Stock Market Game PP


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Stock Market Game PP

  1. 1. The Stock Market Game 2008
  2. 2. What will we learn? <ul><li>Real-world math applications </li></ul><ul><li>Real-world economics concepts </li></ul><ul><ul><li>Supply & demand </li></ul></ul><ul><ul><li>Opportunity costs </li></ul></ul><ul><ul><li>Current events </li></ul></ul><ul><ul><li>Financial markets </li></ul></ul>
  3. 3. What else? <ul><li>Business concepts </li></ul><ul><ul><li>Marketing </li></ul></ul><ul><ul><li>Finance </li></ul></ul><ul><li>Collaboration skills </li></ul><ul><ul><li>Time management </li></ul></ul><ul><ul><li>Decision-making </li></ul></ul><ul><ul><li>Cooperation </li></ul></ul>
  4. 4. Rules of the game <ul><li>Each team begins with $100,000 </li></ul><ul><ul><li>You may borrow against the equity in your account at a rate of 7%. </li></ul></ul><ul><li>You may trade only on stocks listed on the </li></ul><ul><ul><li>American Stock Exchange (AMEX) </li></ul></ul><ul><ul><li>NASDAQ </li></ul></ul><ul><ul><li>New York Stock Exchange (NYSE) </li></ul></ul>
  5. 5. Rules of the game <ul><li>Must buy a minimum of 100 shares </li></ul><ul><li>Sell orders of less than 100 are permitted </li></ul><ul><li>You may not buy stocks that trade at less than $5 per share. </li></ul><ul><li>A 2% broker’s fee is charged for all transactions. </li></ul>
  6. 6. Question <ul><li>If a team sells 200 shares of Intel stock at $32 per share, how much will they pay in broker’s fees? </li></ul><ul><li>200 x 32 = 6400 </li></ul><ul><li>6400 x .02 = 128 </li></ul><ul><li>$128 in broker’s fees </li></ul>
  7. 7. More rules <ul><li>You can trade 7 days a week, 24 hours a day. </li></ul><ul><li>Stock dividends and splits will be added directly into your portfolio. </li></ul><ul><li>To be eligible for awards, teams must trade a minimum of four (4) different stocks during their trading session. </li></ul>
  8. 8. Rules… <ul><li>Stocks may be liquidated any time the team feels that stock is no longer of benefit. </li></ul><ul><li>Teams may invest no more than 30% of their total equity in any one company. If a stock in which teams have invested becomes more than 30% of the total equity, teams will be able to maintain that position but will be unable to purchase additional shares of that company. </li></ul>
  9. 9. What Is Stock? <ul><li>Ownership in a publicly held company </li></ul>
  10. 10. Why do people buy stock? <ul><li>To make money! </li></ul><ul><ul><li>Earn dividends (cash paid to investors from company profits) </li></ul></ul><ul><ul><li>By selling the stock at a higher price </li></ul></ul>
  11. 11. Risk Tolerance <ul><li>Issues that contribute to an investor’s risk tolerance: </li></ul><ul><ul><li>Age </li></ul></ul><ul><ul><li>Health </li></ul></ul><ul><ul><li>Overall financial outlook </li></ul></ul><ul><li>Risk is classified as low, moderate, and high </li></ul><ul><ul><li>Activity Sheet </li></ul></ul>
  12. 12. IPO <ul><li>Before you can buy stock in a company, it has to “go public.” </li></ul><ul><li>The initial stock offering is known as an IPO (Initial Public Offering). </li></ul>
  13. 13. Two forms of stock <ul><li>Common and Preferred </li></ul><ul><li>Common – provides holder with the right to vote on major company issues and on who will serve on the company’s board of directors. </li></ul>
  14. 14. More on Common Stock <ul><li>Common stock is usually more prone to rapid change than preferred stock, therefore is more risky. </li></ul>
  15. 15. Preferred Stock <ul><li>Holders do not have voting rights and the stock usually does not grow or drop in value as much as common stock. </li></ul><ul><li>Is usually more expensive. </li></ul><ul><li>If the company issues dividends, preferred stock holders are paid first. </li></ul>
  16. 16. Diversification <ul><li>Don’t put all your eggs in one basket. </li></ul>
  17. 17. Diversify <ul><li>Spread your investment dollars out over various industry sectors. </li></ul><ul><ul><li>Pharmaceutical </li></ul></ul><ul><ul><li>Technology </li></ul></ul><ul><ul><li>Utilities </li></ul></ul><ul><ul><li>Consumer Goods </li></ul></ul><ul><ul><li>Health Services </li></ul></ul><ul><ul><li>Home Improvement </li></ul></ul>
  18. 18. Mutual Funds <ul><li>A collection of stocks and bonds owned by a group of investors. </li></ul><ul><li>Managed by a “fund manager”. </li></ul><ul><li>Ticker symbols are 5 letters long and end in an X. Example: FBGRX </li></ul>