Stephanie Buehler, M.P.W., Psy.D. Kacy Kohut. Authors

Transcription

1 Editor Gisela Lee Editorial Manager Karen J. Goldfluss, M.S. Ed. Editor-in-Chief Sharon Coan, M.S. Ed. Illustrator Bruce Hedges Cover Artist Jessica Orlando Art Coordinator Denice Adorno Creative Director Elayne Roberts Imaging Rosa C. See Product Manager Phil Garcia Publishers Rachelle Cracchiolo, M.S. Ed. Mary Dupuy Smith, M.S. Ed. Authors Stephanie Buehler, M.P.W., Psy.D. Kacy Kohut Teacher Created Materials, Inc Industry Way Westminster, CA ISBN Teacher Created Materials, Inc. Reprinted, 2003 Made in U.S.A. The classroom teacher may reproduce copies of materials in this book for classroom use only. The reproduction of any part for an entire school or school system is strictly prohibited. No part of this publication may be transmitted, stored, or recorded in any form without written permission from the publisher.

2 Table of Contents Introduction Sample Six-Week Calendar Stock Market Terms Why Invest? History of the American Stock Market What Is the Stock Market? Reading the Financial Page The Dow Jones and the NASDAQ Other Types of Investments Converting Fractions to Decimals Practice Buying Stocks Practice Selling Stocks Stock Market Game Stock Market Simulation Activities Making an Investment Keeping Track of Investments Daily Investment Journal Teacher Preparation for Classroom Stock Exchange Student Introduction to the Classroom Stock Exchange Creating a Company and Going Public Issuing Stock and Keeping Company Records The Securities and Exchange Commission Checks and Receipts Keeping a Check Register and Tracking Your Investments Keeping a Company Ledger Stock Certificate Daily Bugle Financial Page Annual Report Bar Graph Creating a Bar Graph Circle Graph Creating a Circle Graph Line Graph Growth Chart Unit Extension: Stock Market Crash Simulation Black Tuesday Understanding the Stock Market Crash Stock Market Flow Chart Stock Market Crash Simulation #2589 Stock Market Simulations 2 Teacher Created Materials, Inc.

3 Introduction The stock market is a fascinating, exciting part of our nation s economy. Stock Market Simulations is an interactive means of piquing students interest and involving them in concepts related to the world of business and finance. This book is divided into three sections: Stock Market Simulation Activities Unit Extension: Stock Market Crash Simulation To make planning easier, a sample six-week calendar is included. All the handouts students need for recordkeeping are also included. Let the trading begin! This section gives students an introduction to the stock market through vocabulary and informational reading. Students discover such topics as the history of the stock market, how the stock market works, and ideas that they should consider as future investors. also prompts students to think about themselves and their relationship to money and the economy. Stock Market Simulation Activities In this section, students use simulated activities to learn how the actual stock market works and what happens within a simulated, student-created, stock-market exchange. Students invest imaginary dollars in stocks that they choose from real companies and track their performances in investment journals and newspapers. Then, students work in pairs to create simulated companies complete with mission statement, goals, and other materials that are meant to attract the attention of student investors. They must then value their stock and offer it for fellow students to bid on and purchase while they themselves purchase stock in other companies. The teacher, acting as an officer of the classroom Securities and Exchange Commission as well as a producer of the Daily Bugle Financial Page, lends a dose of reality to what should be a very exciting period for students as they watch what happens when trading begins. Unit Extension: Stock Market Crash Simulation Students need to be aware of the realities of the economy. In a bull market, the economy steams ahead, but in a bear market, the economy falters and hibernates. As students participate in this simulation, they acquire an historical perspective of the ups and downs of the economy and how it impacts their lives. Internet Information Here are some Web sites to supplement the information provided in this book. Some of the sites offer general information about the basics of the stock market while others offer online stock market games and simulations Teacher Created Materials, Inc. 3 #2589 Stock Market Simulations

4 Sample Six-Week Calendar This is an example of how to organize and teach the entire Stock Market Simulations unit. You may find that you need to spend more or less time on particular items or concepts. For example, you may wish to assign the reading on pages 6 12 for homework so that you can spend more time in class discussing the investment journal (page 21). Feel free to modify the schedule to suit your classroom needs. Weeks One and Two: Learning Stock Market Basics Create a KWL chart and keep it posted for student reference. Teach and assign Stock Market Terms (page 5) in class. Teach and assign information about the stock market (pages 6 12). Students complete related activity sheets (pages 13 15). Week Two: Investing and Following Actual Stocks Teach and assign Making an Investment and related activity sheets (pages 19 and 20). Ask students to pick companies in which they wish to buy imaginary shares. Students keep track of and discuss the stocks they chose in their journals (page 21). Discuss stock performances and create related graphs, using pages as guidelines. Students continue to follow stock performances during the course of the unit. Copy the Stock Market Game (pages 16 and 17) and mount it on poster board. Copy game cards (page 18) onto cardstock and cut them apart for students to use when playing. Week Three: Creating a Company Read Teacher Preparation for Classroom Stock Exchange on pages 22 and 23 and make necessary copies. Group students into cooperative teams. Use related materials on pages to introduce the simulation and to think about and create companies. Each group creates a poster with its logo and mission statement to display. Discuss how to write checks and receipts and keep a ledger (pages 29 32). Display or make copies of the Daily Bugle Financial Page (page 34) for each day of trading. Weeks Four and Five: Investing and Following Class Company Stocks Allow students time to buy and sell each others stocks with student teams taking turns buying and selling over several periods. Ask students to create press releases and McShare News Hour bulletins. Hold discussions about the classroom stock market exchange as needed. Begin discussion of upcoming annual reports (see pages 35 40). Week Six: Closing the Unit and Unit Extension Ask students to create an annual report (pages 35 40). Teach and assign the Unit Extension: Stock Market Crash Simulation (pages 41 48). #2589 Stock Market Simulations 4 Teacher Created Materials, Inc.

5 Stock Market Terms bear market: a period of generally falling stock prices bid: the price someone says he or she will pay for stocks or bonds at a given time bond: a certificate, written and sold by the government or a company that promises to repay borrowed money with interest bull market: a period of generally rising stock prices call: an option to buy stock at a pre set price until a given date commission: the fee a stockbroker receives from a customer for buying or selling a stock common stock: the typical method by which a company divides its ownership (Owners of common stock can vote at stockholders meetings and receive dividends, if the company distributes them.) corporation: a group of people who obtain a certificate of incorporation, which gives them specific legal rights in the operation of the business dividend: money a corporation pays to its stockholders Dow-Jones Industrial Average: the average price of 65 important stocks traded on the New York Stock Exchange (Investors use this average to judge the general performance of the overall stock market.) earnings: profits of a company floor brokers: brokers who trade stocks and bonds on the exchange floor go public: the action of a private company deciding to sell stock to the public interest: payment for the use of money investor: a person who buys stocks or bonds with the hopes of earning a profit market price: the current price of stocks or bonds mutual funds: companies that invest in a variety of stocks and bonds with money entrusted to them by others offer: the price for which a dealer will sell stock at a given time partnership: a company owned by two or more people portfolio: the total list of stocks and bonds owned by an investor profit: the money earned by a company prospectus: a booklet that contains information about a company that issues stocks and bonds to the public quote: the current price of a stock or bond rate of return: the percentage of interest or dividends earned on money that is invested Securities and Exchange Commission (SEC): the agency of the federal government that is responsible for regulating the buying and selling of securities securities: stocks, bonds, and notes bought and sold on the stock exchanges speculator: an individual involved in business transactions with considerable risks but also with the possibility of considerable gains stock certificate: a certificate that shows the number of shares an investor owns stockholder: an individual who owns stock in a corporation ticker tape: a ribbon-like tape on which a ticker machine prints stock prices (Computers now take the place of ticker machines.) yield: the amount of interest or dividends an investment earns Teacher Created Materials, Inc. 5 #2589 Stock Market Simulations

6 Why Invest? Investing is a way to make money with money. How does one get money to begin with? You may earn an allowance or have a small salaried job. Money can also be inherited or even won (though chances are slim that you will ever do the latter). Generally, people earn money by working. Some of the money that you earn may go toward immediate goals, such as paying for a hamburger and a soda when you are out with friends. Some money may go for short-term goals, like saving to buy a new bicycle or buying holiday gifts next year. Finally, some money may go toward long-term goals, like paying for college or even opening a small business after high school. Stockville Bank The money you save for long-term goals can actually earn more money toward those goals if you invest. Wise and careful investments can reap interest and dividends. In addition, investments are a way to protect you from inflation. Basically, inflation is what happens when prices increase over time. For example, a pizza slice that costs $1.50 today may set you back $2.00 in a few years. If you earn money on your investments, you will be able to keep up with price increases. What s more, the earlier you invest, the more money you will have later. Even small amounts of money can earn money over time. The purpose of learning about the stock market and related investments is to educate you, not only about this important part of the nation s economy but also to stimulate your thinking about money in general. You may hold a belief that since you have very little money of your own, the economy and the stock market have little effect on you, but this is a faulty belief. Not only do you need to learn to think about managing your own money, but economic forces can have a real effect on the type of job you will have, the amount of money you will earn, and how much things will cost to buy. By learning about the stock market, you will begin to understand some of these economic forces and to think about your place in the national, and even the global, economy. Think About It 1. What are your immediate spending needs? What products or services do you purchase on a daily, weekly, or monthly basis? 2. What are your short-term goals? What products or services do you plan to purchase in 3, 6, or 12 months? Do you have any plans for meeting these goals? 3. What are your long-term goals? What products or services do you plan to purchase in 1, 3, 5, or even 10 years? Do you have any plans for meeting these goals? 4. Examine your immediate spending needs and short-term goals. Can your long-term goals be accomplished, keeping in mind your other needs? Do you need to adjust your immediate needs and short-term goals? 5. What do you now know about the stock market and its effect on your financial health and wellbeing? (Note: Try to answer this question again when you and your classmates have completed the unit on the stock market.) #2589 Stock Market Simulations 6 Teacher Created Materials, Inc.