Reference no: EM131099709

Stock Market Game Outline and Grading Rubric

We will be playing a stock market game for approximately 4 weeks. Below are the rules of the game, which you should read carefully. Failure to meet all the requirements of the game will negatively impact your grade on the project.

Objectives of the Stock Market Game:

The student will:

1.   Learn the importance of beginning to invest at an early age, and continuing throughout their work career.

2.   Learn the importance of equity investing as a preferred method of building personal wealth.

3.  Understand various strategies for investing.

4.  Understand the tools available for evaluating stocks as potential investments.

5.  Be able to use the Internet to access information about investing.

In class during the first couple days of the game, we will be learning how to read a stock page, the meaning of various tools that are used to analyze stock, and various strategies for investing.

Procedure:

1. You will be given a hypothetical $100,000 to invest in stocks listed on either the NYSE or NASDAQ stock exchanges.

2.  You must invest in at least five companies.

3.  You must research at least one of the five companies, providing at least the following information about the company:

a.  A company profile, i.e. history and what they produce. (minimum 2 paragraphs)

b. Relevant financial information, such as total sales, total profits, dividends, P/E ratio, number of outstanding shares, recent stock performance

c.  Why you selected this company as a "buy"

4.  You will be required to make at least two trades during the course of the game. These trades may be either a simple sale of one stock and the purchase of another in the same value, or a partial sale of one to acquire a new holding or more of an existing holding. At all times, you must own at least FIVE stocks to simulate a "diversified" portfolio as most investment counselors and brokers recommend.

5.  You will set up an online portfolio for tracking your holdings, according to directions that will be made available to you.

6.  You will track your stocks weekly, recording the results on a transaction register that will be provided.

(Note: We will NOT be investing in mutual funds, preferred stocks, bonds, bond funds, or any of a number of other possible investment vehicles. For the sake of simplicity and uniformity, we will only invest in common stocks on the two exchanges listed above.)

Grading Rubric:

Your grade on the project will consist of the following items, each weighted equally.

1.   Research on one of your five original stocks, turned in on time.

2.  Successfully setting up your online portfolio.

3.  Completing each of the assigned updates of your portfolio in class by bringing a printout of your portfolio.

4.  Completing at least four trades during the course of the game.

Please note that your grade will NOT be based on how your "investments" perform, i.e., whether or not you make money. Four weeks is an extremely brief time in the life of the stock market; the purpose of the game is to develop an understanding of how the market operates, and how investing is accomplished. However, extra credit will be awarded to the top 4 earners in each class, provided they have met all of the above criteria.

Steps to Create a Stock Portfolio for Online Tracking

These directions are for Yahoo, but most others work similarly. Feel free to use another similar service. BEFORE you begin to create your portfolio, BE SURE to have completed the following steps:

a.  selected all of your stocks

b.  looked up and written down the stock symbol

c.   looked up the current price

d.   done your math to decide how many shares of each you wish to purchase Record this information and have it ready.

1.  Go to the Yahoo homepage at Yahoo.com. Just below the search box, among many options, will be a heading labeled "Finance." Click on this.

2.   This will take you to a screen labeled "Yahoo Finance." On the "Welcome" line will be an option to "Sign Up." Click on this. (If you already have a Yahoo e-mail account, you don't need to do these registration steps: just sign in to your account.)

(NOTE: After you first register, you will click on "Sign In" when you want to check your portfolio.)

3.  You will then go to a screen that asks you to enter an ID and a password. Enter both items and make a record of them for future reference. (I would suggest that you use your full name and the last six digits of your SS number-simple is better!) Yahoo will also ask you for an alternate e-mail address. If you don't wish to enter a real e-mail address, make on up, but be sure to fill it in.

4.    After you fill in the required fields correctly, go to the bottom of the screen and click on "Submit This Form." Yahoo will then verify your form, display your ID and e-mail address, followed by a line labeled "Continue to Yahoo Finance." Click on this.

5.   On the next page, find the Portfolio section, click on "New Portfolio."

6.  Click on "Track Your Current Holdings." You will be asked to name your portfolio-USE A SIMPLE NAME THAT YOU WILL RECOGNIZE!

7.    You will have to name the portfolio and you must remember that you will be entering the stock symbol rather than the company name, so you will have to find this symbol for each of your companies before you can continue. BE SURE UNDER BOX #3, LABELED "BASIC FEATURES" TO CHANGE THE VIEW FROM "BASIC" TO "PERFORMANCE" SO THAT YOU WILL SEE TOTALS FOR YOUR ENTIRE PORTFOLIO'S PERFORMANCE EACH TIME YOU OPEN IT.

8.    Edit the portfolio view to show the information that you need, including shares owned and purchase price per share. This is under "Advanced Features." Then, click on "Continue."

9.    On the next screen, labeled "Portfolio Details for: (Your ID)" fill out the number of shares and the price per share, click on "Finished."

10.  Now that your portfolio is set up, each time you enter Yahoo, use the following steps:

a.       click on Finance

b.      click on Sign In

c.       enter ID and password

d.      click on Sign In

e.       under Portfolio, click on your portfolio name

Trading Stocks

In order to trade, you must first complete the following steps:

a.       decide how much money you wish to invest in a "new" stock

b.      get an updated price for both the stock that you are selling and stock you are buying

c.       calculate the number of shares of the stock that you are selling that you must sell in order to receive the amount of money that you need for the new purchase.

d.      calculate the number of shares of the stock you are buying that you can buy, based on the dollars you will get from selling the "old" stock

e.       be sure to have the stock symbol for the "new" stock(s) to enter into the computer

From this point on, if you want to change your portfolio to reflect trades, go into Finance as above and enter your ID and password. Then, on the "Portfolio" line, click on "Manage" then "Edit." This will take you back to the box where you originally entered the stock symbols for your stocks. Follow these steps:

a.       delete any stock symbols for stocks that you are completely selling

b.      add stock symbols for new stocks that you are buying

c.       add share amounts and per share prices for stocks you are buying

d.      if you are making a partial sale, be sure to edit the number of shares for the stock that you are partially selling

 

Step 1 - Find Correct Stock Symbols

 

Enter the name of your company, then select the correct symbol and click on it. Remember, you are only allowed to buy stocks in the New York Stock Exchange (NYSE) or NASDAQ. Check this under the "market" column.

Find and record the "Last Trade" price.

Repeat this procedure for each of your four stocks.

Step 2 - Allocate Your Money

Decide how much of your $100,000 will go to each of the five stocks; this may be split up any way that you choose.

Divide the amount of money that you intend to invest in each stock by the "Last Trade" price that you have found for each stock. Important note: Round the number of shares for each stock DOWN to the nearest tenth of a share! This guarantees that you will not overinvest. You may NOT exceed $100,000!!

Record all of your information and be sure not to lose it; if something happens to your portfolio at any time during the semester, we can easily recreate it so long as you have this information.

With any remaining time, go ahead with the research that you are supposed to do on one of your four companies. See "The Stock Market Game" for exact information about what the research should contain. Much of this information may be found at Yahoo.com, and you might also look on the corporate website of the company you are researching.

Company	Stock Symbol	Total Amount I Want to Invest in this Company	Current Stock Price	# of Shares I am Buying (rounded down to the nearest tenth)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

You must buy stock in AT LEAST five companies. I included #6-10 in case you wanted to further diversify your portfolio, though you don't have to if you don't want to. Again, you may buy stocks in as many companies as you want, but you must buy shares in at least five.