Please Note: Copyright 2009 SIFMA Foundation for Investor Education.

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1 advisor guide

2 Please Note: 1. Prices included in the activities are not representative of actual market data and are for instructional purposes only. Visit online financial reporting sites for real, up-to-the-minute data. 2. Discrepancies may occur between student responses and the answer keys as a result of how far calculations were taken past the decimal point. In most instances, numbers were rounded from the thousandth or ten thousandth place. Copyright 2009 SIFMA Foundation for Investor Education.

3 Table of Contents TABLE OF CONTENTS... 1 HOW TO USE THIS GUIDE... 3 THE SMG STUDENT WORKBOOK... 5 VOCABULARY... 5 ANSWER KEYS... 8 UNDERSTANDING SMG... 9 COMPUTER ACCESS...9 TIME AND ORGANIZATION... 9 TEAMS... 9 CONSENSUS BUILDING SMG TEAM ROLES READING STOCK DATA DOING RESEARCH READING A STOCK TABLE HOW TO READ A STOCK TABLE EVIDENCING LEARNING TIPS FOR SMG ADVISORS RESEARCH WEB SITES UNDERSTANDING PORTFOLIOS WELCOME SCREEN (MAIN MENU) CHANGE PASSWORD INVESTOR RESEARCH AMERICAN INDICES ENTER A TRADE PENDING TRANSACTIONS ACCOUNT SUMMARY ACCOUNT HOLDINGS GAINS AND LOSSES...24 TRANSACTION HISTORY NEWS UPDATE TERMS YOU NEED TO KNOW RULES OF THE STOCK MARKET GAME CODE OF PARTICIPATION

4 HOT TIPS MANAGE STUDENT PORTFOLIOS RANKINGS CHANGING PASSWORDS TROUBLESHOOTING HELP DESK PARTICIPATION CERTIFICATES TRANSACTION NOTES TEACHER SUPPORT CENTER IN THE CLASSROOM CONCEPTS DEFINED LESSON SEQUENCE LESSONS & ACTIVITIES PROJECTS ASSESSMENTS STANDARDS PUBLICATIONS ANSWER KEYS

5 How to Use This Guide Congratulations! By registering for The Stock Market Game (SMG) you will connect student learning to real world saving and investing. The SMG program is a comprehensive, engaging program that advances academic achievement for students in grades 4 to 12, while providing them with an understanding of saving and investing concepts. Your student will have access to an on line portfolio with a virtual $100,000 account to invest, a student workbook to guide and provide evidence of student learning and a copy of Math Behind the Market to enrich the SMG learning experience. The purpose of the SMG Advisor s Guide is to provide you (the SMG Advisor) with an effective desk reference for implementing the SMG program. This guide is designed to assist you in managing your students while they participate in The Stock Market Game. It includes the answer keys to workbook activities, tips for effective play, and supplemental activities for a richer online experience. Please read the suggestions in this guide carefully. Doing so will make a positive difference in how well your students engage in the SMG program. 3

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7 The SMG Student Workbook The SMG Student Workbook provides the essential experiences students need to conduct transactions at increasingly complex levels. It demonstrates the most essential tasks found in the In The Classroom section of Teacher Support Center. The tasks in the SMG Student Workbook are organized according to the SMG program s core units and lessons. The SMG Student Workbook provides enough activities for a semester course of study or about 16 weeks. Students are encouraged to complete a variety of tasks before the portfolio becomes active and they purchase stocks and mutual funds. They continue to learn about the financial markets while the portfolio is active and they analyze their investment strategy once the portfolio is closed. It is recommended that you correct each completed task before allowing your student to move on to the next task. Answer sheets are provided for you. Vocabulary Developing the language of investing is an important way to understand investment concepts. The following terms are defined in the SMG program. Please review these terms with the students as they appear in the tasks. Bid Price: The bid is the price a market maker or broker is willing to pay for a security, such as a stock or bond, at a particular time. Blue Chip Stock: Blue chip stock is the common stock of a large, well-regarded US company. The companies in that informal category are collectively known as blue chip companies. Blue chips have a long-established record of earning profits and paying dividends regardless of the economic climate. Brand-name: A name that sets apart a product or company from rival products or companies Company: A person or group that makes something for other people to buy or use. Companies try to earn a profit. 5

8 Compound Interest: Interest paid on the principal and the accrued interest. Interest earned on an investment is added to the principal. This becomes the new base on which future interest accumulates. (See Activity Sheet 1 for an example) Corporation: A company legally separate from stockholders who own it and the managers who run it. Distribution date: Date on which the dividend payment is made. Diversification: An investment strategy in which you spread your investment dollars among industry sectors. Dividend: Portion of a company s profits (earnings) that may be paid to stockholders. Earnings: Whatever profits or net income remains after subtracting the company s expenses from its revenue; a company s profit. Income: Total earnings after all expenses and taxes have been paid. Index: Reports changes, usually expressed as a percentage, in a specific financial market. Each index measures the market from a specific starting point. Some indexes are: Dow (NYSE), S&P 500 (NYSE), Russell (NASDAQ), etc. Industry: A group of companies that make the same products, i.e. pharmaceutical companies. Investing: Buying stocks or other assets to have the money grow over time. Large Cap: The stock of companies with market capitalizations typically of $10 billion or more is known as large-cap stock.large-cap stock is generally considered less volatile than stock in smaller companies, in part because the bigger companies may have larger reserves to carry them through economic downturns. However, market capitalization is always in flux. Today s large-cap stock can drop out of that category if the share price plunges either in a general market downturn or as a result of internal problems. Margin, Buying on: Buying stocks (securities) by paying only a percentage (a margin) of the purchase price and borrowing the remainder from the securities firm for a fee 6

9 Mid cap Stock: A mid-cap stock is one issued by a corporation whose market capitalization falls in a range between $2 billion and $10 billion, making it larger than a small-cap stock but smaller than a large-cap stock. Investors tend to buy mid-cap stocks for their growth potential. Their prices are typically lower than those of large-caps. At the same time, these companies tend to be less volatile than small-caps, in part because they have more resources with which to weather an economic downturn. Mutual funds An investment company that pools savers money to invest in a variety of stocks and bonds. Professionals who research companies and buy or sell stocks actively manage them based on what they think is best for the shareholder. Portfolio: A collection of investments owned by one individual or organization. Price/Earnings Ratio: A company s closing price divided by its latest annual earnings per share. Also expressed as P/E. Ratio. Principal: Principal refers to an amount of money you invest, the face amount of a bond, or the balance you owe on a debt, aside from the interest. Private Company: A company owned by an individual or a group who will be responsible for all the company s gains and losses Profit/Earnings: The amount of money that remains after subtracting the company s expenses from its revenue. Public Company: A company owned by investors who buy shares of stock, usually through a stock exchange. Quote: The bid or ask price quoted for a stock at a given time. Record date: Date set by a company on which an individual must own shares to be eligible to receive dividends. Revenue: Revenue is the money collected for providing a product or service. Risk: The chance of losing all or part of the value of an investment. Risk Tolerance: An individual investor s ability to accept loss of some or all of the money they have invested. An individuals Risk Tolerance is based on a 7

10 number of factors including age, financial stability, amount of time before invested funds are needed for other purposes. Savings: Money set aside for future use. Sector: A group of stocks, often in one industry. The performance of any single stock in a sector can be measured against the performance of the group. Pharmaceutical companies are considered in the health care sector for example. Small Cap Stock: Shares of relatively small publicly traded corporations with a total market capitalization of less than $2.3 billion are typically considered smallcapitalization, or small-cap, stocks. That number is not used uniformly, however, and you may find small-cap defined as below $1.5 billion. Small-cap stocks tend to be issued by young, potentially fast-growing companies. Over the long term though not in every period small-cap stocks as a group have produced stronger returns than any other investment category. Stock: Ownership of shares in a business. Companies issue stock to raise money for a variety of reasons, including expanding or modernizing their operations. Stockholders (also shareholders): Ownership of shares in a business. Ticker Symbol: Letters that identify a security for trading purposes on the consolidated tape, such as XON for Exxon Corporation. Volatility: Indicates how much and how quickly the value of an investment, market, or market sector changes. Yield: The rate of return on an investment paid in dividends or interest. It is expressed as a percent. Answer Keys The SMG Advisor s Guide includes answer keys for tasks in the SMG Student Workbook. When your one of your students has completed a task, please mark that task before allowing them to continue to the next activity. If time is limited then you may provide your student with the answer key for him or her to self correct. Regardless of how you choose to manage this process, it is essential you check the completed work before a student advances to the next task. 8