STOCKS GROUP PROJECT



STOCKS GROUP PROJECT

The project can be done individually or as a group of two.

Part A: If experts could name one factor that causes all stock prices to rise, then they could predict when stock investments would be profitable for everyone. But there are many things that contribute to a bull market. Below you see a list of factors that market analysts say help drive the market or influence the price of an individual stock. Type a sentence or two explaining how each factor might influence the price of stocks.

• The US economy

• The World economy

• The growth of many new companies

• New technology, such as the internet, that makes information available faster

• Low inflation

• Low interest rates

• Services that make it easier for investors to buy stock (such as mutual funds and employer-worker pension funds)

• A depreciation of the US dollar

Part B: There are also events that can affect the price of an individual company’s stock and not always in obvious ways. Type how you think the events below might impact a company’s stock. Be sure to give reasons for your answer and it would be helpful to use real companies as your example. You might want to do research online to see how similar events have affected companies’ stocks in the past.

• A company’s profits are lower than expected

• A company’s long timer chief executive officer retires

• A company lays off 10 percent of its work force

• A company announces that it’s opening 20 new stores

• A major lawsuit is filed against a company

• A company announces the launch of a brand-new product

• Two companies announce they are merging

Part C: You are to play the role of an investment advisor. Pick one of the situations below: evaluate the clients risk tolerance, investment horizon and liquidity needs. Draft a suggested investment plan, explaining your choices.

• The Winters are in their fifties. They have a college fund for their high school senior, Summer. They have saved quite a bit for her tuition. They have $80,000 and are very interested in increasing their total in the next year. Currently, they have invested $75,000 of the total in two areas: Stocks of technology companies and a mutual fund (aggressive growth).

• Ryan Will is a 22 year old single male. He just inherited $4,000 from his grandmother. He has a job but most of his paycheck is required for living expenses. He does not have any big expenditures looming in the near future but would like to begin saving for later – maybe a house, kids, etc. He is a little vague on his long-term needs. This is understandable. It’s a little hard to focus on when and how much money you will need for children when you are more concerned with finding someone willing to date you on Saturday night. What should Ryan invest the inheritance in?

• Brendan and Amy are a cute young couple with 2 kids under five. They have begun saving for when their kids are grown. They are invested in index mutual funds. Brendan recently read an article entitled, “Stock rally set to continue; Dow could hit 11,000.” It discussed the stock market rise of the last few months and predicted that, under the right conditions, the Dow Jones index could move much higher. Brendan has convinced Amy that they ought to invest more directly in stocks so they do not miss this increase. What advice would you give them?

Part D: Any good investor will analyze every possible sector to invest in the stock market. I have given you a list of different sectors to research. Your assignment is to research ONE stock for FIVE different sectors and include the following in your research:

• Overview of Company (Name, Symbol, History, Products/Services)

• Stock Price (52-week High, 52-week Low, Last, Change in Price)

• Risk Indicators (PE Ratio, Beta, Leverage, Market Capitalization)

• Rate of Return (Dividends and Yield)

• Current News

• Is the stock a worthy investment? Why or why not?

Sectors to research:

• Technology ● Insurance ● Tourism

• Telecom and Utilities ● Banks ● Defense

• Retail ● Financial Services ● Health Care

• Housing ● Entertainment

Research Websites for part C:

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• Cover/Stocks.html

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Helpful Hints:

• Remember this will be graded as a major assessment for quarter 1

• If you are having trouble with what companies to research, refer back to “The Stock Market & You” worksheet.

• Due Date: Friday, November 4 by 3:00 pm

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