1. TYPES OF FINANCIAL ASSETS

2. Distinguish between stocks and bonds

3. OBJECTIVES: Explain the meaning of financial assets
Establish the difference between stocks and bonds

4. DEFINITION Financial ASSETS A financial asset is an intangible
(NON PHYSICAL)asset
Examples include bank deposits, bonds, and stocks.

5. FINANCIAL ASSETS are usually more liquid than tangible (fixed)
assets, such as land or real estate (property)

6. FINANCIAL ASSETS

7. TASK
STOCKS?
Explain the difference between these 2 financial assets
BONDS?

8. STOCKS CHARACTERISTICS

9. STOCKS Stocks offer part ownership in a company,
stocks are considered riskier and more unstable than bonds
Mine…mine…mine

10. STOCKS ARE EQUITY Stockholders own a share of the business.

11. Stockholders have voting rights

12. Stocks: Buying part ownership in a corporation
EXAMPLE [STOCKS]
Stocks: Buying part ownership in a corporation

13. RETURN / YIELD
dividend
PROFIT

14. What does this diagram represent? Explain…..
Where would you find this data?

15. BONDS CHARACTERISTICS

16. BONDS Bonds are simply loans They are a form of debt
appear as liabilities
in the organization's balance sheet.

17. BONDS Bonds are issued by: companies, municipalities, states
foreign governments
to finance a variety of projects and activities.

18. BONDS
the “company” borrows the funds for a defined period of time at a fixed interest rate.

19. BONDS
Loans must be paid back!
“DEBT Obligation”

20. BONDS
The maturity date is the date in the future on which the investor's principal will be repaid

21. Bonds are also traded on exchanges, but often have a lower volume (quantity) of transactions than stocks.

22. BONDS: Making a loan to a corporation
EXAMPLE
BONDS: Making a loan to a corporation

23. YIELD = RETURN
“INTEREST”
…usually paid every 6 months

24. QUESTION SO… …..what are the differences between STOCKS & BONDS
Draw a table and list the differences

25. WHY? COMPANY BALANCE SHEET ASSETS LIABILITIES FIXED ASSETS
(eg property, equipment)
CURRENT ASSETS
(eg trading stock, cash)
LONG TERM
Long term loans (BONDS)
SHORT TERM
OWNERS EQUITY
STOCKS

26. BANK’S BALANCE SHEET
….. Is it the SAME?

27. BANK’S BALANCE SHEET
OWES
OWNS

28. Which is better (stocks or bonds) ???
QUESTION
Which is better (stocks or bonds) ???

29. Yield financial asset Dividend interest NEW WORDS obligation
stock bond
Dividend interest
obligation
Yield financial asset

30. Business’s finance their transactions with financial assets
CONCLUSION
Business’s finance their transactions with financial assets