Online LEI Lesson 1. Lesson 1 Stock Prices LEARNING, EARNING

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1 Lesson 1 Stock Prices On l i n e L E I 1

2 1 Stock Prices LESS 1 STOCK PRICES Lesson Description Newspaper and Internet listings of stock prices provide important information for investors. Gathering and understanding information found in the stock listings is an important life skill, and also a useful skill for students participating in stock market simulations. This lesson introduces information typically found in stock listings, focusing on the basic elements. In stock listings, prices are listed as whole numbers with decimals. Understanding these numbers and equating them with mixed numbers are important mathematics skills for students. The lesson begins, therefore, with a review of these concepts. The students then participate in a math match-up to review equivalent mixed numbers and whole numbers with fractions. Next, they are introduced to some basic information of the sort found in stock listings. Finally, the students compute the cost of buying stock in various quantities at different prices. Concepts Copies of Activity 1, cut apart to provide a number card for each student and an equal sign card for each pair of students in the class One copy of Activity 2 for each student One copy of Activity 3 for each pair of students Standards Economics 7. Markets exist when buyers and sellers interact. This interaction determines market prices and thereby allocates scarce goods and services. Personal Finance Saving and Investing 4. Describe how to buy and sell investments. Mathematics Number and Operations for Grades 3-5 and Grades 6-8 Understand numbers, ways of representing numbers, relationships among numbers, and number systems. Procedure 1. Tell the class that the purpose of this lesson is to learn how to read information on the stock pages. The students will review two concepts that they need to understand in order to work with stock prices: whole numbers and fractions. Provide definitions and examples as necessary. Ask the following questions. Decimal Diversification Fraction Mixed number Stock Whole number A. What is a whole number? Any of the set of numbers beginning with zero and continuing with each number being one more than the number before it. Objectives The students will: 1. Define stock and diversification. 2. Define mixed number and decimal. 3. Give examples of whole numbers, mixed numbers and decimals. 4. Identify and give examples of equivalent mixed numbers and whole numbers with decimals. 5. Multiply with decimals. Time Required 60 minutes Materials B. Give examples of whole numbers. 0, 1, 2, 5, 10, 100 C. What is a fraction? A part of a whole or a part of a whole number. D. Give examples of fractions. 1 /2, 1/4, 3/4 2. Explain that mixed numbers are made up of a whole number and a fraction. Write 21/2 on the board, and explain that it takes 2 whole cups and 1/2 cup of flour to make a batch of chocolate chip cookies. Ask the students to identify the whole number and the fraction in this example of a mixed number. 2 is the whole number and 1/2 is the fraction. Transparencies of Visuals 1, 2, 3 and 4 2

3 3. Ask the students to provide more examples of mixed numbers. 6 3/4, 20 1/4 and so on 4. Explain that mixed numbers can also be expressed using whole numbers and decimals. Decimals represent fractions, using numbers to the right of a decimal point to show tenths, hundredths, thousandths and so on. Ask the students how to write 21/2 as a whole number and a decimal Tell the students that they will participate in a math match-up. Explain the following. Each student will receive a card. There will be a mixed number or a whole number with a decimal written on each card. A student who receives a card on which there is a mixed number must find a student who has a whole number and decimal that equals the mixed number. A student who receives a card on which there is a whole number and a decimal must find a student with a card that has a mixed number that is equal to the whole number and decimal. When two students think they have a match, they should come to the teacher s desk. If they have a correct match, they will receive an equal sign card, and they may sit down with their partners. If they don t have a correct match, they must continue to look until they find someone who has a correct match. When the partners are seated, they should write a sentence or two to describe their match. Write the following example on the board: 21/ Then write It takes 2 and 1/2 cups of flour to make a batch of cookies. This is the same as 2 and five-tenths cups of flour. 6. For practice, display a transparency of Visual 1, and ask the students to match the mixed numbers with the whole numbers and decimals that represent the same amount. 7. Distribute a card (cut out of Activity 1) to each student, and allow time for the students to find their matches and obtain equal sign cards. 8. When the students have found matches, each pair should write a sentence or two similar to the ones on the board, using the two numbers from his or her match. Allow time for the students to share their matches and their sentences with the class. 9. Then shift the focus of the lesson to stocks and stock prices. Ask the students if they have heard of stocks. Answers will vary. Explain that stocks represent shares of ownership (equity) in a corporation. People who buy stock become part-owners of corporations. 10. Ask the students why people want to buy stock. Answers will vary. Suppose Ms. Smith is not at all interested in bicycles, for example. Why would she want to be partowner of a company that makes bicycles? When corporations do well, shares of ownership may increase in value. People who own those shares then see an increase in their wealth. That is why people often buy stocks as a personal investment. 11. Explain that people who buy and sell stocks must understand mixed numbers and whole numbers with decimals. That is because stock prices are listed in the newspapers as whole numbers with decimals. 12. Discuss the following. A. Have you ever heard of the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX) or the NASDAQ Stock Market? Answers will vary. B. What are these exchanges? Places or means by which people may buy and sell stocks. These exchanges enable people to buy stock in more than 9,000 companies. 13. Like other things that are bought and sold, stocks have prices. A stock price is the amount the buyer pays and the seller receives when a stock is sold. Stock prices are constantly changing as buyers and sellers decide on a price that is agreeable to both of them. When they agree on a price and complete a transaction, both the buyer and the seller benefit, or the exchange would not take place. 14. Tell the students that stock prices are listed in newspapers; they also are posted on certain television broadcasts and on the Internet. 15. Project a transparency of Visual 2 and discuss the following. A. This table illustrates the sort of information that can be found in the stock-listings pages of most newspapers. B. The first two columns, labeled 52 Weeks Hi Lo, list the highest and lowest prices of the respective stocks during the last 52 weeks. For example, the highest price paid for a share of Sony Corporation stock during the last 52 weeks was $ C. How would you write this price as a mixed number? 64 1/4 D. The next column is labeled Stock. This column contains an abbreviated name for the listed companies. For example, McDnlds is the abbreviation for McDonald s. 3

4 1 Stock Prices E. The next column is labeled Sym. Sym stands for symbol. Each stock traded in the stock markets has a symbol. The symbol for McDonald s is MCD. F. The next two columns are labeled Hi and Lo. These two columns show the highest and lowest prices paid for a share of this stock on this particular trading day. G. The final column is labeled Close. This column lists the price of a share of stock in its last trade at the close of the market on this particular day. 16. Distribute a copy of Activity 2 to each student and allow time for the students to answer the questions. Check their answers. 1.A. 68.5; 1.B 68 1/2; 1.C ; 1.D. 47 3/4; 2. AbercrombieAbercrombie and Fitch, DaveBustersDave and Buster s, SonyCpSony Corporation, GenMillsGeneral Mills, McDnldsMcDonald s, PepsiCoPepsiCo; 3.A. MCD; 3.B. ANF; 4. $26.50; 5.A. $42.50; 5.B. $ Move on to Activity 3. Tell the students that for Activity 3 they will work with the partner they found during the Math Match-Up activity. Distribute a copy of Activity 3 to each pair of students. 18. Display a transparency of Visual 3 and assign each pair of students one of the stocks listed on the transparency. Allow time for the students to work. Tell each pair of students to complete the questions on Activity 3 based on the stock they were assigned. 4 E. McDonald s is part of the fast-food restaurant industry. F. PepsiCo and Coca-Cola Company are part of the softdrink industry. G. Disney is part of the entertainment industry, providing theme parks, movies and other entertainment. H. General Motors is part of the automotive industry. I. Pfizer is part of the pharmaceutical (medications/drugs) industry. J. Nike is part of the athletic apparel industry. 22. Tell the students that each pair has $10,000 to invest. They may purchase any of the stocks listed on Visual 4. They must purchase in increments of 10, 50 or 100 shares. They should come as close to spending $10,000 as they can without spending more. And they should try to diversify their portfolio. 23. Allow time for the pairs of students to work. When the students have finished their work, call on them to them summarize their portfolios and explain their investment choices. Closure Review the content of the lesson by asking the following questions. 1. Give an example of a whole number. 0, 1, 2, 3 and so on 19. When the student pairs have completed their work, record their answers on a transparency of Visual Give an example of a fraction. 1/2, 1/8, 2/5 and so on 20. Explain that it is important for people to diversify their stock portfolio. Diversification means buying stocks in various industries. Diversification protects people against losses that might occur if a single company or an industry suffers losses. 3. What is a mixed number? A combination of a whole number and a fraction. 21. Investors seeking to diversify can consider companies from a broad range of industries. Indicate the possibilities by reviewing the list on Visual 4. A. Abercrombie and Fitch is in the retail clothing industry. We see Abercrombie and Fitch stores at malls throughout the country. B. Dave and Buster s offers video games and other entertainment for adults. C. Sony Corporation is part of the electronic equipment industry. D. General Mills is part of the wholesale food industry. Its products are sold in grocery stores and other food stores throughout the country. 5. How would you write 241/4 as a decimal? Give an example of a mixed number. 21/2, 37 5/8 and so on 6. What is a stock? An ownership share or shares of ownership [equity] in a corporation. 7. What do investors do if they diversify? They buy stocks from various industries.

5 3. A stock is Assessment Multiple-Choice Questions a. ownership in a corporation. 1. Which of the following is a mixed number? b. a debt owed to a corporation. a. 23 c. buying stocks in various industries. b d. a debt a corporation owes. 4. Diversification means c. 0 a. ownership in a corporation. d. 31/4 b. a debt owed to a corporation. 2. Which of the following is equal to 241/2? a c. buying stocks in various industries. b d. a debt a corporation owes. c d Short-Response Questions 1. Use the information in the table below to answer the questions that follow. 52 Weeks Stock Sym Hi Lo Close SonyCp SNE GenMills GIS McDnlds MCD Hi Lo A. What was the highest price for General Mills stock during the last 52 weeks? $26.75 B. Write this price as a mixed number. 27 3/4 C. What was the closing price (last price) paid for a share of McDonald s stock on this day? $ Why is it important for individuals to diversify their stock portfolios? Diversification protects people against losses that might occur if a single company or an industry suffers losses. 5

6 1 Stock Prices LESS 1 VISUAL 1 MATH MATCH-UP PRACTICE Draw a line to connect the mixed numbers to the whole numbers and decimals that equal the same amount / / /

7 LESS 1 VISUAL 2 INFORMATI FROM THE STOCK PAGES 52 Weeks Stock Sym Hi Lo Close Hi Lo Abercrombie ANF DaveBusters DAB SonyCp SNE GenMills GIS McDnlds 9.75 PepsiCo MCD PEP

8 1 Stock Prices LESS 1 VISUAL 3 STOCKS PRICES Stocks 8 Prices Abercrombie and Fitch $65.25 Dave and Buster s $74.25 Sony Corporation $59.50 General Mills $26.50 McDonald s $61.50 PepsiCo $42.50 Disney $59.50 General Motors $26.75 Coca-Cola $63.25 Pfizer $48.50 Nike $37.25

9 LESS 1 VISUAL 4 STOCKS PURCHASES Stock Price Abercrombie and Fitch $65.25 Dave and Buster s $74.25 Sony Corporation $59.50 General Mills $26.50 McDonald s $61.50 PepsiCo $42.50 Disney $59.50 General Motors $26.75 Coca-Cola $63.25 Pfizer $48.50 Nike $37.25 Cost to Cost to Cost to Buy Buy Buy Shares Shares Shares 9

10 1 Stock Prices LESS 1 ACTIVITY 1 MATH MATCH-UP CARDS

11 LESS 1 ACTIVITY 1 MATH MATCH-UP CARDS (CTINUED) 8 1/4 47 1/2 12 3/4 53 1/4 17 1/2 96 3/4 34 2/5 6 1/5 96 3/5 9 1/ /2 12 3/4 26 1/4 66 3/5 11

12 1 Stock Prices LESS 1 ACTIVITY 1 MATH MATCH-UP CARDS (CTINUED) 12

13 LESS 1 ACTIVITY 2 STOCK INFORMATI The following table illustrates the sort of information that is on the stock pages of most newspapers. 52 Weeks Stock Sym Hi Lo Close Hi Lo Abercrombie ANF DaveBusters DAB SonyCp SNE GenMills GIS McDnlds MCD PepsiCo PEP The first two columns, labeled 52 Weeks Hi Lo, list the highest and lowest prices of the respective stocks during the last 52 weeks. A. What was the highest price for Abercrombie and Fitch stock during the last 52 weeks? B. Write this price as a mixed number. C. What was the lowest price of PepsiCo stock during the last 52 weeks? D. Write this price as a mixed number. 2. The next column is labeled Stock. It provides an abbreviated (shortened) name for the company. In the list below, draw lines to match each abbreviation with its complete company name. Abbreviation Abercrombie DaveBusters SonyCp GenMills McDnlds PepsiCo Company Name McDonald s PepsiCo General Mills Company Dave and Buster s Abercrombie and Fitch Sony Corporation 13

14 1 Stock Prices LESS 1 ACTIVITY 2 (CTINUED) 3. The next column is labeled Sym. This stands for symbol. A symbol is used in the stock market listings to identify each company s stock. A. What is the stock symbol for McDonald s? B. What is the stock symbol for Abercrombie and Fitch? 4. The next two columns are labeled Hi and Lo. These columns show the highest and lowest price paid for the stock on that particular trading day. For example, on this day, the highest price paid for a share of Dave and Buster s stock was $ What was the lowest price paid for a share of General Mills stock on this day? 5. The next column shows the closing price for the stock. The closing price is the price of a share of the stock in its last trade at the close of the market on this particular day. A. What was the closing price (last price) paid for a share of PepsiCo stock on this day? B. What was the closing (last price) paid for a share of Sony Corporation stock on this day? 14

15 LESS 1 ACTIVITY 3 CALCULATING PURCHASES 1. Your teacher will assign you and your partner a stock. Write the name of the stock on this line. 2. What is the price for a share of this stock? 3. Use the price to calculate how much it would cost to buy 10 shares of this stock, 50 shares of this stock and 100 shares of this stock. Show your work. a. How much would it cost to buy 10 shares of this stock? b. How much would it cost to buy 50 shares of this stock? c. How much would it cost to buy 100 shares of this stock? 15