Exploring the Stock Exploring the Stock MarketMarketA project for Fifth Graders at UPES A project for Fifth Graders at UPES

Detroit, MIDetroit, MI

What is a stock?What is a stock?

A stock is a piece of a company. When you A stock is a piece of a company. When you own one own one shareshare of stock, you own one tiny of stock, you own one tiny piece of that company. You are a piece of that company. You are a shareholdershareholder..

What kinds of companies What kinds of companies have stocks?have stocks?

Companies that issue stock are called Companies that issue stock are called corporationscorporations..

Corporations come in all sizes. But they all Corporations come in all sizes. But they all have this in common: have this in common: They are not They are not owned by any one person.owned by any one person. Every Every shareholder is an owner of that shareholder is an owner of that corporation.corporation.

Where can I buy stock?Where can I buy stock?

You must buy stock from a You must buy stock from a stock brokerstock broker, a , a person that is licensed to sell stocks.person that is licensed to sell stocks.

You can also buy stocks on the Internet You can also buy stocks on the Internet through a through a brokeragebrokerage, such as TD , such as TD Ameritrade or E*trade.Ameritrade or E*trade.

Where does my money go Where does my money go when I buy a stock?when I buy a stock?

That’s simple… That’s simple… the corporation gets it!the corporation gets it!

It uses it to pay its It uses it to pay its expensesexpenses..

In return, you get to help make decisions for the In return, you get to help make decisions for the company by electing its Board of Directors. The company by electing its Board of Directors. The more shares you own, the more votes you get!more shares you own, the more votes you get!

Some corporations also reward their stockholders Some corporations also reward their stockholders by giving them payments every year…these by giving them payments every year…these payments are called payments are called dividendsdividends..

What happens when I don’t What happens when I don’t want to be a shareholder want to be a shareholder anymore?anymore?

You sell your stock, through a broker.You sell your stock, through a broker.

You give up your shares in the corporation You give up your shares in the corporation and get MONEY in return.and get MONEY in return.

How do I make money How do I make money from stocks?from stocks?

You don’t always make money! But here’s You don’t always make money! But here’s how it works…how it works…

You buy shares in the company for a You buy shares in the company for a certain price…called the certain price…called the asking priceasking price..

The asking price changes every dayThe asking price changes every day. . It tells It tells you how much a stock is worth.you how much a stock is worth.

Then…Then…

……when it’s time to sell…when it’s time to sell…

You sell your shares in exchange for that You sell your shares in exchange for that day’s asking price!day’s asking price!

If you sell your shares for more than you If you sell your shares for more than you bought them, you make a bought them, you make a profitprofit..

If you sell your shares for LESS than you If you sell your shares for LESS than you bought them, you incur a bought them, you incur a lossloss..

Can you give us an Can you give us an example???example???

Sure…Sure…

Let’s say you buy 100 shares of Microsoft Let’s say you buy 100 shares of Microsoft on Tuesday, April 15. The asking price on Tuesday, April 15. The asking price that day is $54.54.that day is $54.54.

How much do you have to pay???How much do you have to pay???

$5,454.00$5,454.00

Then what???Then what???

You decide to sell your 100 shares two You decide to sell your 100 shares two weeks later. The price that day is $63.23.weeks later. The price that day is $63.23.

You receive $6323 (63.23 * 100)You receive $6323 (63.23 * 100)

How much did you make?How much did you make?

$6323 - $5454 = $6323 - $5454 = $869

What do I have to do for What do I have to do for this project?this project?

You start with an imaginary $10,000You start with an imaginary $10,000 Create a Create a portfolioportfolio by using that “money” to by using that “money” to

“buy” stock of 10 different corporations.“buy” stock of 10 different corporations. These corporations must come from different These corporations must come from different

sectors. sectors. Track the value of your portfolio (how much it’s Track the value of your portfolio (how much it’s

worth) every week for six weeks.worth) every week for six weeks. At the end of May, determine your profit or At the end of May, determine your profit or

loss.loss.

Is that all?Is that all?

Along the way, you’ll complete math Along the way, you’ll complete math assignments that involve fractions, assignments that involve fractions, decimals, percents, and graphs.decimals, percents, and graphs.

You’ll also have the opportunity to “sell” You’ll also have the opportunity to “sell” stocks that aren’t doing well and “buy” stocks that aren’t doing well and “buy” new ones from time to time.new ones from time to time.

Terms you need to knowTerms you need to know

Wall StreetWall Street New York Stock New York Stock

ExchangeExchange ““The Dow”The Dow” Mutual FundMutual Fund NASDAQNASDAQ 52-week high & low52-week high & low

StockStock ShareShare ProfitProfit LossLoss CorporationCorporation BrokerBroker SectorSector