Stock Market Project


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Stock Market Project

  1. 1. New Brunswick Middle School New Brunswick, New Jersey “Preparing Today for a Better Tomorrow” Stock Market Project 2005-2006 Due: Friday, June 23, 2006
  2. 2. How the stock market works Lets say you hear a tip that McDonalds is coming out with a brand new product that is supposed to double their business. You think to yourself, "Darn, I wish I owned that company." Well you can. McDonalds, along with thousands of other companies, lets the public buy part of its company. It does this through selling shares. A share is simply a piece of paper that says you own part of a company. This part is usually extremely small, perhaps thousandths of a percent of the total company, but, hey, it is a beginning. You decide you want to buy part of McDonalds. You run home, and count up all of the money you have been saving, and find out you have 250 dollars. Well you are not going to be able to buy the whole company, but it is a start. You've got the money, you know what stock you want to buy, now what? Do you go to the grocery store and ask for a dozen shares of McDonalds. Not exactly, but close. You don't go to a grocery store, but rather you call a broker. A brokerage house is your supermarket of stocks. You call up any broker and say, "Charles, I've got 250 dollars, and want to buy as much McDonalds as I can." Charles in return tells you, "Let's see, a share of McDonalds costs 20 dollars (Not the actual price), and I am going to charge you 50 dollars for my services, so you can buy 10 shares of McDonalds. " You then give Charles the money, and you get the stock. (They usually don't give you the paper stock certificates, but they transfer ownership over to you.) Voila, you have just bought stock in a company! Sounds simple enough, right? Actually it is not if you look at it from the broker's point of view. When you told the broker you wanted those 10 shares of stocks, he did not magically buy them for you, or already own them. Rather, he sent a message to another person who is working down on the floor of the New York Stock Exchange (or any other stock exchange). He tells this person to buy these stocks for you. This person is called a "Floor Broker." Now this person goes to the part of the Stock Exchange that is allotted to this particular stock. Here there are companies that specialize in this stock. This means that they will usually, if not always, buy and sell from people at the normal price. The floor broker then buys your ten shares from one of these people, reports his trade through the hundreds of computers on the floor, then reports to his colleagues back at the brokerage house that he bought the stock. The broker keeps a record that you own that stock, rather than sending you the actual paper stock certificates. If you ever want to sell them, your broker will sell them, deduct his commission, and then give you the money.
  3. 3. Got all that? Well if you did not, here it is again using a simplified example. When you want a stock, you call a broker. The broker calls a person on the floor (usually an employee of the broker). This person runs to the space that is allotted to this stock. He then buys the amount of stock from the specialists, or companies, that are there to sell and buy on a regular basis. He then tells the firm he bought it, and then you have your stock. Objectives Use the mathematics taught this year. Work cooperatively in groups. Explore buying stocks as investments. Apply decimals and fractions. Use charts in problem solving. Learn to create tables, charts, and line graphs based on statistical data using a computer. Interpret charts, drawing conclusions about the data. Present data, charts, and conclusions in an organized technical report following a set format. Present data, charts, and conclusions in front of the class in a format of your choice. Develop a basic understanding of the use and operation of Microsoft Word and Excel. Important Due Dates Friday, May 12th – Weekly Progress Report Due At the beginning of class. Friday, May 19th – Weekly Progress Report Due At the beginning of class. Friday, May 26th – Weekly Progress Report Due At the beginning of class. Friday, June 2th – Weekly Progress Report Due At the beginning of class. Friday, June 9th – Data Collections ends and assembly of project starts. Friday, June 12-16th – Work on project and presentation continues. Friday, June 23th – FINAL PROJECT SUBMISSION AND PRESENTATION.
  4. 4. Basic Project Description You have been assigned partners to act as “investment clubs”. Each individual has been “given” $10,000 to divide amongst 4 stocks. Your investment club must agree on 4 stocks to purchase. Each member of the group must purchase the same 4 stocks, but you may not purchase the same amount of a stock as another member in your club. You each have $10,000 to invest, make sure you each invest in all six stocks, and you each distribute your funds differently among the 4 stocks. You will each be submitting different reports, though you will be presenting to the class as a group, and are partnered so you can help each other as needed. Your grade will be a combination of your individual and group work. company name, stock symbol, a brief description of the company and its ties to Cincinnati, and why you want to select this company. (You may want to ask your parents if they work for a company that is publicly traded, and choose their company as one of your stocks to purchase.) You will be collecting data between May 5 – June 9. Project Deliverables (what to turn in) • Stock Choices and fund distribution due Monday, February 6th, 2006. • One-page per group listing: • The Investment Club Name and Group Number. • The six stocks the group has chosen, and their trading symbols. • A brief (one to two sentence) description of each stock (company.) • The names of the investment club members. • The current price of each stock (per share), (closing price on Wed., February 1st.) • How many shares of each stock each member of the group is purchasing, and how much this will cost per person, per stock. • These choices will be typed on the form at the end of this packet. Collect at least three closing prices for your stocks each week throughout the project. Your data will be more accurate, and you will be able to make better conclusions (perhaps earning a better grade) if you record the closing prices for your stocks each day of the week (5 per week per stock.) Record the prices in a table, either by hand, and in Excel each week. At the end of the project, you must have these prices recorded in an Excel spreadsheet and will use the data to create your graphs. Make sure you record the date for each quote (the date of the closing price, not the date you checked the internet for the data.) Weekly portfolio values due Fridays One-page per group listing: O The Investment Club Name. T The names of the investment club members. T The value of each investment club member’s portfolio – these values must be from the closing prices on Wednesday’s market. (Note that the NYSE closes at 4pm, so Wednesday’s closing prices can usually be found online Wednesday evening, in the paper Thursday, and online Thursday listed as “yesterday’s closing price”.)
  5. 5. The total value of the investment club’s holdings (based on Wednesday’s closing prices). p Average holdings per member. (Take the total for the group, and divide by the number of people in the group.) Project Report due Friday, June 23 (Each student will submit their own report.): o Title Page, with report title, your name, date, bell number, investment club name, and group number. o Table of Contents & List of Figures. o Introduction – one to two paragraphs describing the project. o Description of Stocks - For each of the six stocks you purchase, you must have: D A minimum of one paragraph describing the changes in the stock’s performance over the project timeframe. Include an explanation for significant changes. (These justifications can often be found in news releases.) Make sure you include the initial and final values of your stock (per share, as well as how much your shares were worth when purchased and then at the end of the project.) p A minimum of one paragraph explaining whether (in your opinion) this was a good stock to purchase or not, and why. (Research the performance history of the stock; this may help you to answer this question.) m A line graph (for each stock) showing the changes in the value of your shares over the course of the project. Make sure all your graphs have a figure name and number below them. Make sure your figures have titles, and appropriate x- and y-axis labels. When you are describing the stock in your body text, you may want to refer to the graph showing the stock’s progress, make sure to refer to it by figure number. Make sure to discuss the graphs in your report. g A line graph showing the progress of all six stocks on the same graph, and an explanation/interpretation of this graph. Use the per share data, not your total value for this graph. Note: We will be working on the graphs together in the computerLab. N Explain the overall changes in your portfolio. Did you make money or lose money? How much? What factors contributed to these changes? Discuss each of the following graphs: g A line graph showing the progress of all six stocks on the same graph. Use the total value of your stocks for this graph, not the per price data. v A line graph (for each stock) showing the changes in the value of your shares over the course of the project. Make sure all your graphs have a figure name and number below them. Make sure your figures have titles, and appropriate x- and y-axis labels. When you are describing the stock in your body text, you may want to refer to the graph showing the stock’s progress, make sure to refer to it by figure number. Make sure to discuss the graphs in your report. g A line graph showing the progress of all six stocks on the same graph, and an explanation/interpretation of this graph. Use the per share data, not your total value for this graph.
  6. 6. ” o Reference List R List the resources you used while working on your project, including web pages, newspapers, journals, and magazines. For formatting examples, see the listing in the Computer Lab, in the Library, or on Mrs. Cotton’s web page. Make sure your company descriptions have this information included each week. When you finish your report, copy these references into the reference section, and delete them from the body of the report. Group Presentations in class Friday, June 23, 2006 o 10-minute presentation in class explaining your group’s project. 1 Your presentation should explain which companies you chose, how they performed, and what you learned from this project. o Every group member must participate. o Get creative – you have lots of freedom on how you want to present – you could make up a skit o Start thinking about your presentation early, you don’t want to throw something together at the last minute. List of Figures (make sure titles reflect your stocks) Figure 1: stock 1 changes over time Figure 2: stock 2 Figure 3: stock 3 Figure 4: stock 4 Figure 5: the value of your six stocks on one graph (per share values) Figure 6: the value of your six stocks on one graph (total holdings values) Figure 7: your portfolio’s value Figure 8: total investment club holdings Figure 9: comparison of individual holdings with average investment club holdings
  7. 7. Reference Sheet Example: Standard Bibliography Style Sheet – 7th and 8th Grade Book Anderson, J.B. Surfing in Hawaii. New York: Marine Press, 1995. Encyclopedia Article – Author Not Given “Gaius Julius Caesar.” Encyclopedia of World Biography. Detroit: Gale, 1998. Encyclopedia Article – Author Given Joes, Anthony James. "Rome." World Book Encyclopedia. Chicago: World Book Inc., 1997. Almanac “Population of the World’s Largest Cities.” The World Almanac and Book of Facts. Mahwah, N.J.: World Almanac Books, 2001. Atlas Goode’s World Atlas. Chicago: Rand McNally and Company, 1986. Magazine Article Stein, Bart. "Caught in the World Wide Web." National Geographic World. June 1997: 24-25. CD ROM Encyclopedia “Microwave Ovens.” The Way Things Work. CD-ROM. Dorling Kindersely, 1994. Website Classics Collections. 2003. University of Florida. 10 September 2004. Encyclopedia Britannica Online "Rome." Britannica Student Encyclopedia. 2004. Encyclopædia Britannica Online School Edition.10 Aug. 2004 <>. Internet Magazine Article Wertman, Danny. “Mark Twain.” The Advocate 13 January 2002: p. 12. In NewsBank, May 9, 2002. If a book or other material does not have an author, use the title or shortened form of the title in place of the author's last name. One-page articles and encyclopedia articles do not need page numbers. If you wish to use formal bibliographic format, you may wish to list sources on a separate page with the heading "Bibliography." Sample
  8. 8. Page 4 of 14 Description and Analysis of Stocks Stock 1: Cotton Music Company, Inc. (CMC) Brothers Michael and Chris Cotton founded Cotton Music Company in 1992. Born to a talented singer for a mother, both Michael and Chris found an early love for music. By their high school years in the 1980’s, they had each learned to play multiple instruments, and were becoming especially fond of string instruments, but were frustrated by the frequent and time consuming tuning required. In college, Michael combined his education in engineering with his love of music to create the “Auto-Tuner”, a device that measures the pitch of each string (on a violin, cello, bass, guitar, etc.) and turns the pins until the correct frequency is found. He enlisted his brother Chris, who was teaching at a local conservatory in 1992, to help him pitch his auto-tuner to other teachers and performers. The tuner was an overnight hit, though the original prototype was large and cumbersome. After hiring additional engineers to refine the original design, the brothers marketed the now hand-held tuner to adult performers and music schools in several neighboring states. By 1996, the brothers’ tuner was being sold to a younger audience; children’s music teachers were starting to use the tuners to minimize the “tuning time” and increase the “play-time” in their orchestra classes. The Cotton brothers had been outsourcing the production of the tuners until 1997 when they went public, after recognizing they needed additional funding to open their own factory, making the auto- tuner affordable and easily available. Cotton Music Company now has two production plants in the Midwest, 1100 employees, and manufactures and sells a wide variety of musical supplies both direct through their website and through music stores across the country, but they’re still best known for their “auto-tuner.” Cotton Music Company History. 2004. Cotton Inc. 11 February 2006.
  9. 9. Is it a Worthwhile Mathematical Task? The teacher of mathematics should pose tasks that are based on- 1. sound and significant mathematics; This activity addresses the following: Number, Number Sense and Operations Standard for Grades 8-10 (F) Explain the effects of operations on the magnitude of quantities. Patterns, Functions and Algebra Standard for Grades 8-10 (C)Translate information from one representation (words, table, graph or equation) to another representation of a relation or function. (D) Use algebraic representations, such as tables, graphs, expressions, functions and inequalities, to model and solve problem situations. Data Analysis and Probability Standard for Grades 8-10: (A) Create, interpret and use graphical displays and statistical measures to describe data; e.g., box-and-whisker plots, histograms, scatterplots, measures of center and variability. (F) Evaluate different graphical representations of the same data to determine which is the most appropriate representation for an identified purpose. Mathematical Processes Standard for Grades 8-10: (A) Formulate a problem or mathematical model in response to a specific need or situation, determine information required to solve the problem, choose method for obtaining this information, and set limits for acceptable solution. (B) Apply mathematical knowledge and skills routinely in other content areas and practical situations. (C) Recognize and use connections between equivalent representations and related procedures for a mathematical concept; e.g., zero of a function and the x- intercept of the graph of the function, apply proportional thinking when measuring, describing functions, and comparing probabilities. (D) Apply reasoning processes and skills to construct logical verifications or counterexamples to test conjectures and to justify and defend algorithms and solutions. (E) Use a variety of mathematical representations flexibly and appropriately to organize, record and communicate mathematical ideas. (G) Write clearly and coherently about mathematical thinking and ideas. (H) Locate and interpret mathematical information accurately, and communicate ideas, processes and solutions in a complete and easily understood manner. 2. knowledge of students’ understandings, interests, and experiences;
  10. 10. This stock market project is not one you would expect teenagers to care about. Because of that, the project was designed to create interest that might not have been there. Students are encouraged to select stocks from companies they knew such as Nike, Coke, and McDonalds.. 3. knowledge of the range of ways that diverse students learn mathematics; This project has many components. Students are able to learn from each other by working in small groups. The spreadsheets and graphs created by Excel provide both graphic and numeric representation of the data. Constructing the actual graphs allow for “hands-on” work for the tactile learner. 4. engage students’ intellect; Most teens think they are ready to deal with the adult world, and this project allows them to do so. The monies they are dealing with are quite large, and the decisions they make are up them. Students can feel “grown-up” as they mange and discuss their investment strategies. 5. develop students’ mathematical understandings and skills; This project deals with a great deal of data calculations and manipulations. Most of the calculations are relatively simple, but they need to be made frequently. Students should realize technology allows them to do these frequent calculations more efficiently and potentially more accurately. 6. stimulate students to make connections and develop a coherent framework for mathematical ideas; This project is all about applying math in the real world. It demonstrates that you need a working knowledge of math in order to make sound financial decisions. Although it is a big project, it is broken down into small, manageable steps that students should be able to follow. The use of technology is designed to enhance the student’s understanding of basic computational skills. 7. call for problem formulation, problem solving, and mathematical reasoning; This project is very clearly laid out for the student, and the problems the students will answer have already been formulated. Students do have to input their stock selections and solve problems related to the group and individual investments. 8. promote communication about mathematics; The final project report requires the student to describe their investment activities in various
  11. 11. ways. They need to explain any changes to their original investment and how the change was calculated. They need to describe their investments as a percentage of the group’s total investment. 9. represent mathematics as an ongoing human activity; The stock market is very much an on-going activity as today’s hot tip is tomorrow’s old news. Students should realize that by being proactive (i.e., using their math skills) with their investments, they can make more intelligent decisions about how their money is invested. 10. display sensitivity to, and draw on, students' diverse background experiences and dispositions; Although it appears this project was designed for middle class, suburban students, the project was designed to accommodate all students including those from lower socioeconomic classes. All students regardless of economic situations were “given” $10,000 to invest. Most students, rich or poor, don’t have ready access to that much money, which minimizes the importance of a student’s economic status. Students were encouraged to invest in what they know. Many students have brand loyalty already, and they could use that to make investment decisions. 11. promote the development of all students' dispositions to do mathematics. A student might think he/she cannot do math, but are keenly aware of his or her own financial situation. By using money in the project, most students tend to be more engaged. This project shows students how to manage a large data set without being overwhelmed by it. It also promotes students to take ownership of their actions.