The Investment Challenge PresentedBy SOLENT SKILL QUEST.
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Transcript of The Investment Challenge PresentedBy SOLENT SKILL QUEST.
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The Investment ChallengeThe Investment Challenge
PresentedPresented
ByBy
SOLENT SKILL QUESTSOLENT SKILL QUEST
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How the Stock Market How the Stock Market WorksWorks
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The Stock MarketThe Stock Market
• Daily News StatementsDaily News Statements
• Record Highs & LowsRecord Highs & Lows
• Gains & LossesGains & Losses
• Opening & Closing IndicesOpening & Closing Indices
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The Questions!The Questions!
• What is Stock?What is Stock?
• What is the Stock Market?What is the Stock Market?
• Why do we need a Stock Market?Why do we need a Stock Market?
• Where does the Stock come from?Where does the Stock come from?
• Why do people want to Buy and Sell Why do people want to Buy and Sell from it?from it?
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Determining ValueDetermining Value
ExampleExample A RestaurantA Restaurant
• PurchasesPurchases– BuildingBuilding– Kitchen EquipmentKitchen Equipment– TablesTables– ChairsChairs– StaffStaff– SuppliesSupplies– MarketingMarketing
• Cost £500,000Cost £500,000
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FinancesFinances
DescriptionDescription COSTSCOSTS INCOMEINCOME
Building, Building, Equipment & Equipment & PurchasesPurchases
£500,000£500,000
11stst YEAR YEAR
ExpenseExpense £250,000£250,000
SalesSales £300,000£300,000
Profit/LossProfit/Loss £50,000£50,000
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2nd YEAR Finances2nd YEAR Finances
22ndnd YEAR YEAR COSTSCOSTS INCOMEINCOME
ExpenseExpense £250,000£250,000
SalesSales £325,000£325,000
Profit/LossProfit/Loss £75,000£75,000
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Sell the Company?Sell the Company?
What is it worth?What is it worth?
No Further TradingNo Further Trading
• Building and Equipment = £500,000Building and Equipment = £500,000
• Assets or Book ValueAssets or Book Value
Sell - Ongoing Business (Keeps Sell - Ongoing Business (Keeps trading)trading)
1.1. £750,000 = £750,000 = 10% return (75,000 per year Profit)10% return (75,000 per year Profit)
2.2. £1.5M = £1.5M = 5% return (75,000 per year profit)5% return (75,000 per year profit)
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Selling the BusinessSelling the Business
Value of Business = £1.5MValue of Business = £1.5M• Selling 10 Parts = £150,000 per shareSelling 10 Parts = £150,000 per share• Each Share entitled to 1/10 of profitsEach Share entitled to 1/10 of profitsAlternativesAlternatives1.1. Sell 1500 Parts = £1000 per shareSell 1500 Parts = £1000 per share2.2. Divide into 3000 Shares – sell 1500 & Divide into 3000 Shares – sell 1500 &
keep 1500 (remain in control & bank keep 1500 (remain in control & bank £750,000)£750,000)
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StockStock
• Ownership of Company Assets & ProfitsOwnership of Company Assets & Profits
• A A DividendDividend = A share’s proportion of the = A share’s proportion of the Company’s profitsCompany’s profits
If Restaurant:If Restaurant:• 10 owners10 owners• makes £75,000 profit makes £75,000 profit • then each share = £7,500then each share = £7,500
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The Stock ExchangeThe Stock Exchange
• Selling the RestaurantSelling the Restaurant1.1. To local CommunityTo local Community
• Word of mouthWord of mouth• Advertise in Local PaperAdvertise in Local Paper
2.2. To wider community – DIFFICULT!To wider community – DIFFICULT!• Stock Market Stock Market (sometimes call Stock exchange)(sometimes call Stock exchange)
solves problemsolves problem• The LSE The LSE (London Stock Exchange)(London Stock Exchange) – The – The
Supermarket for buying and selling sharesSupermarket for buying and selling shares• The LSE – Better known as FTSE (The Footsie)The LSE – Better known as FTSE (The Footsie)• Use of Stock BrokersUse of Stock Brokers
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The Stock ExchangeThe Stock Exchange
Interesting FactsInteresting Facts• All buying & Selling in ONE Place – Share price All buying & Selling in ONE Place – Share price
known every second of the Dayknown every second of the Day• Price fluctuates based on:Price fluctuates based on:
– Company NewsCompany NewsMedia NewsMedia NewsEconomic NewsEconomic News
• Price of Stock reflects:Price of Stock reflects:– Projected dividendProjected dividend– ProfitsProfits– Price of Commodities (Oil, Gas, Etc)Price of Commodities (Oil, Gas, Etc)
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The FTSE IndicesThe FTSE Indices
• FTSE 100FTSE 100– 100 largest quoted companies (usually over 2 billion in value)100 largest quoted companies (usually over 2 billion in value)– Companies on index are changed quarterlyCompanies on index are changed quarterly
• FTSE 250FTSE 250– The 250 largest companies after FTSE 100The 250 largest companies after FTSE 100– Tracker Funds cant invest in these companiesTracker Funds cant invest in these companies
• FTSE Small CapFTSE Small Cap– About 550 Smaller CompaniesAbout 550 Smaller Companies
• FTSE All ShareFTSE All Share– About 900 CompaniesAbout 900 Companies– Price calculated at end of each dayPrice calculated at end of each day
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Remember The Questions!Remember The Questions!
• What is Stock?What is Stock?
• What is the Stock Market?What is the Stock Market?
• Why do we need a Stock Market?Why do we need a Stock Market?
• Where does the Stock come from?Where does the Stock come from?
• Why do people want to Buy and Sell Why do people want to Buy and Sell from it?from it?
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Why Invest in SharesWhy Invest in Shares
Interest Rate (5.25 %)
Dividend (7 %)
Share Price – FluctuationsFTSE 100 – 18%
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Managing your InvestmentManaging your Investment
• Yahoo FinanceYahoo Finance
• FT.ComFT.Com
• Bloomberg.ComBloomberg.Com
• www.londonstockexchange.comwww.londonstockexchange.com
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Share Price – The Influencing FactorsShare Price – The Influencing Factors
• The EconomyThe Economy
• Company NewsCompany News
• Analyst ReportsAnalyst Reports
• Press RecommendationPress Recommendation
• SentimentSentiment
• TechnologyTechnology
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The NewspaperThe Newspaper
CompanyCompany PricePrice ChangeChange HighHigh LowLow
HBOSHBOS 11391139 +8+8 11731173 881881TescoTesco 433433 +3.5+3.5 456456 313313EurotunnelEurotunnel 2525 00 3232 2222BPBP 538538 +3+3 723723 527527First First ChoiceChoice
305305 +2+2 306306 194194
ITVITV 112112 +1+1 130130 9494
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Task – Understanding Task – Understanding InformationInformationFrom the Daily Papers find the following information:From the Daily Papers find the following information:
1.1. Identify Newspaper & DateIdentify Newspaper & Date2.2. Identify FTSE 100 PriceIdentify FTSE 100 Price3.3. Identify FTSE 250 PriceIdentify FTSE 250 Price4.4. Find Price, Change, High Price, Low Price of:Find Price, Change, High Price, Low Price of:
1.1. PrudentialPrudential2.2. BarclaysBarclays3.3. SainsburySainsbury4.4. NextNext5.5. Mark & SpencerMark & Spencer
5.5. Identify the Business Headline Statement – Explain Identify the Business Headline Statement – Explain Comment?Comment?
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TerminologyTerminology
• Shares/EquitiesShares/Equities
• AcquisitionAcquisition
• MergerMerger
• Profit/LossProfit/Loss
• Cash FlowCash Flow
• AssetsAssets
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THE INVESTMENT THE INVESTMENT CHALLENGECHALLENGE
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The Investment Challenge The Investment Challenge
Rules of the GameRules of the Game• Each Team Has £100,000 to investEach Team Has £100,000 to invest
• One days trading will take place (20 mins)One days trading will take place (20 mins)
• Day starts at 08:30am and closes at 4:30pmDay starts at 08:30am and closes at 4:30pm
• You can buy and sell at anytimeYou can buy and sell at anytime
• No Commission ChargesNo Commission Charges
• News Items will occur by Text and RadioNews Items will occur by Text and Radio
• Winner = Highest Value (Closing Cash & Share Winner = Highest Value (Closing Cash & Share Value)Value)
• Bell will signify start and end of tradingBell will signify start and end of trading
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The Investment ChallengeThe Investment Challenge
• To complete a TradeTo complete a Trade
• Complete a Transaction DocumentComplete a Transaction Document
• Pass to Stock BrokerPass to Stock Broker
• Obtain PriceObtain Price
• Receive or Return a CertificateReceive or Return a Certificate
• Complete your Cash Flow DocumentComplete your Cash Flow Document
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The Investment ChallengeThe Investment Challenge
Prepare your StrategyPrepare your Strategy
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The Investment ChallengeThe Investment Challenge
The Game BeginsThe Game Begins
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The Investment ChallengeThe Investment Challenge
Thank YouThank You
Robin J SmithRobin J SmithSolent Skill QuestSolent Skill Quest