INVESTMENTS

Agapito, PaulDela Cruz, PaulineLucman, FatimahTorio, Jeandie

putting money into a productive activity postpone spending for future benefit assets held by an enterprise for earning income the accretion of wealth through distribution dividends, interest, rentals, etc. can be short-term or long-term

WHAT IS INVESTMENT?

 Investors make investments for three primary reasons:

1) appreciation in market value2) income from interest and dividends3) significant influence and control

• Investments are held by entities for diverse reasons such as: • For accretion of wealth or regular income through interest,

dividends, royalties and rentals.• For capital appreciation as in the case of investments in land

and real estate held for appreciation and direct investments in gold, diamonds and other precious commodities.

• For ownership control as in the case of investments in the subsidiaries and associates.

• For meeting business requirements as in the case of sinking fund, preference share redemption fund, plant expansion fund and other noncurrent fund.

• For protection as in the case of interest in life insurance contract in the form of cash surrender value.

Investments are held by entities for diverse reasons such as:

• nature readily realisable• intended to be held for not more than 1 year from• the date on which such investment is made

CURRENT INVESTMENTS

LONG-TERM INVESTMENTS

•investments that an entity intends to hold for more than 1 year.•stocks, bonds, real estate, cash

INVESTMENT PROPERTY

DEPENDS ON YOUR PURPOSE.- PPE- Investments

WHAT MAKES AN INVESTMENT AN INVESTMENT?

FIXED INCOME INVESTMENTS

•"bonds" and "money market securities"•loans made by an investor to a corporate or government borrower (issuer)

Establishes debtor-creditor relationships They have maturities You earn through: Interest Trading Gain Marking-to-Market

DEBT SECURITIES

means the acquisition of equity securities for the purpose of accruing income through dividends and increase in market value, or controlling another entity.

securities represent ownership shares such as ordinary shares, preference shares and other share capital.

EQUITY SECURITIES

• BONDS under "fixed income investments" indebtedness of a corporation source of borrowed capital when you invest, you get interest (creditor)

• BONDHOLDER (owner of a bond certificate)• BOND CERTIFICATE (evidence of indebtedness)*During liquidation, bondholders are paid first before the

stockholders

TYPES OF INVESTMENTS

• STOCKS ownership in a corporation source of equity capital (owner's capital)*a stock certificate is a financial instrument• CAPITAL STOCK total capital of a corporation• SHARES OF STOCK unit of ownership in a corporation• DIVIDENDS (share of stockholders)• - PROPERTY DIVIDENDS (form of property or noncash assets)• - LIQUIDATING DIVIDENDS (return of invested capital, net

income, cash)• - STOCK DIVIDENDS (bonus issue)• STOCK CERTIFICATE (evidence of being a stockholder)

TYPES OF INVESTMENTS

• STOCKS ownership in a corporation source of equity capital (owner's capital)*a stock certificate is a financial instrument• CAPITAL STOCK total capital of a corporation• SHARES OF STOCK unit of ownership in a corporation• DIVIDENDS (share of stockholders)• - PROPERTY DIVIDENDS (form of property or noncash assets)• - LIQUIDATING DIVIDENDS (return of invested capital, net

income, cash)• - STOCK DIVIDENDS (bonus issue)• STOCK CERTIFICATE (evidence of being a stockholder)

TYPES OF INVESTMENTS

COMMON SHARES has the right to vote for the BOD - "voting share" receives variable amount of dividend has residual claim against the corporate profits and liquidated

assets (residue after payment of the preferred stock)

PREFERRED SHARES has no right to vote for the BOD - "non-voting shares" "preferred" - paid first receive a fixed amount of dividend due to the Preferential Rate of

Dividends has preferential claim against corporation profits and liquidated

assets has specific rates to be received from the profit.

TYPES OF STOCK