Download Answer Sheet for Stock Market Lessons

Answer Sheet for Stock Market Lessons
Names_________________________________________
USE THIS FORM TO ANSWER THE QUESTIONS FOR EACH OF
THE LESSONS. I WILL ONLY ACCEPT THIS ANSWER SHEET
WITH THE ANSWERS TYPED IN (I WIIL NOT GRADE ANY HAND
WRITTEN ANSWERS) AND THE LESSONS IN ORDER.
Lesson 2 How Do You Find Stock Symbols?
Company Name
Agilent
Apple Computer
McDonald’s
Pixel
Coca-Cola
Disney
Gillette
Tricon
Adobe
Symbol
A
aapl
MCD
PXLW
COKE
DIS
G
TY
ADBE
Market
US
US
US
US
US
US
US
US
US
Industry: software
Company Name
#1 burst.com Inc
#2 Calico Commerce Inc
#3 CorVu Corp
Industry: Communications Services
Company Name
#1 Arch Wireless Inc
#2 Talk America holdings
#3 WilTel Communications Inc
Industry: Biotechnology & Drugs
Company Name
#1 Chattem Inc
#2 Fountain Pharmaceuticals Inc
#3 Integrated Health Technologies Inc
Industry: Casinos & Gaming
Symbol
BRST.OB
CLIC.OB
CRVU.OB
Symbol
AWIN.OB
TALKD
WTELV.OB
Symbol
CHTT
FPHI.OB
IHTC.OB
Company Name
#1 Boyd Gaming Corp
#2 JCC HLDG CO
#3 Trans World Corp
Industry: Computer Network
Company Name
#1 Creative Computer Applications Inc
#2 Intergraph Corp
#3 LanVision Systems Inc
Symbol
BYD
JCHC.OB
TWCP.OB
Symbol
CAP
INGR
LANV
Use Yahoo! Finance http://finance.yahoo.com/ under World Finance to find the
following stock symbols by country.
Country
Company Name
Australia
News Corp
Australia
Telstra Corp
Canada
Dominion Bank
Canada
Kasten Chase Applied Research
France
PEUGEOT
Germany
VOLKSWAGEN
China
QINGDAO SODA
Hong Kong
HONGKONG.COM
Japan
Sony (6758)
Mexico
TLEVISA CPO
Singapore
DBS LAND LTD
United Kingdom British Telecom PLC
United Kingdom Cable and Wireless PLC
United Kingdom British Aerospace PLC
Symbol
NOP pa
TLS
TD
KCA.TO
12150.PA
466400.BE
600229.SS
8006.HK
6758
TLEVISAAc.MX
DBL.SG
BTge.L
CW.L
N/a
Lesson 3 How Do You Read Stock Quotes Online?
1. What is the name of the stock exchange on which Intel is presently
trading now? NASDAQ_______________________________
2. How much would students have to pay for one share of Intel if they
bought the stock for the stock game at this moment? $17.91 ______
3. What was yesterday’s closing price for Intel? $17.30_____________
4. How many shares of Intel were traded since the market was open this
morning? 57,271,596 ___________________________
5. How many shares of Intel are traded daily on average? ___64,615,954___
6. How much did Intel earn per share in the last year? $12.29_________
7. The price-earning ratio (P/E) of the stock market is presently at 28. How
many times is Intel’s P/E above the market? _2.06_____________
8. Does Intel pay a dividend? _______Yes_______
9. If students bought 10 shares of Intel at the lowest price of the year and
sold it at the highest price for the year, how much money would they
make?___________238.30__________________________
10. If students bought 100 shares of Intel at the current price but missed the
chance to buy the shares at the lowest price for the day, how much more
money would they have to pay? _____$1506_________________
11. What is Intel’s market cap? _____119.0B___________
Additional Activities:
Look at a 5-year chart below the stock table from Yahoo! Finance.
1. How many times has Intel had a stock split during the last 5 years?
________________3times___________________________
2. If students bought 100 shares of Intel in 1995, how many shares
would they have now? Click on the "vs. S&P 500" link on the bottom
right hand corner of the chart. _______1600___________________
3. Intel and the S&P index were at the same value in January 1996.
How many percent did Intel outperform the market (S&P) at the
current share price? _____________It didn’t__________________
4. Is Intel’s current price above or below its 50-day moving average?
200-day moving average? __________Below, Below_____________
Note: If the share price is above the 50-day or 200-day moving average,
investors will expect the price to go even higher due to upward
momentum. The opposite is true if the price is below the moving
averages.
Click on “Profile” in the stock table and answer the following questions:
1. What is Intel’s main business? _____________Semi-conductor chips_____
2. What were Intel’s top line (revenues) and bottom line (net income) growth
3.
4.
5.
6.
in the recent financial reporting period? _$6,504,000,000___$686,000,000
Is Intel a strong growth company? Why? _yes, they are constantly
Increasing their profits and going up in the stock market.____________
Who is the president, CEO, of Intel? ____________Craig Barrett________
What was the closing price for Intel 3 months ago (click on historical
data)? ___________$16.67_______________________________________
How many percent of shares do insiders (management and directors)
own? _7%______________________
4 How Do You Profit From Trading Stocks?
1.
How did the performance of the sample portfolio compare with
the three benchmarks? _It was a lot lower.
2. ___________________________________
3.
Which type of investment had the most gains during this period?
_It seemed to be chance and high risk ones. ____________________
4.
One of the strategies of managing risks in investing is through
diversification. By comparing investments in the sample portfolio with
the S&P 500 benchmarks, can you tell why diversification is a good
strategy? ____________It allows a person to have different area’s of
growth instead of just all tech or all Government o all entertainment
they have a wide variety of all of them_______________________
5 How Do You Double Your Money? Rule of 72
2. Ask students to complete the columns below:
How many years will it take John to double his money if he invests in a Treasury
bond? ____ years
1
Beginning
Amount ($)
100
Rate of Return
(%)
6
Amount
Earned ($)
6
Ending
Amount ($)
106
2
106
6
6
112
3
112
7
7
119
Year
4
119
7
7
126
5
126
8
8
134
6
134
8
8
142
7
8
9
10
11
142
150
159
169
179
9
9
10
10
11
9
9
10
10
11
150
159
169
179
190
12
190
11
11
200
Ask students to observe a pattern.
3. From the previous example, students should predict the outcome of the
columns below. How long will it take John to double his money?
Rate of Return (%)
Number of Years
12
6
6
12
24
3
24
3
4
10
8
18
7.2
9
4. How accurate is the rule of 72? Ask students to complete the columns
below with the help of the StocksQuest Calculator. Click here to use the
Calculator. Like any general rule, the rule of 72 is just an approximation.
For exact calculations, students can go directly to the Calculator section.
Rate of Return (%)
Rule of 72
1
2
3
4
5
6
7
72.00
36.08
24.00
18.00
14.40
12.00
10.29
Actual
(from Calculator)
72
36
24
18
14.4
12
10.29
8
9
10
15
20
30
40
50
100
9.00
8.00
7.20
4.80
3.60
2.40
1.80
1.44
0.72
9
8
7.2
4.8
3.6
2.4
1.8
1.44
1.00*
* 38% error
Additional Activities:
1. The reverse of the rule of 72 can tell students how many years before their
money is worth only half of its original value. Let’s say inflation is at 4%
per year. A dollar today will be worth only $0.50 in 18 years since 72 / 4 =
18. How many years will it take to lose half of the purchasing power?
Complete the columns below:
Inflation Rate (%)
Number of Years
4
3
3
10
5
10.29
18
24
24
7.2
14.4
7
8 What is A Stock Screener?
1. One of the investing strategies is to select high growth small-cap
companies. To find small-cap stocks from the screener, students should
select the “Market Cap” for under $500 million and keep all other variables
in the “Any” position. Now, complete the table below to narrow the
selections. For % Growth use Est. 1 Yr EPS, for % price increase use
Performance (1 Yr Stock Perf:)
Small-cap companies selection criteria
Industry
1. Any
2. Software
3. Software
P/E ratio
Any
Any
Max. 30
%Growth
+50
+50
+50
% Price Increase
+50
+50
+50
# Of Results
.4629
. 348
. 41
2. Another strategy is to go with the Wall Street professionals. To find stocks
that analysts are presently strongly recommending, students should set
“Analyst Recommendation” to the “1” position. Now, complete the table
below to narrow the selections.
Analyst recommendations selection criteria
Industry
1. Any
2. Software
3. Software
P/E ratio
Any
Any
Max. 30
%Growth
+ 50
+50
+50
% Price Increase
# Of Results
Any
Any
+50
18
2.
. 10
3. One strategy of investing is called “bottom fishing.” To find stocks that
performed poorly in the past year, students should select “One Year Stock
Price Performance” to “Decrease greater than 50%” and keep all other
variables in the “Any” position. Now, complete the table below to narrow
the selections.
One Year Stock Price Performance selection criteria
Industry
1. Any
2. Any
3. Any
P/E ratio
Any
Max. 5
Max. 5
%Growth
Any
Any
+50
% Price Increase
Decrease 50
Decrease 50
Decrease 50
# Of Results
. 49
.5
. 11
4. Another strategy is to find winners in a given industry. To find stocks that
have a leading position in an industry, students should complete the table
below.
Industry criteria
Industry
1. Biotechnology
2. Biotechnology
3. Biotechnology
P/E ratio
Any
Any
Max 50
%Growth
Any
+50
+50
% Price Increase
Any
Any
Any
# Of Results
. 453
. 17
. 13
9 What are the Indices of Investing?
1. Go to Yahoo! Finance http://finance.yahoo.com/ to get detailed quotes for SPY
and select the 1-year big chart. Then, click on "vs. S&P 500", meaning the
comparison chart with the U.S. overall stock market measured by the broad S&P
500 index. Does the SPY match closely with the S&P 500 index on the chart?
_____________________yes._________________________________
2. On the same Web page, enter DIA and click the Get Quotes button. Can
students tell if the Dow performed better or worse than the S&P 500 index in the
past year?_________________yes, better_________________________
3. Enter QQQ and click the Get Quotes button again. Can students tell if the
Nasdaq 100 performed better or worse than the S&P 500 index in the past
year?____________________yes, worse_____________________
4. Repeat the similar procedures for the sector indices, XLE, XLF, XLK, and
HHH._____better.better,worse,worse____________________________
5. Repeat the similar procedures for the WEBS, EWJ and
EWU.___N/a,better,better________________________________________
Now, students should get a feel of how those indices shown in the above table
performed compared with the overall U. S. stock market. If they are not
interested in reading charts and calculating percentages, students may get
started with the Global Stock Game (GSG). Make sure they purchase at least
one share of SPY, QQQ, or DIA as benchmarks for their stock portfolio. As an
on-going monitoring effort in their stock portfolio, students can compare how well
their investments are doing in comparison with these indices.
If students are investing in the Japanese or U. K. market, they may use EWJ or
EWK as their benchmarks. Also, students can choose these indices as their
primary investments for the GSG.
For students who are interested in math, they can complete the following table by
reading charts and calculating data from the above 1,2,3,4, and 5 activities.
Indexes Name
Symbol
One-year gain* (%)
Spiders, S&P 500
SPY
.
Diamonds, Dow 30
DIA
.
Nasdaq-100
QQQ
.
Energy Select Spider
XLE
.
Financial Select Spider
XLF
.
Technology Select Spider
XLK
.
Internet Holders
HHH
.
WEBS-Japan
EWJ
.
WEBS-U.K.
EWU
.
*(Right vertical reading – left vertical reading) x 100%
Left vertical reading
11 What is the Dow?
1. . Matching: The Dow 30 represents a cross-section of major U.S.
industries. Complete the following table that divides these 30 companies
into different industry groups. Match the number of companies with the
different groups. For example, there are only four companies in the
technology sector and two in the telecommunications sector. Students
may use this link and click on profiles to help in this matching.
Industry
Technology
.
.
.
.
Company Name
Company Name
1 Intel
3 HP
.
.
2 Microsoft
4 united tech.
.
.
1 AT&T
.
.
2 SBC
.
.
1 American express 2 citigroup
3 Alcoa
.
.
.
.
1 caterpillar
3 GMC
5 MM&M
7 Merck
9 Dupont
11 Kodak
.
.
2 Exxon
4 JPmorgan
6 Boeing
8 Honeywell
10 IBM
.
.
.
Consumer products/services
.
.
.
.
.
.
Boeing Co.
Caterpillar Inc.
Coca-Cola Co.
DuPont Co.
Eastman Kodak Co.
General Electric Co.
General Motors Corp.
Home Depot Inc.
Honeywell International Inc.
Hewlett-Packard Co.
Manufacturing/heavy industry
.
.
.
.
.
.
.
.
AT & T Corp.
Exxon Mobil Corp.
Financial Services
.
.
.
.
American Express Co.
Citigroup Inc.
Telecommunications
.
.
.
The Dow
Alcoa Inc.
1 GE
2 McDonalds
3 Procter & gamble 4 wal-mart
5 Walt Disney
6 Philip Morris
8 Johnson &
7Int paper co.
Johnson
9 coke
10 Home Depot
.
.
International Business
Machines Corp.
Intel Corp.
International Paper Co.
J.P. Morgan & Co.
Johnson & Johnson
McDonald's Corp.
Merck & Co.
Microsoft Corp.
Minnesota Mining &
Manufacturing Co.
Philip Morris Cos.
Procter & Gamble Co.
SBC Communications Inc.
United Technologies Corp.
Wal-Mart Stores Inc.
Walt Disney Co.
2. 2. The Dow has been up and down around 10,000 in most of 1999 and
2000 while the Nasdaq, powered by the technology stocks, doubled to
pass 5,000.
What is the ratio of the Dow and Nasdaq now?
(The ratio of the Dow and Nasdaq used to be 4 to 1)
2-1
3. 3. Traditionally, all the Dow stocks are traded in the New York Stock
Exchange, NYSE. In November 1999, the Dow added two Nasdaq stocks
to reflect the change from the old to the new economy. Can students
name those two companies?________SBC, Microsoft_______________
4. 4. The Dow committee is planning to make substitutions again in the
components to reflect the changing economy. Students should nominate
three stocks to the Dow membership. Also, name three companies that
should be replaced by the substitutions.
IBM, AT&T, Kodak replace GE JP Morgan and Merck
5. 5. The Standard and Poors 500 (S&P 500) index is often used as a
benchmark to gauge the gains and losses of the stock market. Compare
the gains or losses of the Dow with the S&P 500 benchmarks for the past
one year. (Hint: the stock symbol for the Dow is DIA. If students need
help, they can go back to Lesson 7 “What are the Indices of Investing?”)
6. 6. One strategy is commonly known as “Dogs of the Dow,” meaning
buying the Dow companies with the highest dividend yields. Students
should buy the Dow laggards at a low price and sell them after they
rebound. Now, they should find the top five “Dogs of the Dow” stocks with
the highest dividend yields. Students can find dividend yields by using this
link and clicking on profiles.
Company name
1 Alcola
2 Gen. Electric
3 johnson&johnson
4 american express
5 Gen. motors
Symbol
. AA
GE
. JNJ
. AXP
. GM
Dividend Yield
. 2.51%
. 2.76%
. 1.48%
. 0.85%
. 5.37%
7. What does a great or bad day in the stock market feel like? Use the Dow’s
home page to complete the following tables.
The five worst days of the Dow
(Also know as a market crash)
Date
1
2
Point Loss
.
.
% Loss
.
.
3
4
5
.
.
.
.
.
.
The five biggest percent gains in the Dow
Date
1
2
3
4
5
% Gain
.
.
.
.
.
14 How Do You Analyze a Corporation?
Calculate key financial ratios:
1. Price-to-earnings ratio (P/E)
P/E = Share Price / Earnings Per Share
(from annual report)
Get a stock quote for Intel (INTC) from the home page of this Web site. Click on
this link to get the EPS for Intel. Then, calculate the P/E for Intel.
Note: The higher the P/E, the more expensive the share price. P/Es for the S&P
500 range from 20 to 30.
2. Net Profit Margin
Margin = Net Income / Revenue
Click here to get Intel’s data and calculate Intel’s profit margin.
Note: The higher the profit margin, the better. Not many companies have a
margin over 20%, but Microsoft and Intel are two exceptions.
3. Return on Equity (ROE)
ROE = Net Income / Shareholder’s Equity
Click here to get Intel’s shareholder’s equity. Click here to get Intel’s net income.
Then, calculate the ROE for Intel.
Note: The higher the ROE, the better. An ROE over 20 indicates a strong
competitive position in the business.
4. Debt to Equity Ratio (D/E)
D/E = Long-term Debt / Shareholder’s Equity
Long-term debt means the amount borrowed by the company that will be paid
back in a time period over one year. Click here to get the long-term debt and the
shareholder’s equity for Intel. Calculate the D/E for Intel.
Note: A D/E of 25% or less is considered safe while above 50% means the
company has been borrowing too much money and runs a risk of not meeting
loan payments.