Securities Traded on the Stock Exchange for SS 3

Class: SS 3
Term: First Term
Week: 8
Age: 16-17 years
Duration: 45 minutes
Subject: Commerce
Curriculum Theme: Business Finance
Previous Lesson: Meaning, Functions and Organisation of the Stock Exchange
Topic: STOCK EXCHANGE
Subject Matter: Securities; meaning, types, shares, stocks, bonds, gilt- edged and debentures; Capital market; method of raising fund, offer for sale, offer/subscription, right issue, private placement; Speculation; meaning, speculators, bull, bear and stage

Specific Objectives

By the end of the lesson, pupils/students should be able to:

Cognitive Domain

• Define securities and identify their various types.
• Explain the meaning of capital market and describe methods of raising funds.
• Define speculation and differentiate between bull and bear speculators.

Affective Domain

• Appreciate the role of the stock exchange in economic development.
• Show interest in understanding market dynamics and investment opportunities.

Psychomotor Domain

• Participate in a role-play demonstrating stock exchange transactions.
• Identify examples of different securities in real-world scenarios.

Reference Materials

The following resources were used in planning this lesson:

• 2025 Revised 9 Years Basic Education Curriculum
• Relevant State Unified Scheme of Work
• Essential Commerce for Senior Secondary Schools by O.A. Longe
• The HeadTeacher Scheme of work

Instructional Materials

The teacher will teach this lesson with the aid of:

• Charts showing different types of securities (shares, bonds).
• Diagrams illustrating the capital market structure.
• Pictures of stockbrokers and stock exchange trading floors.
• Whiteboard and markers.

Rationale for the Lesson

This lesson is important as it provides students with a fundamental understanding of financial markets and investment instruments. Knowledge of securities, capital markets, and speculation is essential for future entrepreneurs, investors, and informed citizens. It helps students grasp how businesses raise capital and how market forces operate.

Prerequisite/Previous Knowledge

Students should have a basic understanding of business organizations and sources of business finance.

Lesson Content/Board Summary

STOCK EXCHANGE

Meaning of Securities

Securities are financial instruments that represent a monetary value and can be traded. They are generally classified as debt securities (like bonds) or equity securities (like shares).

Types of Securities

1. Shares: Units of ownership in a company.
   1. Ordinary Shares: Represent ownership and voting rights, with variable dividends.
   2. Preference Shares: Carry fixed dividends and priority in payment but usually no voting rights.
2. Stocks: A general term for a collection of shares or other securities. Often used interchangeably with shares, but can also refer to government bonds.
3. Bonds: Debt instruments issued by governments or corporations to raise capital. Bondholders lend money and receive periodic interest payments, with the principal repaid at maturity.
4. Gilt-edged Securities: High-quality bonds issued by governments, considered very safe due to the low risk of default. They are highly liquid and have a stable market.
5. Debentures: Long-term debt instruments issued by companies, usually unsecured, meaning they are not backed by specific assets. Debenture holders are creditors of the company.

Capital Market

The capital market is a financial market where long-term funds are raised by companies and governments. It deals with the issuance and trading of long-term debt and equity-backed securities.

Methods of Raising Funds in the Capital Market

1. Offer for Sale: Existing shares are sold by an issuing house (e.g., an investment bank) to the public. The issuing house buys the shares from the company and resells them.
2. Offer for Subscription (or Offer): New shares are directly offered by a company to the public for subscription. The public applies for the shares, and the company allots them.
3. Right Issue: New shares are offered to existing shareholders in proportion to their current shareholdings. This allows existing shareholders to maintain their percentage of ownership.
4. Private Placement: Shares or other securities are sold directly to a select group of large investors (e.g., institutions, wealthy individuals) rather than to the general public.

Meaning of Speculation

Speculation is the act of engaging in risky financial transactions in an attempt to profit from short-term price fluctuations in a market. Speculators try to predict market movements.

Speculators

Speculators are individuals or entities who take high risks in financial markets, hoping to make quick profits from short-term price changes. They do not hold assets for long-term investment.

Types of Speculators

1. Bull: A speculator who buys securities with the expectation that their prices will rise in the near future. Bulls aim to profit by selling at a higher price.
2. Bear: A speculator who sells securities (often by borrowing them) with the expectation that their prices will fall. Bears aim to profit by buying back the securities at a lower price.

Stages of Speculation

Speculation often thrives in volatile market conditions or stages. These stages can be characterized by:

1. Boom Stage: A period of rapid economic growth and rising asset prices, often fueled by optimistic sentiment and increased speculative buying (bullish activity).
2. Bust Stage: A period of sharp decline in asset prices, often triggered by a loss of confidence, leading to panic selling (bearish activity) and market crashes.

Teaching Methods/Instructional Techniques

Discussion, Explanation, Question and Answer, Role-play, Group Work

Instructional Procedures

Step 1: Introduction

Time: 5 minutes

Teaching Skill: Activating Prior Knowledge

Teacher’s Activity: The teacher greets the students and asks questions about how companies raise money for their operations and what they understand by ‘investment’. The teacher then introduces the topic: Stock Exchange, focusing on securities, capital market, and speculation.

Pupils’ Activity: Students respond to questions and listen attentively to the introduction.

Learning Point: Introduction to Stock Exchange

Step 2: Explanation of Securities

Time: 8 minutes

Teaching Skill: Explanation/Definition

Teacher’s Activity: The teacher defines securities and explains the various types: shares (ordinary and preference), stocks, bonds, gilt-edged securities, and debentures, using charts for illustration. The teacher ensures students understand the differences between them.

Pupils’ Activity: Students listen, ask questions for clarification, and observe the charts.

Learning Point: Understanding different securities

Step 3: Capital Market and Fund-Raising Methods

Time: 8 minutes

Teaching Skill: Explanation/Illustration

Teacher’s Activity: The teacher explains the concept of the capital market and details the methods companies use to raise long-term funds: offer for sale, offer for subscription, right issue, and private placement. The teacher provides simple examples for each method.

Pupils’ Activity: Students listen and take notes, asking questions about the fund-raising methods.

Learning Point: Capital market fund-raising

Step 4: Role-play Stock Exchange Transactions

Time: 7 minutes

Teaching Skill: Demonstration/Guided Practice

Teacher’s Activity: The teacher guides students to role-play a simple transaction on the stock exchange. The teacher can assign roles like ‘broker’, ‘buyer’, ‘seller’, and ‘company representative’ to demonstrate how securities are bought and sold.

Pupils’ Activity: Students participate actively in the role-play, acting out their assigned roles.

Learning Point: Practical stock exchange operations

Step 5: Introduction to Speculation

Time: 5 minutes

Teaching Skill: Explanation/Concept Introduction

Teacher’s Activity: The teacher defines speculation and introduces the concept of speculators, explaining their role in the market. The teacher also explains the terms ‘bull’ and ‘bear’ speculators and their market actions.

Pupils’ Activity: Students listen and contribute to the discussion on speculation.

Learning Point: Meaning of speculation

Step 6: Stages of Speculation and Guest Speaker

Time: 4 minutes

Teaching Skill: Explanation/Guest Interaction

Teacher’s Activity: The teacher explains the concept of “stages” in speculation, linking it to market conditions like boom and bust. If possible, the teacher invites a ‘speculator’ (another teacher or a student playing the role) to talk briefly about their experience, focusing on risks and rewards. Students are encouraged to ask questions.

Pupils’ Activity: Students listen to the explanation and the ‘guest speaker’, asking relevant questions.

Learning Point: Speculation market stages

Step 7: Evaluation/Review

Time: 5 minutes

Teaching Skill: Questioning/Assessment

Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

1. What are securities?
2. Mention two types of shares.
3. Name two methods of raising funds in the capital market.
4. Who is a ‘bull’ speculator?

Pupils’ Activity: Pupils answer orally and in writing.

Learning Point: Assessment of understanding

Step 8: Note-Taking

Time: 4 minutes

Teaching Skill: Guided Writing

Teacher’s Activity: The teacher guides pupils/students to copy the essential Board Summary notes on securities, capital market, and speculation into their notebooks.

Pupils’ Activity: Pupils/students copy the notes carefully into their notebooks.

Learning Point: Recording lesson content

Step 9: Conclusion

Time: 2 minutes

Teaching Skill: Consolidation

Teacher’s Activity: The teacher briefly summarizes the key points of the lesson, emphasizing the importance of understanding financial markets for personal and national economic growth. The teacher encourages students to continue researching the stock exchange.

Pupils’ Activity: Students listen and reflect on the lesson’s main points.

Learning Point: Lesson consolidation

Continuous Assessment/Further Study

Type: Homework

Instruction: Answer the following questions in your Commerce notebook.

1. Differentiate between shares and debentures.
2. Explain the term ‘gilt-edged securities’ and state one characteristic.
3. Describe two methods by which a company can raise funds from the capital market.
4. In your own words, explain the difference between a bull and a bear in the stock market.
5. Research and write a short paragraph on why speculation can be risky.

Lesson Keywords

• Securities – Financial instruments representing monetary value.
• Shares – Units of ownership in a company.
• Bonds – Debt instruments issued by governments or corporations.
• Gilt-edged – High-quality government bonds.
• Debentures – Unsecured long-term debt issued by companies.
• Capital Market – Market for long-term funds.
• Offer for Sale – Existing shares sold by an issuing house.
• Right Issue – New shares offered to existing shareholders.
• Speculation – Risky transactions for short-term profit.
• Bull – Speculator expecting price rises.
• Bear – Speculator expecting price falls.

Differentiation

For weaker learners, the teacher will provide simpler definitions and more direct examples of each security type and fund-raising method. Stronger learners will be encouraged to research current stock market news and identify examples of speculative activities or recent capital market transactions.

Suggested Lesson Videos

For further understanding, students can search YouTube for:

• “What are securities in finance”
• “Capital market methods of raising funds”
• “Bull vs Bear market explanation”

Teacher Guide for Using This Lesson Plan

Before the lesson, ensure you have prepared visual aids for different securities and the capital market. The role-play activity is crucial for practical understanding; guide students clearly through their roles. If inviting a ‘speculator’ is not feasible, you can narrate a scenario or use a short video clip. Pay close attention to students’ understanding of the differences between the various types of securities and fund-raising methods, as these can be confusing. Encourage questions throughout the lesson. Students should copy the Board Summary notes during Step 8 to ensure they have accurate information for revision. Provide additional support to learners struggling with the financial terminology and challenge advanced learners with more complex market scenarios.