Georgia Council on Economic Education www gcee org

Georgia Council on Economic Education www. gcee. org

The Basics Stock. An ownership share, or shares of ownership, in a corporation. When you own stock, you own a percent of a corporation. If a corporation has 100 shares and you own 10, you own 10/100 of the corporation, or 10%. Georgia Council on Economic Education www. gcee. org

Public vs. Privately held-Can You Buy Stock in ? Georgia Council on Economic Education www. gcee. org

New York Stock Exchange The oldest stock exchange in the United States, founded in 1792. Stocks are still traded on the floor. Traditionally for large corporations with large volumes of shares. Georgia Council on Economic Education www. gcee. org

NASDAQ An electronic marketplace enabling buyers and sellers to get together via computer to trade stocks. Traditionally high-tech firms that are very active. Created in 1971. Georgia Council on Economic Education www. gcee. org

American Stock Exchange (AMEX) Located in New York, handles about 10% of all securities exchange. Has mostly small-cap stocks, exchange-traded funds and derivatives. Georgia Council on Economic Education www. gcee. org

Rules • $100, 000 to invest for 10 Weeks • NYSE • AMEX • NASDAQ Georgia Council on Economic Education www. gcee. org • Must Purchase Minimum of 10 Shares in each corporation • Minimum Share Price of $3 • Buy at the Closing Price (not real-time) • You must pay $9. 99 transaction fee on every buy and sell transaction • Use www. yahoo. finance. com

Additional Rules • All money must be invested to within $100 • Must purchase 3 stocks only • Must buy shares that cost at least $3 • Must hold each stock for 3 weeks before selling • 3 X 3 rule! Georgia Council on Economic Education www. gcee. org

How to Win? • Select stock you are familiar with--NIKE • Buy at $100/share • 1000 shares with $100, 000 • Price rises to $101/share • Account increases by $1, 000 Georgia Council on Economic Education www. gcee. org • Select stock with a lot of volatility--XYZ • Buy at $10/share • 10, 000 shares with $100, 000 • Price rises to $11/share • Account increases by $10, 000

Stock Market Game • How can you make money in our game? • Buy ↓ Sell ↑ This is known as a long position. Georgia Council on Economic Education www. gcee. org

What does it mean if a stock splits? • The price of a company’s shares has been going up and has reached $100. Demand for the stock has started to decrease due to the high price. • So, the company does a 2: 1 split. Each share is “split” into two shares, doubling the company’s number of shares. Each share is now worth $50. • A shareholder with one share of stock that was worth $100 now has two shares, each worth $50 a piece, for a total of $100. • Hopefully, demand for the stock will now go up since the price for a share is now $50 instead of $100.

Selling short—sell high, then buy low. How? Your friend loans you this- Georgia Council on Economic Education www. gcee. org

You immediately turn around and sell it for $200. (the $200. 00 goes in your pocket) Georgia Council on Economic Education www. gcee. org

What do you owe your friend at this point? Georgia Council on Economic Education www. gcee. org

Georgia Council on Economic Education www. gcee. org

You expect leather briefcases to be on clearance sale at Macy’s for $150. 00 Georgia Council on Economic Education www. gcee. org

When they go on sale, you buy your friend a new briefcase for $150. 00. She gets her briefcase back and you just made $50. 00! Georgia Council on Economic Education www. gcee. org

Your broker loans you this- Georgia Council on Economic Education www. gcee. org

You immediately turn around and sell it for $50. 00. (the $50. 00 goes in your pocket) Georgia Council on Economic Education www. gcee. org

What do you owe your broker at this point? Georgia Council on Economic Education www. gcee. org

Georgia Council on Economic Education www. gcee. org

You expect the CDC to announce that Coke causes cancer… …so you wait. The price drops to $40, you buy it back, give it to your broker, and pocket $10. Georgia Council on Economic Education www. gcee. org

Instead, the CDC announces that Coke cures cancer! What happens to the price of Coke stock? Georgia Council on Economic Education www. gcee. org

The Risk of Short Selling? If the price of the stock goes up before you are required to return the stock to your broker, (a margin call), you will lose money. Why? Georgia Council on Economic Education www. gcee. org

What are Your Questions? Georgia Council on Economic Education www. gcee. org