Stock Market Simulation



Stock Market Simulation

October-December

Contest Basics:

1.

2. Each group has $100,000 to spend.

3. No more than $25,000 may be spent on any one stock or fund

4. Stocks must be at least $5 in value.

5. Each stock transaction costs $25 in broker fees.

6. You may purchase only stocks listed on NYSE, NASDAQ, or AMEX.

7. You may purchase any mutual fund.

8. You may buy on margin, doubling your initial purchase power.

Relevant Definitions:

• Stock—document signifying ownership in a company.

• Stock Market—exchange that brings together buyers and sellers of stock.

• Mutual Fund—fund operated by an investment company which raises money from shareholders and invests in a group of assets.

• Margin—using money borrowed from a broker/dealer to purchase securities.

• Ticker Symbol—an abbreviation, usually 1-3 letters long, that represents a company (e.g. WMT stands for Wal Mart).

Purchasing/Selling Process:

1) Research companies using the following three indicators. In order to receive full credit on this portion of the project, all three of the following MUST be met (if all three are not met, you will lose points only if the value of the stock decreases):

a. Company P/E ratio < Industry P/E ratio ( → enter ticker symbol → company P/E ratio is on initial page → to get industry P/E ratio, click on industry link above chart)

b. %∆EPS > 20% when compared to same quarter last year ( → enter ticker symbol → click on estimates above chart → use Qtr./Sept. 2005 column → scroll down to get percentage in row titled current vs. year ago)

c. Analyst has stock listed as either a buy or strong buy ( → enter ticker symbol → click on analyst link above chart or → enter ticker symbol → click on estimates above chart → recommendation is below company name)

2) Upon making a purchase, print a confirmation sheet and write the following on the back:

a. Three indicators noted above (Which site listed stock as a buy or strong buy?).

b. Brief description of the company

3) Upon selling a stock or fund, print a confirmation sheet and write the following on the back:

a. Purchase price

b. Your rationale for selling.

4) All confirmation sheets MUST be turned in to me at the time of the transaction.

Project—Team Expectations:

1) You may divvy up responsibilities within your group, but all members of the group are to be actively involved.

2) Purchase deadlines will be set throughout the contest (First Deadline: One purchase by 10/).

3) Midway account analysis is due March 22nd. Analyze your groups performance at the halfway point.

Project—Individual Expectations:

1) Assignments and worksheets will be assigned throughout the project.

2) Analysis paper due December 12th, 2008, answering the questions below (typed, double-spaced, maximum of two pages). This will be completed individually.

a. What did you learn from this project? Elaborate.

b. What did you and your team do well? Explain.

c. What could you and your team have done better? Explain.

d. Which stocks did well? Which did poorly?

e. Has this project influenced your desire to invest in the future? Explain.

Helpful Sites:

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Grading:

Confirmation Sheets (40 pts.)

Midway Account Analysis (15 pts.)

Project Analysis Paper (30 pts.)

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