2289
4/30/2014 172.00 185.66 -13.66 186.5956 10/31/2014 185.00 169.33 15.67 245.5489
5/31/2014 179.10 186.66 -7.56 57.1536
6/30/2014 176.00 187.66 -11.66 135.9556 11/30/2014 194.00 170.33 23.67 560.2689
7/31/2014 176.80 188.66 -11.86 140.6596
8/31/2014 180.00 189.66 -9.66 93.3156
12/31/2014 195.00 171.33 23.67 560.2689
9/30/2014 196.00 190.66 5.34 28.5156 5,420.2268
10/31/2014 196.00 191.66 4.34 18.8356
11/30/2014 207.00 192.66 14.34 205.6356 492.7478
12/31/2014 215.00 193.66 21.34 455.3956
2608.9692  54.98
237.1790
 15.40 Year Stock Price Return (x) x xx
Year Stock Price Return (x) x xx 1/31/2014 11.768 14.5825 -2.8145 7.92141
1/31/2014 1710.00 1695.33 14.67 215.2089 2/28/2014 13.657 15.5825 -1.9255 3.70755
2/28/2014 1700.00 1696.33 3.67 13.4689 3/31/2014 13.775 16.5825 -2.8075 7.882056
3/31/2014 1664.00 1697.33 -33.33 1110.889
4/30/2014 14.129 17.5825 -3.4535 11.92666
4/30/2014 1657.00 1698.33 -41.33 1708.169
5/31/2014 1690.00 1699.33 -9.33 87.0489 5/31/2014 14.021 18.5825 -4.5615 20.80728
6/30/2014 1600.00 1700.33 -100.33 10066.11 6/30/2014 14.562 19.5825 -5.0205 25.20542
7/31/2014 1735.00 1701.33 33.67 1133.669 7/31/2014 14.375 20.5825 -6.2075 38.53306
8/31/2014 1800.00 1702.33 97.67 9539.429
8/31/2014 15.743 21.5825 -5.8395 34.09976
9/30/2014 1623.00 1703.33 -80.33 6452.909
10/31/2014 1685.00 1704.33 -19.33 373.6489 9/30/2014 15.536 22.5825 -7.0465 49.65316
11/30/2014 1750.00 1705.33 44.67 1995.409 10/31/2014 15.939 23.5825 -7.6435 58.42309
12/31/2014 1730.00 1706.33 23.67 560.2689 11/30/2014 16.038 24.5825 -8.5445 73.00848
33256.23 12/31/2014 15.447 25.5825 -10.1355 102.7284
3,023.3027
433.8963
 54.98 39.4451

 6.28

LEARNING ACTIVITY SHEET IN BUSINESS FINANCE

Let’s Practice! Compute for the volatility of the following stocks GRADE 12
(equity investments): 2nd Semester, 4th Quarter, Week 2

3
Activity 1 • This is entirely possible and gives you freedom and
wealth. If certain aspects of your lifestyle are forcing
Standard deviation versus coefficient of variation as your expenses above your income, then question those
measures of risk. assumptions.
Bluecage, Inc., a successful pre-school, is considering several • If your mortgage is the culprit, then you have believed
expansion projects. All of the alternatives promise to produce an it when someone said you ‘need’ that much housing, or
acceptable return. The owners are extremely risk-averse; in that particular area.
therefore, they will choose the least risky of the alternatives. • Anyone can get a very good, slightly used car from a
Data on four possible projects follow. dealer for Php150,000 or so – it is not necessary to
drown in car debt.
Project Expected return Range Standard deviation • What makes it necessary are assumptions that you have
A 12.0% .040 .029 bought into around how you are supposed to live your
B 12.5 .050 .032 life.
C 13.0 .060 .035
D 12.8 .045 .030 Philosophy #4: Your income level has a role to play in saving
• While the cardinal rule is to live below your income,
a. Which project is least risky, judging based on range? the hard truth is that people with more income coming
b. Which project has the lowest standard deviation? Explain in have more money to save.
why standard deviation is not an appropriate measure of risk for • This does NOT mean they are better at managing
purposes of this comparison. money or will have a more comfortable retirement or
c. Calculate the coefficient of variation for each project. Which be able to give more than someone earning less.
project will Bluecage’s owners choose? Explain why this may • It just means that the potential is there. If you have a
be the best measure of risk for comparing this set of good financial philosophy and solid habits, it would be
opportunities. of huge benefit to you to earn a higher income or avoid
any loss of income.
LECTURE IN BUSINESS FINANCE GRADE 12 • Do what you can to avoid divorce for many reasons,
SECOND SEMESTER among which is the financial impact it will have on
SECOND QUARTER (WEEK 3) your family.
• Do not limit your income based on loyalty to an
COMPETENCY: employer – make job decisions as if you are a company
Enumerate money management philosophies (ABM_BF12-IVo- and you are responsible to your shareholders to
p-26) maximize revenue, given the associated risks with
making any move.
Objectives: • Maximize the income flow as any business would,
At the end of the lesson, you would be able to: while of course knowing your limits and what is good
o Demonstrate the philosophy and practices in personal for you and your family emotionally or timewise.
finance
o Identify money management philosophy
o Enumerate money management philosophies The Decision-Making Process: Before You Spend your
Money…

Philosophy #1: Take the long-term approach

• Money and managing it is a fundamental part of life
and is as basic as any other necessary, daily life skill.
• It’s not like breathing or eating, but it is one of those
fundamental tasks the mastering of which makes life a
whole lot easier. I would equate it to cleaning your
home, eating well, having a driver’s license (in most
places) or working hard at whatever you do.
• It is not absolutely required that you do any of these in
life, but doing all these makes life easier and more
fulfilling.
• If you keep your home clean, eat well, stay healthy and
maintain a good career but you manage money poorly
means that you have not mastered all the basic life
skills.
LEARNING ACTIVITY SHEET IN BUSINESS FINANCE
Philosophy #2: Living frugally isn’t a punishment GRADE 12
• Everyone should live inexpensively and using luxuries 2nd Semester, 4th Quarter, Week 3
as treats. Activity 1
• Of course, as your income flow and money
management improve, the definitions of ‘inexpensive’ List at least 3 money management philosophies that aren’t
and ‘treat’ change, but not out of proportion to your provided above and describe each in 5-10 sentences.
ability to afford them.
• If you earn Php 500,000 a year, then a Php150,000 car Rubrics:
would be appropriate to your lifestyle. If you earn Content 15points
Php1,000,000 a year, then a Php 600,000 car might be Organization of Ideas 15points
appropriate to your lifestyle.
• But in neither case does the car command anywhere LECTURE IN BUSINESS FINANCE GRADE 12
near the full annual income. SECOND SEMESTER
SECOND QUARTER (WEEK 4)
Philosophy #3: Live below your income level
4
COMPETENCY:  Review legal papers (i.e. insurance policies, trust
Illustrate the money management cycle and gives examples of agreements, wills, etc.).
sound practices in earning, spending, saving, and investing  Evaluate objectives vis-à-vis the individual’s resources
money ABM_BF12-IVo-p-27 and economic conditions.

Learning Objectives: Financial Plan Recommendation

At the end of the lecture, you would be able to:  Propose financial products.
o Define personal finance  At this point, the individual can comment on the
o Enumerate and define the personal financial planning proposed solutions.
process; and
o Describe the six key areas of personal financial Plan Implementation
planning.  Assist the individual in the execution of the
recommended financial plan.
Personal finance is a term that covers managing your money as  Implementation may involve other entities so assist the
well as saving and investing. It encompasses budgeting, individual in dealing with the parties involved in the
banking, insurance, mortgages, investments, retirement execution of the financial plan.
planning, and tax and estate planning. (Investopedia.com)
Plan Monitoring
Personal finance includes all financial decisions and activities  Review the financial plan periodically to evaluate
of an individual including budgeting, insurance, mortgage changing market conditions (i.e. economic conditions,
planning, savings, and retirement planning. taxes, interest rates, etc.).
 Evaluate the financial plan regularly to see if it
It involves analyzing current financial positions, projecting effectively meets the individual’s goals and objectives.
short-term and long-term funding needs, and executing a plan to
fulfill those needs considering individual financial constraints. Six Key Areas of Personal Financial Planning

It is primarily dependent on one’s earnings, cost of living, and

personal goals and wants.

Personal Financial Planning Process

Financial Position
 Understanding of personal resources by checking an
individual’s net worth and cash flow.
 Net worth = assets less liabilities at a point in time
 Cash flow = expected sources of income less expected
expenses within a period (i.e. year)
 Helps in determining the time frame to which personal
goals can realistically be met.
 May need to answer the following questions:
 Do they have a clear understanding of their
goals?
 How do they track their income, expenses,
and net worth?
 What financial benefits do they get from their
employer?

Objective Setting Adequate Protection

 Quantify monetary objectives with definite time  Analysis of protection needed for unforeseen risks.
frames.  Includes risks of liability, property, death, disability,
 Prioritize objectives. health, and long-term care.
 Examine these objectives with an individual’s  Some insurance plans enjoy some tax benefits.
resources and limitations.  May need to answer the following questions:
 What things can they not afford to lose?
Data gathering  How will they take care of their dependents?
 Use surveys, questionnaires, and interviews to gather  How have they planned for financial risks
quantitative and qualitative information from the such as disability, illness, long-term care, and
individual. death?
 Quantitative – for assessing financial status (i.e.
investments, cash flow, liabilities, etc.) Tax Planning
 Qualitative – to identify individual’s goals and  Management of when and how much taxes will be
objectives, lifestyle, risk-tolerance, etc. paid.
 Understanding possible tax incentives, deductions,
rebates, etc. can have a significant impact on managing
personal finances given the magnitude of taxes paid by
Data Analysis an individual.
 Analyze the individual’s financial position and cash  May need to answer the following questions:
flows.  How do they manage their taxes?

5
 How do they plan the timing of income and
deductions for tax purposes? • Investment Amount of Accumulated
 Are they comfortable with the tax Type/Features of Investment Fund in 10 years
environment applicable to them? Investment Type

Investment and Accumulation Goals

 Planning on wealth accumulation for large purchases
such as house, educational expenses, investments for
retirement, etc.
 May need to answer the following questions:
 What are their goals for wealth accumulation?
(i.e. education, home, business, retirement
comfort, etc.)
 How are their current investments performing
to meet their goals? Total Accumulated Fund
 How much will they need? When will they
need it?

Retirement Planning
 Understanding the cost of retirement.
 Analysis of cash flows to come up with investment
plans that will meet the costs of retirement in the
future.
 May need to answer the following questions:
 How are they preparing for their retirement?
 How are their liabilities affecting their
retirement objectives?
 Do they think they can maintain their standard
of living during their retirement?

Estate Planning
 Planning for disposition of one’s assets after death.
 Estate taxes paid to the government are huge, so
avoiding these taxes can significantly impact one’s
personal finances.
 May need to answer the following questions:
 How should their assets be distributed upon
death?
 How will their intentions be carried out? (i.e.
will, trust, power of attorney, etc.)

LEARNING ACTIVITY SHEET IN BUSINESS FINANCE

GRADE 12
2nd Semester, 4th Quarter, Week 4
Activity 1

As a student, you have limited sources of fund, but if given a

chance, fast forward to 10 years from now, you have your good
source of income, a successful person of your chosen career.
What if you have a savings amounting to P3,000,000. You are
about to invest the amount from different or diversified
investments available in the market.

You can choose from fixed to alternative to other types of

investment.

At least 3 investment type and how much will you put in that
particular investment and compute of how much will you
earn or accumulate fund for at least after 5 to 10 years.
6