The Stock Market Game

2008

What will we learn?

Real-world math applications

Real-world economics conceptsSupply & demand

Opportunity costs

Current events

Financial markets

What else?

Business conceptsMarketing

Finance

Collaboration skillsTime management

Decision-making

Cooperation

Rules of the game

Each team begins with $100,000You may borrow against the equity in your account at a rate of 7%.

You may trade only on stocks listed on theAmerican Stock Exchange (AMEX)

NASDAQ

New York Stock Exchange (NYSE)

Rules of the game

Must buy a minimum of 100 shares

Sell orders of less than 100 are permitted

You may not buy stocks that trade at less than $5 per share.

A 2% broker’s fee is charged for all transactions.

Question

If a team sells 200 shares of Intel stock at $32 per share, how much will they pay in broker’s fees?

200 x 32 = 6400

6400 x .02 = 128

$128 in broker’s fees

More rules

You can trade 7 days a week, 24 hours a day.

Stock dividends and splits will be added directly into your portfolio.

To be eligible for awards, teams must trade a minimum of four (4) different stocks during their trading session.

Rules…

Stocks may be liquidated any time the team feels that stock is no longer of benefit.

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.

What Is Stock?

Ownership in a publicly held company

http://www.gap.com/browse/home.do?tid=3030&kwid=1&NG_urlID=6646993

Why do people buy stock?

To make money!Earn dividends (cash paid to investors from company profits)

By selling the stock at a higher price

Risk Tolerance

Issues that contribute to an investor’s risk tolerance:

Age

Health

Overall financial outlook

Risk is classified as low, moderate, and high

Activity Sheet

IPO

Before you can buy stock in a company, it has to “go public.”

The initial stock offering is known as an IPO (Initial Public Offering).

Two forms of stock

Common and Preferred

Common – provides holder with the right to vote on major company issues and on who will serve on the company’s board of directors.

More on Common Stock

Common stock is usually more prone to rapid change than preferred stock, therefore is more risky.

Preferred Stock

Holders do not have voting rights and the stock usually does not grow or drop in value as much as common stock.

Is usually more expensive.

If the company issues dividends, preferred stock holders are paid first.

Diversification

Don’t put all your eggs in one basket.

Diversify

Spread your investment dollars out over various industry sectors.

PharmaceuticalTechnologyUtilitiesConsumer GoodsHealth ServicesHome Improvement

Mutual Funds

A collection of stocks and bonds owned by a group of investors.

Managed by a “fund manager”.

Ticker symbols are 5 letters long and end in an X. Example: FBGRX