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Name _____________________________ -*Date __________

Note: This assignment is adapted from one created by Mr. Heisey and Mr. Blair.

Stock Market Game

Background:

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Overview: In order to gain an understanding of how the stock market works, students will be participating in a stock market simulation. In this game, students will be able to build a portfolio (collection) of stocks by investing a hypothetical $250,000. The simulation will run through our unit on the Great Depression. You will be graded on your responses to prompts (questions) throughout the simulation, and possibly with an additional assessment at the end.

What is the main goal of the stock market simulation?

Believe it or not, my goal for you regarding this activity is NOT to see who can earn the most money in the shortest period time. Going for the most amount of money in a short period of time leads to overly risky behavior in the market, which is not what we, as a society, need. Stock market crashes have been caused by such behavior. My goal is to help prevent a repeat of those things, not to make them more likely to happen again.

My goal is simply that you become knowledgeable about the stock market, what it is, why it exists, how it generally operates, and the risks and rewards associated with it (they can both be very considerable). Finally, I want you to know how to get involved in it and, if you choose to actually do so, to do so with some level of comfort and confidence.

Again, this is NOT a competition to see who can earn the most money in the shortest period of time.

What are the three basic kinds of investments that investors can make?

Stocks:

A stock is a type of investment that shows you have ownership in a single corporation (company).

Having it means you have a claim to part of that company’s profits and property.

For example, “Apple” is a corporation in which you could buy stock. Its symbol is “AAPL”.

Mutual Funds:

Think of a mutual fund as being like a box. That box is stacked full of stocks that are from many different

companies. Someone working at the mutual fund company has done research and they believe they

have put together a package of stocks that will, overall, go up in value and make you, the investor that

buys the mutual fund, money. An example of a mutual fund is one that I own. It is called “Davis New

York Venture Fund” and its symbol is “NYVTX”. Feel free to check it out.

Bonds:

Bonds are loans. Bonds can be sold by companies, like General Motors, or by the government (local,

state and federal levels). Bonds have certain amounts of time associated with them, as well as an

interest rate that must be paid to whoever has the bond. For instance, you can buy a U.S. Treasury Bond

that might be a 10 year bond that pays 2% interest. If you spent $100 on the bond, every year you

have the bond you will get $2 in interest, for a total of $20 overall. At the end of the 10 years you will

get your original $100 back. In the end, you have made your $100 grow into $120.

Directions for creating a “Smartstocks” account:

1. Log onto

2. Scroll down to the center of the page and locate step #4 where it says join your group.

Group Leaders.

1.Sign up for an account.

- Click “No account yet?

Register now for free!”.

2. Create an Account.

- At the next screen, fill in the account information”.

- Enter your first and last name

as your username.

- Enter your e-mail address.

- Enter an appropriate password.

- Confirm the password.

- Be sure to type the code where it

says “type text”.

- Click “Register”.

3. Join a group.

- At the next screen click where it says “Groups”.

- Find the “Group Search”

box on the next screen.

Enter “9th Higgins 2014-2015”.

- Find “9th Higgins 2014-2015”

under the “Name” column.

- Then click the “Join” button

on the right side of the screen.

- At the next screen enter the

password “chiggins”.

- Click “Join Group”.

- You should now be part of the group.

4. Manage your portfolio.

From the dashboard you can manage your portfolio. Start by purchasing some stocks!

- To create a portfolio click the following link and follow the instructions:



How To Read A Stock Table

Source:

See An Example Of A Chart (see below): Source:

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If you are new to investing, or considering investing in individual stocks for the first time, then one of the basic things you will need to do is follow and learn how to read a stock table.

A stock table gives the following information:

- 52 week high and low:

The 52 week shows the highest and lowest prices from the previous year. This will give you an idea as to the trading range of the stock price. The 52 high and low provide a numerical means of estimating the stock's volatility (the price movement of the stock). The wider the trading range, the more volatile the stock, and the more you can either make or lose in a relatively short period of time.

- the stock name or symbol:

The name of the company or stock symbol - If a stock is listed on the NYSE, its symbol will contain three letters or less. If a stock has four or more letters, it is listed on the NASDAQ system.

- the annual dividend (if paid):

The annual company dividend, if paid. Dividends represent that portion of a company's profits

paid back to shareholders. If, for example, the number 1.5 appears under "Div", this indicates that for

every share of stock owned, a dividend of $1.50 is paid out annually from company profits. A company

may or may not declare and pay out dividends. In general, stocks that pay out dividends on a regular,

consistent basis tend to be less volatile (unstable) than those that don't.

- the yield percentage

The yield percentage is an analytical ratio which shows the rate of return on that particular stock. The yield percentage is calculated by dividing the annual dividend by the current price. The yield percentage is used to compare earnings for a particular company with other companies in the same or similar

market sector.

- the P/E ratio:

This is another analytic ratio calculated by dividing the current share price by earnings per share. The P/E ratio represents a mathematical relationship between the price of a stock and the company's earnings over the last (4) quarters. It is a measure of the relative value of the stock in comparison to other stocks in the same or similar market sectors. If a stock has a relatively high P/E ratio in comparison to

other stocks, this gives an indication that investors believe the company's overall earnings

will grow at a faster rate, a favorable investment factor.

- sales in 100s (volume):

This figure indicates how many shares were traded over the course of the trading day (the volume), stated in terms of multiples of 100. If, for example, the number 5467 is listed under Sales 100s, this means that 546,700 shares were traded during the day (5467 x 100 = 546,700). If a "Z" is written next to the Sales number, this indicates the actual number of shares traded for the day.

- the high, low, final price for the trading day, and net change from the previous

day's trading

These indicate, respectively, the previous day's high price, low price, the last price the stock traded at for the day, and the net change from the previous day's share price (Prices that change 5% or more from the previous day's closing price are indicated in boldface.) Share prices used to be stated in terms of

fractions - 23 ½, 8 ¼ - but are now designated in decimal points. Decimal pricing narrows the gap between the bid price (the price at which someone is willing to pay for the stock), and the ask price (the price at which someone is willing to sell the stock.) The difference between the bid and ask price is referred to as the spread.

If you are looking for resources on stocks to purchase or ticker names follow the links shown below. Good luck, investors!

Links to Suggestions for Stock and Mutual Fund Picks:

(1) U.S. News and World Report (a list of their best funds)



(2) Sivy’s Stocks: (a list of somebody’s choice of the “best” stocks)



(3) MSN Stock Screener



(4) Kiplinger's 25 Favorite No-Load Mutual Funds



(5) “The World’s 10 Best Stocks” (slideshow)

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(6) Merrill Lynch Unveils Its Top 10 Stocks to Buy for 2014



Other Useful Links (for general research and education):

(7) “How To Choose A Stock”



(8) “Stock Market Advice For Beginners”



(9) “The Basics of Investing”

Note: This “lesson” has several “pages”. You will need to advance to the next screen toward the bottom of each page.



(10) “Tips For Investing in Stocks”



(11) “How Much To Pay For Stocks”



(12) “Picking the Best Stocks For Your Portfolio”



(13) Links To The Major Stock Indexes”

Dow Jones Industrial Average:

(30 major stocks)

NASDAQ:

(thousands of stocks)

Note: Find a company by using the list of letters in the alphabet that are shown at the bottom of the screen.

S&P 500: (500 major stocks)

Stocks 1-250:

Stocks 251-500:

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