Stocks, Bonds and Mutual Funds

1. Stocks, Bonds and Mutual Funds

2. Write down these questions on your notes (leave answer space) • What are Stocks? • How does the Stock Market Work? • Why Do People Buy Stock? • Where are stocks bought & sold? • How to buy & sell stocks? • What is the difference between a stock and a bond?

3. Brain Pop • http://www.brainpop.com/socialstudies/economics/stockandshares/ • http://www.brainpop.com/socialstudies/economics/stockmarket/

4. Student Objectives • Students will understand the cost and benefits of investing in the stock market. • Students will understand the cost and benefits of investing in mutual funds. • Essential Learning #2: What role do incentives, benefits, costs and prices play in a market economy?

5. CA State Standards • 12e.2 Students analyze the elements of America's market economy in a global setting • 12e.2.9 Describe the functions of the financial markets.

6. 3 Asset Classes • Stocks • Bonds • Mutual Funds

7. What are Stocks? Remember when taking Cornell Notes you need to come up with at least 3 questions per page!

8. Now it is time to watch a video clip on Stocks!!! • Click on the link below: • http://www.brainpop.com/socialstudies/economics/stockandshares/ • User ID: FSUSD • Password: School • Make sure you view in Full Screen • Make sure the computer speakers are on!

9. How does the Stock Market Work?

10. How does the Stock Market Work?

11. How does the Stock Market Work?

12. Why Do People Buy Stock?

13. Where are stocks bought & sold?

14. How to buy & sell stocks?

15. How do you decide which stocks to buy?

17. The Dow Jones Industrial Average (DJIA)

18. 3M Company (MMM) • Alcoa Inc. (AA) • Altria Group, Inc. (MO) • American Express Co. (AXP) • American Int'l. Group (AIG) • AT&T Inc (T) • Boeing Co. (BA) • Caterpillar, Inc. (CAT) • Citigroup Inc. (C) • Coca-Cola Co. (KO) • DuPont deNemours (DD) • Exxon Mobil Corp. (XOM) • General Electric Co. (GE) • General Motors (GM) • Hewlett-Packard Co. (HPQ) • Home Depot, Inc. (HD) • Honeywell Int'l. Inc. (HON) • Intel Corp. (INTC) • International Bus. Mach. (IBM) • J.P. Morgan Chase & Co. (JPM) • Johnson & Johnson (JNJ) • McDonalds Corp. (MCD) • Merck & Co. Inc. (MRK) • Microsoft Corp. (MSFT) • Pfizer Inc. (PFE) • Procter & Gamble Co. (PG) • United Technologies Corp. (UTX) • Verizon Communications Inc. (VZ) • Wal-Mart Stores, Inc. (WMT) • Walt Disney Co. (DIS)

20. How to Read the Stock Market INDEX Page—you do not need to take notes on this! Symbol= ticker symbol for the index Last= the price it stopped trading at Change= the difference between the current closing price & the previous day’s closing price Change %= the percentage change between the current closing price & the previous day’s closing price This is an index list.

21. How to Read the Stock Market listing— You do not need to take notes on this! NYSE=New York Stock Exchange BBY=Ticker symbol for Best Buy Best Buy Co., Inc (NYSE:BBY) 47.46 +2.92 / +6.56%Sep 18 Prev. Close: 44.54 Open: 46.98 High: 47.56 Low: 45.69 Volume: 24,116,794 52wk Range: 41.85 - 58.49 P/E Ratio: 17.51 Dividend Yield: 1.10% 47.46 = price the stock closed at today +2.92 = the Net Change the difference between the current closing price & the previous day’s closing price. +6.56% = the Net percentage Change the difference between the current closing price & the previous day’s closing price. Volume = the number of shares that were bought & sold today Previous Close = what the stock closed at yesterday 52wk Range = the lowest to highest price this stock has traded at during the past 52 weeks Open = The price it started trading at today P/E Ratio = the price-earnings ratio, & is obtained by taking the latest closing price per share and dividing it by the latest available net earning per share. A high PE ratio usually indicates a stock that is experiencing a higher than average growth in earnings. High = the high price the stock traded for today Dividend Yield: the dividend divided by the closing price Low = the low price the stock traded for today

22. Now it is time to watch a video clip on Stock market!!! • Click on the link below: • http://www.brainpop.com/socialstudies/economics/stockmarket/ • User ID: FSUSD • Password: School • Make sure you view in Full Screen • Make sure the computer speakers are on!

23. Bonds

24. Components of a Bonds • Buying Paper EE Bonds • Sold at half their face value; i.e., you pay $25 for a $50 bond but it's not worth its face value until it has matured (which can take 10-30 years depending on interest rates). EE Bonds can earn more than face value. • Purchase in denominations of $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000. • $30,000 maximum purchase in one calendar year. • Issued as paper bond certificates.

25. Types of Bonds

26. Review—True or False • The NYSE is the largest marketplace for the sale & purchase of stocks in the world. • There are 11 companies in the DOW Jones. • One reason to buy stock is for the expected gain in its price. • The face value of a bond is also called the par value.

27. Review—True or False • The NYSE is the largest marketplace for the sale & purchase of stocks in the world. • TRUE • There are 11 companies in the DOW Jones. • FALSE • One reason to buy stock is for the expected gain in its price. • TRUE • The face value of a bond is also called the par value. • TRUE

28. Summary • When completing your notes you need to write a 3-5 sentence summary of the lecture. This is a part of your notes grade!

30. If you are interested in short sales: • http://www.investopedia.com/university/shortselling/default.asp

31. Next steps… • Get into your group • 12 groups of 3 • Read your packet • Assign who will do what job • Come up with a Team Name • Make a Team Nametag • Team name and number • Your names and jobs • Period • Companies in which you will invest (you can add to this later)