Download Which is NOT a basic function of money?

 Everyone
will need a calculator
 If you do not have one, get one from the box
where your Freyonomy is located.
 Pay
your Thursday and Wednesday bills
 Tickets
are $50 each
 Max of 10 tickets
 Cannot win more than once
 Write name on ticket and fold in half
 Bellwork
 Stock
Market Game Intro
 Stock Notes
 Group Signup
 Investment Calculations
 Exit Ticket

1st Period
 Dahmir
 Johnny
 Mike
 Davin
 Keith
 2nd






Period
Darius
Dominique
Jewel
Tyrny
Sperlin
4th Period
 Horizio
 Christina
 Yawa
 Mike
 Tatiyana
Make up in tutorial
Tues or Thurs
3:30 – 4:15
Virtual $100,000
Teams of 3 to 5
+
Stocks, Bonds, &
Mutual Funds
Why are corporations so successful?
•
One reason is corporations raise money through
selling stocks and bonds
•

But what is a stock????


A stock is a type of investment that signifies ownership in a
corporation.
 Benefit- A holder of stock (a shareholder) has a claim to a part of the
corporation's assets and earnings.
Ownership is determined by the number of shares a person
owns relative to the number of outstanding shares.

For example, if a company has 100 shares of stock outstanding and you
own 10 shares, you would own and have claim to 10% of the company's
earnings.

Most companies start off as private
 Created by individuals or groups
 Ex. Milton Hershey became the first American to
develop a formula for manufacturing milk chocolate

Before you can buy stock the company has to go “public”
 Companies that go public often have great demand and
need more $$$ than banks can provide
 Public companies will sell stocks to the general public
and the company will then use the $$ from stocks to
improve the business
 Examples of public companies- Google, Nike, Apple,
Walmart
Some corporations decide to remain private and do not
sell stock to the general public
 Chick-fil-a, Mars Chocolate, Dell

Stocks are investments in which the goal is to
make money (profit)
 Dividend
payments- small percentage of
corporation profits paid back to stockholders.
 Capital


gains- reselling stocks for profit
Most people try to buy stocks at a lower price and
sell them later when they reach a higher price
This is similar to if you bought a car for $5,000
and then resold it for $6,000 (you profited $1,000)
•
Most stocks are resold to investors through a stock
exchange.
•
Oldest and largest organized stock exchange- New
York Stock Exchange (NYSE)
•
NASDAQ- The centralized computer system that
allows people to make trades online
 Stockbrokers
buy and sell stocks for customers
for a commission.

Stock index- measures the performance of many
individual stocks and the stock market as a whole
Can be indicative of the economy’s general health
 Most well-known:





Dow Jones Industrial Average (“The Dow”)
 Shows how 30 large publicly owned American
companies have performed over time
S&P 500
 Shows how the top 500 publicly traded American
companies have performed over time
Bull market- stock market prices rise steadily over a
relatively long period of time.
Bear market- stock market prices decline steadily over
a relatively long period of time.

Origin of names unclear but recall bears are sluggish and bulls are
spirited and quick
1. Between 2007-2009, do you think the Dow
and S&P showed stock prices generally
increasing or decreasing? Why?
2. Would this be a bull market or bear market?
3. Between 2009-2012, do you think the Dow
and S&P showed stock prices generally
increasing or decreasing? Why?
4. Would this be a bull market or bear market?

When you buy a stock, you’re buying a portion of a
company.

You should buy stock in companies that are:


Currently profitable
You think will become profitable in the future (more risky)

When people invest, they don’t invest chump change.
However, it is unwise to tie up all of your savings in
stocks.

Most people “buy and hold for the long term”

But continue to monitor your stocks and consider selling
them if:


they’re not appreciating in value
if general economic conditions have changed

Financial


Health Care


Companies that manufacture goods or provide services that people want
but don't necessarily need
Consumer Staples


Companies engaged in the creation, storage, and exchange of digital
information
Consumer Discretionary


Companies involved in the exploration, production, or management of
energy resources
Information Technology


Companies engaged in the production and delivery of medicine and health
care–related goods and services
Energy


includes banks, investment companies, insurance companies and real estate
Companies that provide goods and services that people use on a daily basis
Utilities

Companies engaged in the production and delivery of electric power,
natural gas, water, and other utility services
 Write
the name of a company engaged in
each of the 7 industry sectors
 The group that correctly comes up with an
example for each group first wins!







Financial
Health Care
Energy
Information Technology
Consumer Discretionary
Consumer Staples
Utilities
 Which
portfolio is more diversified?
Portfolio A
Portfolio B
Ticker and #
of Shares
Name of
Business
Ticker and # Name of
of Shares
Business
SBUX
100
Starbucks
WLP
100
Wellpoint
(Health care)
TIF
200
Tiffany’s
Jewelry
INN
200
Summit Hotel
Properties
NKE
250
Nike
GPE
250
Georgia Power
WMT
50
Walmart
WMT
50
Walmart
AAPL
350
Apple
GOOG
350
Google
HD
150
Home Depot
BP
150
British
Petroleum (BP)
 Stocks
 Mutual
 Bonds
Funds
Stocks- are an investment in a single corporation
Advantage- If your stock does well you can make a lot of
money.
Disadvantage- It’s risky to invest in only one company
(putting all your eggs in one basket)
 If your stock does poorly, you can lose a lot of money.

Mutual funds are collections of stocks and bonds that are
managed by a financial expert. These funds often contain
stocks and bonds from many different companies.
Advantage- Mutual funds are more stable because you are
investing in several companies instead of just one.
 So if one company performs poorly, the others may still
be doing well enough that you do not lose money.
Disadvantage- Return on investments is typically lower
than well performing single stocks.

Bonds- formalized loans that investors offer to businesses and
government agencies

Bonds do not offer corporate ownership of any kind, but often offer regular
interest payments (called coupons) and/or full repayment at the end of the
bond (loan) term.
Advantage- There is little to no risk in bonds. Interest rates vary
with market conditions but typically fluctuate much less than
stocks and mutual funds.
Disadvantage- Interest rates on bonds are typically lower than
the rate of return on profitable stocks and mutual funds.
__________________ The least risky but
typically the lowest rate of return
_________________ The most risky but can
have a very high rate of return at times
_________________ Moderate risk that is
spread out among companies, moderate rate
of return on investments
 Which
do you prefer as an investment?
Stocks, mutual funds or bonds? Why?