JA Take Stock In Your Future Session Two

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1 JA Take Stock In Your Future Session Two

2 Objectives You will be able to: Identify pieces of information from a stock table (Section 2); Use that information to distinguish if the stock would be a suitable investment for their personal retirement or other use (Section 2); Define the difference and benefits of buy-and-hold trading and active trading (Section 3); and Explain the JA Stock Market Challenge upcoming event, including the stock picks procedure and deadline (Section 3).

3 Review What is the difference between sole proprietorship, partnership, and corporation? Why would a private corporation choose to become public? What is one way the stock price is determined? What are dividends? What is a shareholder? How could you minimize risk if you are an investor? Why might you want to maximize risk? How do you buy stock? Explain where/when/why. What is a bull market? Bear market?

4 Supplemental Activity What companies did you research? What did you learn about the following, and why does this information matter? Stock price Expert opinions about future of product/service Projected earnings How old is the company The amount of debt the company has The size of the company Background of corporate officers

5 New Activity Big Burger Company only has stores in Colorado. They want to expand to Arizona and build at least five new locations. It will take $1 million to build each new location, so they issue $5 million in stock. Each share of stock will be sold at a starting price of $100, so the company will issue 50,000 shares. The company has done research and believes their new locations in Arizona will be successful because people who live in Arizona are similar to those who live in Colorado. Would you invest your money? What other info do you want?

6 Stock Tables

7 Stock Tables A stock table contains basic information on the changes in the stock market for a day Information in a stock table includes: Abbreviation of company name (example: Allstate = ALL) Year high and low for that particular stock How many stocks changed hands for that company within the day The highest and lowest prices paid for that stock during the day The day s closing price and its difference from yesterday s closing price Dividend on the stock

8 How to Read Stock Tables

9

10 Apple (sample)

11 Apple vs. Google

12 The JA Stock Market Challenge

13 Active & Buy-and-Hold Trading Active trading - actively buying and selling The investor watches the market trends and makes constant, fast decisions about what and when to buy and sell. When is this a good strategy? Buy-and-hold trading The investor purchases stocks or funds but does not constantly monitor their progress. When is this a good strategy?

14 What will you do with $500,000? 60 seconds = 1 day Press releases and hot tips throughout Floor traders will help you buy and sell There are 26 different stocks! Your team must submit stock pick info: Stock Name Symbol Number of shares Total Dollars Invested in this Stock

15 Summary of Basic Terms

16 Terms to Know Bear Market: A bear market occurs when more people want to sell stocks than buy them, causing stock prices to fall. Brokerage Commission: Brokers (agents for potential buyers and sellers) charge a fee for each transaction they make on your behalf. You are charged this fee in addition to the price of the stock. Bull Market: A bull market occurs when more people want to buy stocks than sell them, causing stock prices to rise.

17 Terms to Know (cont d) Common Stock: Stock that may pay dividends as determined by the corporation s board of directors. Common stock holders can vote for members of the board. Dividend: The part of corporate profits distributed to stockholders (generally dispersed quarterly.) Dow Jones Industrial Average: While not a true average, the calculation provides a measure of the average price of a select group of 30 large, industrial companies over time. Broad market averages designed to tell you how companies traded on the stock market are doing in general. Equity: Ownership in a company.

18 Terms to Know (cont d) Market/Marketplace: A place where buyers and sellers meet. Preferred Stock: As opposed to common stock, preferred stock has certain privileges. Owners are the first to receive dividends and the first to receive a share of the assets if the corporation is liquidated. The dividend is a constant amount. Prospectus: a statement of financial information published when a corporation is about to issue new securities, or when a mutual fund is created or changes its stated objectives.

19 Terms to Know (cont d) Retained Earnings: Profit (minus taxes), not paid as dividends but instead retained by the business to be reinvested in the business. Securities: Stocks, bonds or other investment vehicles. Stock: Shares in the ownership of a corporation. Stock Exchange: An organized marketplace where securities are bought and sold. Stock Broker: A person in a firm who is authorized to trade at the exchange. Stock Market: 1) Where buyers and sellers of stock meet; 2) an arrangement, rather than a physical place, that allows people to exchange stock. Stockholder: The owner of stock in a corporation.

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