Republic of the Philippines

Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

LEARNER’S PACKET
Key Stage 4
BUSINESS FINANCE
Quarter 2 (Week 1 & 2)

Content The learners demonstrate an understanding of the definition, purpose,

Standards kinds, advantages, and disadvantages of investments.

Performance The learners shall be able to identify the Types of Investments and
Standards indicate the Advantages and Disadvantages of each type of investment.

Learner’s Packets
Most Videos
Essential Learn /
Pre- LM
Learning Conte Text er’s Visual
requisite page Activity
Compete nt Book/Referen Mater s/
s numb Sheets
ncies ces ials Audio
er
(MELCs) (LMs) Materi
als
Retrieved from
http://www.b
hojvirtualunive
rsity.com/slm
Compare /mba1p6.pdf.
and Fundame
contrast Introd Commission The
ntals of
the uction on Higher Different
Accounta
to Education. Types of
Different ncy, None None
Invest (2016). In Investme
types of Business
ment Business nts
Investmen and
Finance).
ts Manage
Diliman,
ment 1
Quezon City:
Commission
on Higher
Education (pp.
285-299)
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

LEARNER’S ACTIVITY SHEET (LAS) Week 1-2

BUSINESS FINANCE

Name of Learner
Grade level and Section
Date

THE DIFFERENT TYPES OF INVESTMENTS

Learning Competency with code:

Compare and contrast the different Types of Investments ABM_BF12-IVm-n-23

Learning Competency

DIFFERENT TYPES OF INVESTMENTS

1. Fixed Income and Equities

Investment Type Advantages Disadvantages

1.Stocks (Equity) *Unlimited Upside No guaranteed returns.

“Type of security that Riskiest of all assets (can

signifies ownership in a lose even more than 50%
corporation and represents of their money in one day)
a claim on part of the
corporation's assets and
earnings”

2.Bank Deposits (Fixed Known income based on Lower interest income vs.
Income) outstanding principal and bonds
current interest rate
“Money placed into a • Settlement risk if the
Shorter, if any, holding
banking institution for bank closes
period vs. bonds.
safekeeping”

3.Bonds (Fixed income)

“Debt investments where Known periodic payments If not held until maturity
an investor loans money for a certain period of time and pre-terminated,
to an entity which investor can gain or lose
borrows the funds for a depending on the prevailing
defined interest rates at the time of
period of time at a variable
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

or commonly, fixed interest Can’t lose money if bond pre-termination. If interest

rate” investment is held until rates are higher, investor
maturity in bonds can lose in the
pre termination.
Sources:
(1) Investopedia - Sharper Insight. Smarter Investing.. (2016). Investopedia. Retrieved
2 May 2016, from http://investopedia.com;
(2) Writer Inputs

2. Alternatives to Fixed Income and Equities

Investment Type Advantages Disadvantages

utual funds “Give small investors access Pay management fees
to professionally managed,
n investment that is made Values can also fluctuate ju
diversified portfolios of
p of a pool of funds like the stock market.
equities, bonds and other
collected om many
securities, which would be
investors for the urpose of
quite difficult (if not
investing in ocks, bonds,
impossible) to create with a
and similar sets”
small amount of capital”

nit investment trust fund Same as mutual funds. No shareholder rights f

ITF) investors such as dividen
• Easier access because
and voting rights.
milar to a mutual fund but clients can open an account
in any branch of the bank
near them.
anaged by banks
• No entry and management
fees.

Sources:
(1) Funds, M. & Tour, A. (2016). Philpad - Your pad on anything Filipino......Philpad.
Retrieved 2 May 2016, from http://philpad.com; (2)
Investopedia - Sharper Insight. Smarter Investing.. (2016). Investopedia. Retrieved
2 May 2016, from http://investopedia.com; (3) Writer Inputs

3. Other investment assets

 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

a. Currencies and Commodities-open a foreign currency/forex account

(i.e. oanda, fxcm, cboe, etc.) online.
*Minimum amount required for forex accounts vary and are usually
higher vs. stocks and usually in USD.
b. Real Estate (i.e. Ayala Land, Megaworld, SM Prime, etc.).
c. Insurance (i.e. Sunlife, Prulife, Manulife, etc.).

Investment Type Advantages Disadvantages

Currencies Largest market in the world Volatile and trades 24-
in terms of trading volume, hours a day (must be
“Generally accepted form of
so much liquidity closely monitored)
money, including coins and
paper notes, which is • Unlike stocks, • Generally uses margin
issued by a government commodities, etc., trading which allows
and circulated within an currency asset itself is a clients to bet more
economy” (i.e. USD, EUR, medium of exchange
than their capital (may also
JPY) which people can use to
be an advantage)
transact.

Investment Type Advantages Disadvantages

Commodities Natural hedge against Same as currencies

inflation
“A basic good used in • Impractical to invest
commerce that is • Negatively correlated with directly considering
interchangeable with other equities and bonds (may be storage, transportation
used for diversification) and insurance costs
commodities of the same
involved.
type” (i.e. gold, nickel, oil) • Hedge against geopolitical
risks.

Real Estate Generally appreciates over Huge capital needed,

time financing
“Land and any
improvements on it” (i.e. because land gets scarce can be difficult
land, house and lot,
• Have relatively low • Maintenance of the
condominiums) correlations with other property needed to
asset classes (may be used preserve its value
for diversification)
• Illiquid or difficult to sell
• Can be a source of
recurring rental income
• May also be a hedge
against inflation because of
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

inflation-linked rent
escalation clauses

Insurance Gives the insured Insurance premiums may

individual /entity the be costly
“A contract (policy) in
cash/capital to deal with
which an individual or • On some of traditional
unforeseen adverse
entity receives financial insurance
financial consequences
protection or
plans, no sickness/death
reimbursement against • May provide certain tax
until a
losses from an insurance benefits (i.e. tax
company” (i.e. life deductibility, tax-free certain age may mean not
insurance, educational provisions) getting
plans, VUL)
any benefits at all (that’s
why VUL’s
are now very prevalent)
• Some insurance
companies can go
bankrupt (i.e. College
Assurance Plan) if
companies fail to factor
significantly adverse
unforeseen circumstances

Sources:

(1) Gateway Financial | Gateway Financial. (2016). Gatewayfinancial.biz. Retrieved 2

May 2016, from
http://gatewayfinancial.biz; (2) Home Guides | SF Gate. (2016).
Homeguides.sfgate.com. Retrieved 2
May 2016, from http://homeguides.sfgate.com; (3) Investopedia - Sharper Insight.
Smarter Investing..
(2016). Investopedia. Retrieved 2 May 2016, from http://investopedia.com; (4) Saad,
Y. & Slachevsky, A.
(2016). From The Markets - eToro Blog. eToro Blog. Retrieved 2 May 2016, from
http://etoro.com/blog/
markets; (5) Writer Inputs
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

Learning Tasks

Activity 1. Match the investment asset in column A with its

advantage/disadvantage in column B. Write the letter of your answer on the space
provided before each number.

(A) Investment Asset (B) Advantage/Disadvantage

A. Disadvantage: On some of traditional plan

(Fixed Income) sickness/death until Stocks
1 Stocks (Equity) (Equity) a certain age may mean not getting any
2 Bank Deposits (Fixed Income) benefits at all
B. Advantage: Shorter, if any, holding period
vs. bonds
3 Mutual Funds C. Advantage: Can be a source of
recurring rental income
4 Real Estate D. Disadvantage: Riskiest of all assets (can lose
as much as50% of their money in one day)
5 Insurance E. Disadvantage: Pay management fees

Activity 2. Mutiple Choice: Write the letter of your answer on the given blank before
each number.
1. An investment that is made up of a pool of funds collected from many investors
for the purpose of investing in stocks, bonds, and similar assets.
a. Stocks (Equity)
b. Bank Deposits
c. Mutual Funds
d. Insurance
2. Type of security that signifies ownership in a corporation and represents a
claim on part of the corporation's assets and earnings.
a. Stocks (Equity)
b. Bank Deposits
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

c. Mutual Funds
d. Insurance
3. A contract (policy) in which an individual or entity receives financial protection
or reimbursement against losses from an insurance company.
a. Stocks (Equity)
b. Bank Deposits
c. Mutual Funds
d. Insurance
4. It is where the money placed into a banking institution for safekeeping.
a. Mutual Funds
b. Insurance
c. Stocks (Equity)
d. Bank Deposits

5. Accepted form which is issued by a government and circulated within an

economy.
a. Currencies
b. Commodities
c. Real Estate
d. Bonds

Activity 3. Essay. Answer the following question.

1. Why would a risk-taker (likes to take risk)prefer equities over fixed income?
2. Why would a risk-averse (likes to avoid risks) prefer fixed income over equities?
3. How do mutual funds differ from UITFs?
4. In your own perspective, which is better investment bank deposits (Fixed
Income)
or bonds (Fixed income)? Explain
5. Compare commodities and currencies in term of its advantages.

Scoring Rubric (If necessary

Reflection:

The learners will write their personal insights about the lesson using the prompts
below:
I understand that .
I realize that .

References for learners

 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

Comission on Higher Education. (2016). In Business Finance (pp. 285-299). Diliman,

Quezon City: Comission on Higher Education.

Retrieved from http://www.bhojvirtualuniversity.com/slm/mba1p6.pdf.

Activity 1 Activity 2
1. D 1. C
Answer Key :
2. B 2. A
3. E 3. D
4. C 4. D
5. A 5. A
Suggested Answer for Essay
1-5. Answer may vary

LEARNER’S PACKET TEMPLATE

Key Stage 4 BUSINESS FINANCE
Quarter 2 (Week 3 & 4)

Content The learners demonstrate an understanding of the measure and list

Standards ways to minimize or reduce investment risk.

Performance The learners shall be able to explain the risks inherent in each type
Standards of investment.

Learner’s Packets
Most Videos
LM
Essential /
Learner’ pag
Learning Pre- Conte Text Visual Activi
s e
Competen requisites nt Book/Refer s/ ty
Material nu
cies ences Audio Sheet
s (LMs) mbe
(MELCs) Materi
r
als
Measure Fundame https://ww
and list ntals of Introdu w.yourarticle Measu
ways to Accounta ction to library.com/ ring
ncy, Invest Invest
minimize or financial- None
Business ment ment
reduce management
and Risk
investment Managem /risk-and-
risks in ent 1 returns-
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

simple case concept-of-

problems. risk-and-
returns/438
19. (n.d.).
Commission
on Higher
Education.
(2016). In
Business
Finance).
Diliman,
Quezon City:
Commission
on Higher
Education
(pp.300-313)

LEARNER’S ACTIVITY SHEET (LAS) Week 3-4

MEASURE AND LIST WAYS TO MINIMIZE OR REDUCE INVESTMENT RISKS IN
SIMPLE CASE PROBLEMS.

Name of Learner
Grade level and
Section
Date

MEASURING INVESTMENT RISK

Learning Competency with code:

Measure and list ways to minimize or reduce investment risks in simple case problems.
ABM_BF12-IVm-n-25

THE CONCEPT OF RISK AND RETURN INVESTMENT

Concept of Risk:

An individual making an investment expects to get some returns from the

investment in the future. However, as future is predictable, the expected returns are too
uncertain. It is the uncertainty associated with the returns from an investment that
introduces a risk into the investment. The expected return is that to get from investment
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

will be never sure on its success. The said return, on the contrary, is the certain return
that has actually earned.

Concept of Return:

Return can be defined as the actual income from an investment as well as

appreciation in the value of capital. Thus, there are two components in return — the basic
component or the periodic cash flows from the investment, either in the form of interest
or dividends; and the change in the price of the asset, commonly called as the capital gain
or loss.

Definition of Risk

“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.”
(Source: Investopedia – Sharper Insight. Smarter Investing. | Investopedia. (2016).
Investopedia. Retrieved 8 May 2016, from http://investopedia.com

Systematic and Non-Systematic Risk

Also Known
Risk Definition Examples Measurement
As
Systematic Uncertainty Market risk, Changes in Beta (β)
inherent diversifiable interest
to the entire risk rates,
market recession,
wars
Non- Uncertainty Specific risk, Rumors of a Standard
systematic that diversifiable potential deviation
comes with the risk, default, (σ) less beta
company or residual risk labor strikes,
industry landslide in a
mining
company that
disrupted the
operations

Table 1: Differentiating Risks

Source: Investment Strategies, Education & News | InvestingAnswers. (2016).
Investinganswers.com.
Retrieved 8 May 2016, from http://investinganswers.com; Investopedia - Sharper Insight.
Smarter
Investing. | Investopedia. (2016). Investopedia. Retrieved 8 May 2016, from
http://investopedia.com

Measuring Systematic and Non-Systematic Risk

 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

Risk it
Measurement Definition Formula
Measures
Beta (β) Systematic Measure of the
risk systematic risk of an
investment or portfolio
vs. the market as a
whole.
• Tendency of an
investment's returns to
respond to swings in the
market.
Standard Total risk Sum of systematic and
deviation (σ) nonsystematic risk.
• Total volatility of an
investment.

Table 4: Measuring Risks

Source: Investopedia. (2016). Investopedia. Retrieved 8 May 2016, from
http://investopedia.com

Guide on β interpretation to measure

• =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

Example:

A company with a β = 1.3 means that if the PSEi goes up by 10%, this company’s
stock price, on the average, will go up by 13%. The reverse is true which means that if the
PSEi goes down by 10%, this company’s stock price, on the average, will go down by 13%.

Based on the example, we can conclude that a company with higher beta (β) is more
volatile and a company with lower beta (β) is less volatile.

Note that the computed β using the formula given on the table may not be reliable
if the data points used are for a short period of time only. Five to ten years is the
suggested period in data covering / gathering because such period will often cover the
booms and busts of an economic cycle.

The formula for beta is the covariance of the investment asset’s returns with the
returns of the market divided by the variance of the market.
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

Beta can be easily computed through Microsoft Office Excel but due to the
complexity of the formula in terms of manually computing beta, sources will be cited
instead on where beta can be found.

In getting an estimate of the non-systematic risk, the total risk will be computed
first then from this, the systematic risk will be deducted.

The components of the standard deviation (σ) formula (please refer to the table)
xi – return
x̄ – average of returns
n – no. of data points

Year Portfolio Return x̄ (xi-x̄)2

Value xi
30/1/2014 152.00
28/2/2014 171.00 0.1250 0.0328 0.00850
31/3/2014 171.00 0.0000 0.0328 0.00108
30/4/2014 172.00 0.0058 0.0328 0.00073
30/5/2014 179.10 0.0413 0.0328 0.00007
30/6/2014 176.00 -0.0173 0.0328 0.00251
31/7/2014 176.80 0.0045 0.0328 0.00080
29/8/2014 180.00 0.0181 0.0328 0.00022
30/9/2014 196.00 0.0889 0.0328 0.00315
31/10/2014 196.00 0.0000 0.0328 0.00108
28/11/2014 207.00 0.0561 0.0328 0.00054
29/12/2014 215.00 0.0386 0.0328 0.00003
0.01869
𝝈 = 𝟒. 𝟑%

Below are solutions on how to get the following:

1. Return (xi)

xi = x2 – x1 ÷ x1
= (172 – 152) ÷ 152 = 0.132 or 0.13

2. Average of Returns (x̄)

x̄ = xi1 + xi2 + xi3 +…….. = 0.3610

= 0.3610 ÷ 11
= 0.0328 or 3.28%
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

3. (xi-
x̄)2 = (0.1250 - 0.0328)2
= 0.09222
= 0.00850

4. Total of (xi-x̄)2 = .01869

5. Standard Deviation (σ)

0.01869 0.01869
= √ =√ =√0.001869 =0.04323 or 4.3%
11−1 10

Computed Standard deviation (σ) represents total risk. Note that formula for
return should be: stock price current divided by stock price previous less 1. Clarify that n-
1 is used as divisor because only a sample of data is used. While total risk can be broken
down to systematic and non-systematic risk, the breakdown formula is beyond the
scope.

To minimize investment risk, an investor has to have a diversified portfolio. The

composition of the portfolio depends on the risk appetite of the investor. A more
conservative investor (i.e. investor who has less appetite for risk) may have a portfolio which
is more skewed to fixed income instruments like time deposits. On the other hand, an
investor who has a higher appetite for risk (i.e. an investor who is more willing to take risk)
may have a portfolio which is more skewed to equity investments.
Diversification is a risk management technique that combines a wide variety of
investments within a portfolio to reduce risk. A well-diversified portfolio can eliminate
non- systematic risk.

Two-Stock PHP 10,000 Portfolio (JFC and DMC)

Year Portfolio Return x̄ (xi-

x̄)2 Value xi
30/1/2014 10,000.00
28/2/2014 11,427.60 14.3% 2.9% 1.3%
31/3/2014 11,477.74 0.4% 2.9% 0.1%
30/4/2014 11,661.04 1.6% 2.9% 0.0%
30/5/2014 11,848.70 1.6% 2.9% 0.0%
30/6/2014 11,976.59 1.1% 2.9% 0.0%
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

31/7/2014 11,923.45 -0.4% 2.9% 0.1%

29/8/2014 12,609.95 5.8% 2.9% 0.1%
30/9/2014 13,048.32 3.5% 2.9% 0.0%
31/10/2014 13,219.55 1.3% 2.9% 0.0%
28/11/2014 13,623.45 3.1% 2.9% 0.0%
29/12/2014 13,635.51 0.1% 2.9% 0.1%
1.7%
𝝈 = 𝟒. 𝟐%

Five-Stock PHP 10,000 Portfolio (JFC, GLO, URC, DMC, and PCOR)

Year Portfolio Return x̄ (xi-

x̄)2 Value xi
30/1/2014 10,000.00
28/2/2014 10,921.56 9.2% 2.0% 0.5237%
31/3/2014 10,647.87 -2.5% 2.0% 0.2030%
30/4/2014 10,859.22 2.0% 2.0% 0.0000%
30/5/2014 10,981.69 1.1% 2.0% 0.0076%
30/6/2014 11,122.52 1.3% 2.0% 0.0051%
31/7/2014 11,337.00 1.9% 2.0% 0.0001%
29/8/2014 11,593.20 2.3% 2.0% 0.0007%
30/9/2014 12,009.73 3.6% 2.0% 0.0254%
31/10/2014 12,139.22 1.1% 2.0% 0.0085%
28/11/2014 12,428.98 2.4% 2.0% 0.0015%
29/12/2014 12,356.12 -0.6% 2.0% 0.0669%
0.8%
𝝈 = 𝟑. 𝟏%
PSEi-invested PHP 10,000 Portfolio

Year Portfolio Return x̄ (xi-x̄)2

Value xi
30/1/2014 10,000.00
28/2/2014 10,635.31 6.4% 1.7% 0.22%
31/3/2014 10,641.46 0.1% 1.7% 0.03%
30/4/2014 11,103.62 4.3% 1.7% 0.07%
30/5/2014 11,003.88 -0.9% 1.7% 0.07%
30/6/2014 11,329.41 3.0% 1.7% 0.02%
31/7/2014 11,363.36 0.3% 1.7% 0.02%
29/8/2014 11,671.36 2.7% 1.7% 0.01%
30/9/2014 12,055.69 3.3% 1.7% 0.03%
31/10/2014 11,944.22 -0.9% 1.7% 0.07%
28/11/2014 12,074.41 1.1% 1.7% 0.00%
29/12/2014 11,968.78 -0.9% 1.7% 0.07%
0.60%

𝝈 = 𝟐. 𝟒%
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

We can observe that the computed standard deviation for a portfolio goes down as
the component stocks increase in number. Notice that the PSEi has the least volatility
because it is composed of 30 stocks.
Learning Task:
Activity 1.1 Measure the investment risk by computing the standard deviation (%) of
the following stocks and the PSEi.
1. AC
Year Portfolio Return x̄ (xi-x̄)2
Value xi
30/1/2014 524.00
28/2/2014 575.00 1.1 2 3.1
31/3/2014 578.00 1.2 3.2
30/4/2014 624.00 1.3 3.3
30/5/2014 618.00 1.4 3.4
30/6/2014 647.00 1.5 3.5
31/7/2014 658.00 1.6 3.6
29/8/2014 700.50 1.7 3.7
30/9/2014 740.00 1.8 3.8
31/10/2014 690.00 1.9 3.9
28/11/2014 694.00 1.10 3.10
29/12/2014 694.00 1.11 3.11
4

2. JGS 𝝈=𝟓
Year Portfolio Return x̄ (xi-x)2
Value xi
30/1/2014 39.400
28/2/2014 46.900 1.1 2 3.1
31/3/2014 49.500 1.2 3.2
30/4/2014 50.600 1.3 3.3
30/5/2014 49.300 1.4 3.4
30/6/2014 51.250 1.5 3.5
31/7/2014 53.000 1.6 3.6
29/8/2014 51.450 1.7 3.7
30/9/2014 57.900 1.8 3.8
31/10/2014 63.800 1.9 3.9
28/11/2014 61.650 1.10 3.10
29/12/2014 66.000 1.11 3.11
4

𝝈=𝟓

3. Given below data, compute and describe the standard deviation of the PSEi stocks. List
suggested ways to minimize or reduce investment risk
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

PSEi

Year Portfolio Return x̄ (xi-x)2

Value xi
30/1/2014 6,041.19
28/2/2014 6,424.99 1.1 2 3.1
31/3/2014 6,428.71 1.2 3.2
30/4/2014 6,707.91 1.3 3.3
30/5/2014 6,647.65 1.4 3.4
30/6/2014 6,844.31 1.5 3.5
31/7/2014 6,864.82 1.6 3.6
29/8/2014 7,050.89 1.7 3.7
30/9/2014 7,283.07 1.8 3.8
31/10/2014 7,215.73 1.9 3.9
28/11/2014 7,294.38 1.10 3.10
29/12/2014 7,230.57 1.11 3.11
4
𝝈=𝟓

Scoring Rubric (If necessary)

Reflection:
The learners will write their personal insights about the lesson using the prompts
below: I understand that .
I realize that .

References for learners

Comission on Higher Education. (2016). In Business Finance (pp. 300-313). Diliman,

Quezon City: Comission on Higher Education.

https://www.yourarticlelibrary.com/financial-management/risk-and-returns-concept-of-
risk-and-returns/43819. (n.d.).

Answer Key
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

1. AC 2. JGS
1.1 9.73% 3.1 0.50% 1.1 19.0% 3.1 1.970%
1.2 0.52% 3.2 0.05% 1.2 5.5% 3.2 0.003%
1.3 7.96% 3.3 0.28% 1.3 2.2% 3.3 0.077%
1.4 -0.96% 3.4 0.13% 1.4 -2.6% 3.4 0.573%
1.5 4.69% 3.5 0.04% 1.5 4.0% 3.5 0.011%
1.6 1.70% 3.6 0.01% 1.6 3.4% 3.6 0.025%
1.7 6.46% 3.7 0.14% 1.7 -2.9% 3.7 0.628%
1.8 5.64% 3.8 0.09% 1.8 12.5% 3.8 0.568%
1.9 -6.76% 3.9 0.89% 1.9 10.2% 3.9 0.269%
1.10 0.58% 3.10 0.04% 1.10 -3.4% 3.10 0.701%
1.11 0.00% 3.11 0.07% 1.11 7.1% 3.11 0.042%
2 2.69% 4 2.24% 2 5% 4 4.867%
5 4.7% 5 6.98%

3. PSEi
1.1 6.4% 3.1 0.219%
1.2 0.1% 3.2 0.026%
1.3 4.3% 3.3 0.071%
1.4 -0.9% 3.4 0.066%
1.5 3.0% 3.5 0.017%
1.6 0.3% 3.6 0.019%
1.7 2.7% 3.7 0.011%
1.8 3.3% 3.8 0.026%
1.9 -0.9% 3.9 0.067%
1.10 1.1% 3.10 0.003%
1.11 -0.9% 3.11 0.065%
2 1.7% 4 .0591%
5 2.4%

a) Solution for Standard Deviation (σ)

= √0.0059 =√0.00059 = √0.00059 = 0.02431 or 2.4%
11−1 10

b) Answers may vary

 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

LEARNER’S PACKET TEMPLATE

Key Stage 4
BUSINESS FINANCE
Quarter 2 (Week 5 & 6)

Content The learners demonstrate an understanding of the philosophy and

Standards practices in personal finance.
Performance The learners shall be able to identify money management philosophy.
Standards

Learner’s Packets
Lear Vide
Most
ner’ os/
Essential
s LM Visua
Learning Pre- Conte *Activ
Text Mat page ls/
Competen requisites nt ity
Book/References erial num Audi
cies Sheets
s ber o
(MELCs)
(LM Mate
s) rials
Retrieved from
http://www.bhojvir
tualuniversity.com
Fundame /slm/mba1p6.pdf
Money
Enumerate ntals of Mana
Manag
money Accountan ging Commission on
manageme cy, Perso Higher Education. ement
None Philoso
nt Business nal (2016). In
philosophi and Finan Business Finance). phies
es Managem ce Diliman, Quezon
ent 2 City: Commission
on Higher
Education. (pp.
314-323)

LEARNER’S ACTIVITY SHEET (LAS) Week 5-6

BUSINESS FINANCE

Name of Learner
Grade level and Section

Date

MONEY MANAGEMENT PHILOSOPHIES

Learning Competency with code:

Enumerate Money Management Philosophies ABM_BF12-IVo-p-26
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

We usually think, what we will do, with the money when we won in a lottery?
We always see a long queue of people trying their luck in lotto outlet when, the prize
money goes up and no one wins in several draws.

Have you tried to calculate the probability, of winning if ever you buy a single
ticket or a combination? Probably not, because we always try our fortune to become
an instant millionaire.

Many Filipinos, see the lottery as a shortcut to financial freedom. They see it’s
the great escape to poverty. Some lotto winners have changed their lives after
winning. We also heard few winners who went to rags to riches and rags again and
probably wondered how they spend huge amount money quickly and went back to
poverty again. This also true for some individuals who mismanage their finances. This
might not happened if they have adhered to some basic principles in money
management.

Forbes Magazines listed the Philippine’s Richest Individuals in 2020. Included

in the top 10 are listed below.

No Net worth Sources of Wealth

Name
. (USD)
1 Sy Siblings $13.9 billion Diversified
2 Manuel Villar $5 billion Real estate
3 Enrique K. Razon $4.3 billion Ports

4 Lance Gokongwei & Siblings $4.1 billion Diversified

5 Jaime Zobel de Ayala $3.6 billion Diversified

6 Andrew Tan $2.3 billion Diversified

7 Lucio Tan $2.2 billion Diversified
8 Ramon Ang $2 billion Diversified
9 Tony Tan Caktiong $1.9 billion Food
10 Lucio and Susan Co $1.7 billion Retail
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

https://www.forbes.com/sites/forbespr/2020/09/16/tycoons-on-2020-forbes-
philippines-rich-list-see-fall-in-wealth-due-to-pandemic-disruption/?sh=7d8a4f171c72

Looking at the list, we can say that none of them won the lottery and not
everyone inherited their riches from their ancestors. Some stories of them started to
scratch and work hard to make their way up. Not everyone is expected to join these
individuals in the list, but then we can be guided to follow the steps they took to
success and avoid pitfall of those who failed.

10 BEST FINANCIAL PHILOSOPHIES

1. You are responsible for your own wealth

Your Financial status at any given point of time is due to the series of your
actions taken in the past. It’s the small steps that count to give desired results.
Whether it is taking a mortgage for vehicles or creating an asset, whatever you do to
make your Financial life better, have consequences. Knowing what’s the difference
between Good Debt and Bad Debt, is what are your Assets and Liabilities and how you
make decisions in everyday life. These decisions are going to stack up and form your
Financial Status 10–15 years down the line. You yourself are responsible for your
Financial Status at any given point of time in your life.

2. Getting out of debt is an emergency

After knowing the difference between Good Debt and Bad Debt. Good Debt is
something that will help you increase your income, it is taken to buy Assets. Bad Debt
is used to buy Liabilities.
“If you are in any kind of Debt, just remember one thing. Coming out of your
Debt should be your top priority.”

3. Always take free money

When someone is offering free cash, never say no. May be he doesn’t know the
value of a dollar, but you should. Always accept free cash.

4. Super frugality is a waste of time and money

There are several blogs and podcasts that teaches you how to be super frugal
and create everything by yourself. It doesn’t work always. Sometimes it’s your
waste of time and resources.
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

“Don’t try to create soap at home by yourself. It is inexpensive and saves time if you
buy it from local shops. Don’t be that frugal.”
Live and enjoy your life. It’s OK to spend some Dollars on entertainment and
other stuff that makes you happy. Don’t be in saving mode throughout your life.

5. Credit cards make spending cheaper when correctly used

Credit cards usually have cash backs in the form of points. Take maximum
advantage of your credit card’s features. But at the same time, use it wisely.
“Most of the items we purchase are not required, with money that we don’t
have, by using our Credit Cards.”
Pay credit card bills in full and on time. Use it wisely and purchase only
required things. Don’t buy unnecessary stuff just because you are getting free cash
temporarily.

6. Avoid bank fees

Avoid having savings or checking accounts in Banks that charge you. Banks
should not charge you to have your money with them.
They give your money to others and make more money, and charge you as well. Stop
having accounts in Banks that charge you with different fees.

7. Automate your finances

Prefer automatic payments of credit card bills, utility bills and other bills which
can be automated.
This not only saves time and energy but avoids penalties in case of late
payments. Let the software do its job and set for auto-payments of bills.
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

8. Savings Accounts are stupid

You get less interest in Savings accounts. Keeping huge chunk of cash in savings
account isn’t wise when you can get more interest money somewhere else. Invest in
liquid or debt funds and close your savings account.

9. Materialism inhibits wealth building and leads to debt

Don’t be a materialistic person. Don’t buy things that you don’t need.
Such things will eat your money, time and energy and avoid you from focusing and
building your wealth. Follow the principle of ‘less is more’. Avoid buying unnecessary
stuff and have less material things. It will save your time and money.

10. Budgeting makes smart people smart with money

Having a Budget has proved to be one of the ways to become smart in financial
planning.
You should know your spending patterns and where you can cut your unnecessary
expenses. There are many free apps available of play stores that will help you to have
monthly budget.

PERSONAL FINANCE

Personal finance includes all financial decisions and activities of an individual

including budgeting, insurance, mortgage planning, savings, and retirement planning.
• It involves analyzing current financial positions, projecting short-term and long-
term funding needs, and executing a plan to fulfil those needs considering individual
financial constraints.
• It is primarily dependent on one’s earnings, cost of living, and personal goals and
wants.
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

PERSONAL FINANCIAL PLANNING PROCESS.

(Source: Private Financial Design. (2016). Privatefinancialdesign.com.

Retrieved 8 May 2016, from http://privatefinancialdesign.com)

A. Objective Setting

• Quantify monetary objectives with definite time frames.

• Prioritize objectives.
• Examine these objectives with an individual’s resources and limitations.
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

B. Data gathering

• Use surveys, questionnaires, and interviews to gather quantitative and

qualitative information from the individual.
• Quantitative – for assessing financial status (i.e. investments, cash flow, liabilities,
etc.)
• Qualitative – to identify individual’s goals and objectives, lifestyle, risk-
tolerance, etc.

C. Data Analysis
• Analyze the individual’s financial position and cash flows.
Review legal papers (i.e. insurance policies, trust agreements, wills, etc.).

• Evaluate objectives vis-à -vis the individual’s resources and economic conditions.

D. Financial Plan Recommendation

• Propose financial products.

• At this point, the individual can comment on the proposed solutions.

E. Plan Implementation
• Assist the individual in the execution of the recommended financial plan.
• Implementation may involve other entities so assist the individual in dealing with
the parties involved in the execution of the financial plan.

F. Plan Monitoring
• Review the financial plan periodically to evaluate changing market conditions (i.e.
economic conditions, taxes
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

Six Key Areas of Personal Financial Planning.

Financial Adequate Tax Investment Understand Estate

Position Protectio Planning and ing the Planning
n Accumulati cost of
on Goals retirement

• Understandi • Analysis • • Planning Understandi Planning for

ng of of Managemen on wealth ng the cost disposition
personal protection t of when accumulatio of of one’s
resources by needed for and how n for large retirement. assets after
checking an unforesee much taxes purchases death.
• Analysis of
individual’s n risks. will be paid. such as
cash flows • Estate
net worth house,
• Includes • to come up taxes paid
and cash educational
risks of Understandi with to the
flow. expenses,
liability, ng possible investment government
investments
• Net worth = property, tax plans that are huge, so
for
assets less death, incentives, will meet avoiding
retirement,
liabilities at disability, deductions, the costs of these taxes
etc.
a point in health, rebates, etc. retirement can
time and long- can have a • May need in the significantly
term care. significant to answer future. impact one’s
• Cash flow =
impact on the personal
expected • Some • May need
managing following finances.
sources of insurance to answer
personal questions:
income less plans the following • May need
finances
expected enjoy • What are questions: to answer
given the
expenses some tax their goals the following
magnitude • How are
within a benefits. for wealth questions:
of taxes paid they
period (i.e. accumulatio
• May by an preparing • How
year) n? (i.e.
need to individual. for their should their
education,
• Helps in answer retirement? assets be
• May need home,
determining the distributed
to answer business, • How are
the time following upon death?
the following retirement their
frame to questions:
questions: comfort, liabilities • How will
which
• What etc.) affecting their
personal • How do
things can their intentions
goals can they • How are be carried
they not retirement
realistically manage their out? (i.e.
afford to objectives?
be met. their taxes? current will, trust,
lose?
investments • Do they power of
• May need • How do
• How will performing think they attorney,
to answer they plan
they take can etc.)
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

the following care of the timing of to meet maintain

questions: their income and their goals? their
dependent deductions standard of
• Do they • How much
s? for tax living during
have a clear will they
purposes? their
understandi • How need? When
will they retirement?
ng of their have they • Are they
goals? planned comfortable need it?
for with the tax
• How do financial environment
they track risks such applicable
their income, as to them?
expenses, disability,
and net illness,
worth? long-term
• What care, and
financial death?
benefits do
they get from
their
employer?
B. Adequate
Protection

Learning Tasks

Activity 1. Match the step in the personal financial planning process in column A
with its description in column B by writing the capital letter on the left side of column
A.

(A) Personal Financial

Planning Process Step
(B) Description

1 Data Gathering A. Periodic review of the financial plan to

evaluate changing market conditions (i.e.
economic conditions, taxes, interest rates,
etc.).
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

2 Financial Plan B. Quantifying monetary objectives with

Recommendation definite time frames. Prioritizing objectives.
3 Plan Monitoring C. Using surveys, questionnaires and
interviews to gather quantitative and
qualitative information from the
individual.
4 Objective Setting D. Analysis of the individual’s financial
position and cash flows. Review of
legal papers. Evaluation of
objectives vis-à -vis the client’s resources
and

economic conditions

5 Data Analysis E. Financial products will be proposed. At

this point, the individual can comment on
the solutions proposed.

Activit y 2. Identify the key area s of personal financial planning in column A with its
descri ption in column B by arranging the letters on the left side of column A.

(A) Key Area of Personal F inancial (B) Description

Planning
- Analysis of the individual’s
financial position and cash flows.
1. AADT GTEHAINGR Review of legal papers.
Evaluation of objectives vis-à -vis
the client’s resources and
economic
2. LAFINCNAINPALMMENNOITR conditions
EOCAD - Quantifying monetary objectives
with definite time frames.
3. GNI RINTMOOALPN Prioritizing objectives.
- Financial products will be
proposed. At this point, the
individual can comment on the
4. TTGNESIVEITCEJOB solutions proposed.
- Using surveys, questionnaires
and interviews to gather
quantitative and qualitative
information from the individual.
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

5. ISSLAANYAATD - Periodic review of the financial

plan to evaluate changing market
conditions (i.e. economic
conditions, taxes, interest rates,
etc.).

Activity 3. Write T if the given st atement is true and F if false.

1 Spending patterns and is where you can cut your unnecessary expenses.
.
2 Quantitative is to identify individual’s goals and objectives, lifestyle, risk-
. tolerance, etc.
3 Keeping huge amount of cash in savings account isn’t wise when you can
. get more interest money somewhere else.
4 Your Financial status at any given point of time was not due to the series
. of your actions taken in th e past.
5 Having a Budget has proved to be one of the ways to become smart in
. financial planning

Activity 4. Enumeration
1. What are the 10 Best Financia l Philosophies?
2. Create your own diagram show ing the Personal Financial Planning Process.

Scoring Rubric (If necessary)

Reflection
The learners will write their personal insights about the lesson using the prompts
below:

I understand that .
I realize that .

References for learners

Commission on Higher Education. (2016). In Business Finance). Diliman, Quezon City:
(page 314-323)
https://medium.com/datadriveninvestor/10-best-financial-philosophies-to-improve-
your-personal-finances-18426eb080f9
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

Answer Key
Activity 1 Activity 2 Activity 3.
1. T
6. C 6. Data Gathering
2. F
7. E 7. Financial Plan
3. T
8. A Recommendation
4. F
9. B 8. Plan Monitoring
5. T
10. D 9. Objective Setting
10. Data Analysis

Activity 4. Enumeration

1. 10 Best Financial Philosophies

1. You are responsible for your own wealth
2. Getting out of debt is an emergency
3. Always take free money
4. Super frugality is a waste of time and money
5. Credit cards make spending cheaper when correctly used
6. Avoid bank fees
7. Automate your finances.
8. Savings Accounts are stupid.
9. Materialism inhibits wealth building and leads to debt
10. Budgeting makes smart people smart with money

2. Answers may Vary

1. Objective Setting
2. Data gathering
3. Data Analysis
4. Financial Plan Recommendation
5. Plan Implementation
6. Plan Monitoring
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

LEARNER’S PACKET TEMPLATE

Key Stage 4
BUSINESS FINANCE
Quarter 2 (Week 7 & 8)

Content The learners demonstrate an understanding of the philosophy and

Standards practices in personal finance.
Performance The learners shall be able to apply basic personal finance principles
Standards and practices in earning, spending, saving, and investing money.

Learner’s Packets
Most Videos
Essential Learne /
Pre- LM
Learning Conte Text r’s Visuals *Activit
requisit page
Competen nt Book/Refer Materi / y
es numb
cies ences als Audio Sheets
er
(MELCs) (LMs) Materi
als
Illustrate
the money
manageme
nt cycle Cayanan,
and gives Fundam Arthur
examples entals of Mana S.Borja, The
of sound Account ging Daniel Money
practices ancy, Perso Vincent H. None Manage
in earning, Business nal (2017). ment
spending, and Finan Business Cycle
saving, Manage ce Finance.
and ment 2 (pp.
investing 132-
money 137)

LEARNER’S ACTIVITY SHEET (LAS) Week 7-8

BUSINESS FINANCE

Name of Learner
Grade level and
Section
Date

THE MONEY MANAGEMENT CYCLE

Learning Competency with code:

 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

Illustrate the money management cycle and gives examples of sound practices in
earning, spending, saving, and investing money. ABM_BF12-IVo-p-27

Learning Context:
THE INDIVIDUAL’S LIFE CYCLE PHASES
Brown and Kelly (2014)

1. Accumulation phase
This stage started when you first begin earning an income, in the early phase of
your respective career. Since relatively young they can afford to take high-risk
investment, for they can simply start again if they fail in some of their
investments. And in this stage they still “accumulating” assets that will satisfy
their individual goals, so in this budgeting is the critical financial skill that need
to master. Develop a suitable budget and build the discipline to live within your
income so that you don’t fall into a debt trap.

2. Consolidation phase
This stage already have the necessary assets required of a typical household and
have settled mostly their outstanding liabilities. Major concern at this phase
include the ability to pay typical needs of their children such as education (from
grade to college). Individuals also fulfill family objectives like going on vacation and
purchase luxury goods, but then of course prioritizing first typical needs.
The net worth (assets less liabilities) of individuals at the consolidation phase
significantly increases compared to the accumulation phase mainly because of the
increase in earnings (higher salary or reaping benefits from earlier investments)
and settlement of the mortgages they entered into previous stage.

3. Spending phase
Retired individuals belong on this stage. In the accumulation phase, budgeting is
the critical skill that need to master and during retirement it becomes the main
focus in finance once again. The objective now is to control expenses since their
pension should be able to cover their daily needs yet if they have excess beyond
this source they can enjoy the fruits of their labor throughout their working
career.

4. Gifting phase
Not everyone is expected to reach this phase and most of the time this stage is
concurrent with the consolidation phase. This stage focuses on how individual
provides support to the family member, friend or any charitable institution.
Example this is the allocation of funds to your beneficiaries in case of your death
or even during your remaining years.

THE MONEY MANAGEMENT CYCLE

 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

Investing
Income

Spending Saving

BASIC PRINCIPLES OF PERSONAL FINANCE MANAGEMENT

By Keown (2010)

1. The Best Protection is Knowledge

2. Nothing Happens Without a Plan
3. The Time Value of Money
4. Taxes Affect Personal Finance Decision
5. Stuff Happens, or the Importance of Liquidity
6. Waste Not, Want Not- Smart Spending Matters
7. Protect yourself Against Major Catastrophes
8. Risk and Return Go Hand in Hand
9. Mind Games and Your Money
10. Just Do It.

Personal financial management requires an understanding of the basic

finance concepts such as time, value of money, risk-return trade-off etc. It is
prerequisite that the individual reads the fine print of investment schemes offered to
him before deciding to allocate part of his funds in these schemes.

It is also important that he must assess his ability and willingness to take on
risk in order to properly set his investment objectives. This includes evaluating his
present stage in an individual’s life cycle.
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

With these consideration in mind, it is then up to the individual to simply

decide and put into action his financial plan. Developing this financial plan is not
exclusive to a certain age or financial standing. Everyone, including high school
students, should simply start now.

Learning Task:

Self-Test Questions (5 points each). Answer the following questions.

1. What are the different phases of an individual’s life cycles?

2. Provide example of sound practices in earning, spending, saving and investing
money.
3. What should be the risk and return objective of the individual at each phase?

B. Illustrate your own money management cycle using a diagram.

Scoring Rubric (If necessary)

Reflection
The learners will write their personal insights about the lesson using the prompts
below:

I understand that .
I realize that .

References for learners

Cayanan, Arthur S.Borja, Daniel Vincent H. (2017). Business Finance. In Business

Finance (pp. 132-137). Metro Manila: Rex Book Store.
 Republic of the Philippines
Department of Education
REGION IV-A CALABARZON
SCHOOLS DIVISION OF SAN PABLO CITY

Answer Key
1. Accumulation phase, Consolidation phase, Spending phase, Gifting phase.
2- 4 Answers may vary

Prepared by:
EMILY D. ESCONDO
Teacher – Writer

For inquiries or feedback, please write or call:

Department of Education – Schools Division of San Pablo City

Rizal Avenue, San Pablo City
Contact details: (049) – 562 7216 * (049) – 503 5960
Email Address: