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Unit 2: The Stock Market

Unit 2: The Stock Market. Lesson 1: What is a stock?. Lesson Objective. SWBAT assess their tolerance for risk and the effect this has on their asset allocation. WOTD/Initial Activity. Allocation The process of distribution something . Bull Market Strong and rising stock market Bear Market

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Unit 2: The Stock Market

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  1. Unit 2: The Stock Market Lesson 1: What is a stock?

  2. Lesson Objective • SWBAT assess their tolerance for risk and the effect this has on their asset allocation.

  3. WOTD/Initial Activity • Allocation • The process of distribution something. • Bull Market • Strong and rising stock market • Bear Market • Weak and falling stock market • Initial Activity • Base your answer on your own opinion. • How does your position in life determine the risk you are willing to take? • What events might alter your risk tolerance?

  4. Activity 1: Types of Stocks Jigsaw • Focus Question: How do the stocks of different companies vary in their riskiness? • Read Defensive Stock Definition • Read Speculative Stock Definitions • Read Cyclical Stock Definitions • For your reading, summarize the central idea for your term. • Briefly describe what your term has to do with stocks. • Record responses on board & copy other group’s responses. • Share Out

  5. Diversification • Asset Allocation • Goal is to make money and protect the money you initially invest. • Diversification • Not putting all your eggs into one basket- minimizing the effect of bad news on one particular part of economy. • Diversify Across Investments to Minimize Risk • Sector: Services, Technology, Consumer Goods, Healthcare, Financial, Utilities, Basic Materials, Industrial Goods, Basic Materials, Conglomerates • Service Industry: Advertising Agencies, Apparel Stores, Auto Dealerships, Auto Parts Stores, Department Stores, Jewlery Stores, Drug Stores • Drug Store Companies: Rite Aid (RAD), Walgreen (WAG), CVS Caremark (CVS), GNC Holdings (GBC), Pharmerica Corp. (PMC), BioScrip Inc. (BIOS)

  6. Activity 2: Risk Assessment • Focus Question: How can an investor determine the value of a stock based on its financial ratios? • Goal: To Assess your risk tolerance and develop your investment outlook. • Consider your risk profile based upon the score of your completed questionnaire. • Based upon your risk profile, create a list of 3-4 sectors you would invest in • Share Out

  7. Summary Discussion • How does diversification of investments prevent an investor from losing all their money during a catastrophe?

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