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They say also

They say also. Standard 4.0 Investigate opportunities available for saving and investing. 4.3 Evaluate methods of investing. a. Stocks and Bonds Our Goals Learn The Rules of the game Learn and apply new indicators P/E ratios & Beta scores Make stock trades. Rules.

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They say also

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  1. They say also Standard 4.0 Investigate opportunities available for saving and investing. 4.3 Evaluate methods of investing. a. Stocks and Bonds Our Goals Learn The Rules of the game Learn and apply new indicators P/E ratios & Beta scoresMake stock trades

  2. Rules Start with $100,000.00 cash Can borrow additional $$ Negative cash balances charged %7 Positive cash balances pay %2

  3. The Formula Daily interest = |Cash| * Appropriate Interest Rate/365 Negative = %7 or .07 $1.92 = -10,000 * .07/365 $1.92 charged on your account Positive = %2 or .02 $0.54= 10,000 * .02/365 $.054 added to your account

  4. Available Stocks • American Stock Exchange • NASDAQ Stock Market • New York Stock Exchange • All trades are end of day transactions. • No matter what time trade is placed.

  5. The Numbers Buy order minimum 100 shares Buy order minimum price $5 End of Day Pricing Broker’s fee of 1% on all transactions Ex. 100 shares @ $10 = $1,000 * .01 = $10 Total cost of trade = $1,010

  6. Tennessee Rules 5x5x5 Must buy at least 5 different stocks, bonds, or mutual funds Make the 5 trades by week 5 Minimum $5,000 per trade plus commission fees

  7. Value Indicators Previously Learned Current Market Value 52 Week High 52 Week Low Daily high/low 4.3 Evaluate methods of investing.

  8. New Value Indicators P/E Ratio P = Price or current market value of stock E = Earnings per share Ex. Stock price = $10 Earnings per share = $2 P/E ratio =5 4.3 Evaluate methods of investing.

  9. Ex. Stock price = $10 Earnings per share = $2 P/E ratio =5 Compare 2 within similar industry Company A -- High ratio = overpriced stock 20/2=10 Company B -- Low ratio = underpriced stock 5/2=2.5 4.3 Evaluate methods of investing.

  10. Beta Scores Beta Scores (risk score) Measures the volatility of stocks relative to the market. Usually the S&P 500 The S&P 500 is considered to have a beta of 1 >1 is more volatile, <1 less volatile 4.3 Evaluate methods of investing.

  11. Higher the Risk Higher the Yield >1 is more volatile, <1 less volatile Higher beta should yield higher return Ex. If the market with a beta of 1 = 8% return then a stock with a beta 1.5 = 12% return beta 0.5 = ?% return 4.3 Evaluate methods of investing.

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