The Stock Market Game is

The Stock Market Game is… an educational program for students in grades 4-12 and adults that stimulates learning about economics, finance and America...
Author: Jocelyn Bruce
6 downloads 2 Views 3MB Size
The Stock Market Game is… an educational program for students in grades 4-12 and adults that stimulates learning about economics, finance and American economic system.

How to Play Teams are given $100,000 of virtual money to invest in any of the three major markets: the Nasdaq National Market, and New York and American Stock Exchanges.

Teams may trade any common stock or mutual funds. Teams may trade as often as they want during the fourteen weeks.

When Does It Begin? Fall Session: September 14 - December 18, 2009 Spring Session: January 11 - April 23, 2010

Year Long Game: September 8 – April 23, 2010

Who Sponsors This Program? The Stock Market Game is run nationally by the Foundation for Investor Education.

More than 400 donors support the work of The Stock Market Game and BestPrep by providing financial and/or volunteer support.

Does Anyone Else Do This? The SMG is used in all 50 states Each year over 800,000 students participate nationally. Minnesota has roughly 13,000 students each year. 250 advisors/teachers will use this program in Minnesota

Portfolio Equity Competition Winners are determined by portfolio total which is… Ending Cash Balance + Value of Long Positions

How many students per team?

No more than 5 students per team!

What Are the Awards? BestPrep honors the top 3 teams in each division. Grades 4-6 Grades 7-9 Grades 10-12

What Do Students Win? Students receive a T-shirt. Signed certificate. One plaque per team. Traveling trophy.

Where should I start? •

• • •

Resources Wall Street Journal Classroom Edition Local Newspapers Star Tribune Annual Reports Web

• • • • • •

Web sites *

A Program of


Introductory Stock Market Information

Why Should I Invest? • It’s important to make investments for the future. • The economy, as well as the individual, benefits from stock investments.

Types of Investments • Savings Accounts • Certificates of Deposit • Bonds • Real Estate • Collectibles

Stocks, Mutual Funds, Bonds Stocks: You own a piece of the company. Stocks trade fluently throughout the day. Mutual Funds: You own one portion of a collection of stocks or bonds. Priced once per day.

Bonds: You loan money to a corporation or the government. You earn interest.


Bear Market


Bull Market

3 Main Markets New York Stock Exchange (NYSE) Auction Market, Oldest, largest, best-known stocks, approximately 3,500 companies listed

American Stock Exchange (AMEX) Auction market, approximately 800 companies listed

NASDAQ Newest exchange, large, mid-sized, and small companies, has the most companies listed

2 Types of Stocks

Common Stocks • Traded by the public

• Entitles you to collect dividends and to sell your stocks at a profit if its price increases.

Preferred Stocks • For employees

• These equity investments are listed on a stock market and traded among investors. Preferred stocks prices tend to stay more stable, changing little over time.

The Long Position • BUY LOW AND SELL HIGH

• Anticipating the stock’s value will go up over time

Example – Buy 100 shares at $50. – Later the stock price increases by $5. – You sell at $55. – You made $500 minus broker fees.


• Anticipating the stock’s value to drop.

High Risk

Example Short sell 100 shares at $50. Later the stock drops by $5. You short cover at $45. You made $500 minus broker fees.

Transaction Types

Long Position Short Position Open Buy Short Sell Close Sell Short Cover

Basic Rules

Rules Teams are permitted to buy up to 30% of their total equity in any one stock. Each team begins The Game with $100,000 in cash and may borrow additional funds. Interest is charged weekly on negative cash balances at an annual rate of 7%, and credited weekly on positive cash balances at an annual rate of 2%.

Rules Teams may trade stocks or mutual funds that has traded in the last seven days. The prices used to calculate a stock transaction are real and are taken from the price quote facilities available the SMG web site. Mutual fund transactions are given the most recent closing price.

Rules Transactions entered with a limit price will not be held past the initial attempt to price the transaction. All buy/short sell orders must be a minimum of 100 shares. Sell/short cover orders for less than 100 shares will be permitted. Mutual funds may not be short sold.

Rules The SMG does not permit buying/short selling stocks that trade below $5 per share. Trades can only be processed in whole and will be rejected if sufficient buying power does not exist to execute the entire order.

Rules A 2% broker's fee is charged for all transactions. Teams may trade on any day the participating stock markets are open.

Rules Stock trades entered after close of market or on the weekend will be priced at next day's opening price.

Teams do not have to liquidate their portfolios at the end of The Game.

Rules A record of a team’s portfolio and transactions will be available daily. Stock and cash dividends and stock splits are automatically computed into your portfolio.

Margin accounts are available Teams begin with a virtual $100,000 in their portfolio. After spending the initial $100,000, teams can borrow an additional $100,000 by ‘buying on margin’. When this money is borrowed, teams are charged an interest rate of 7%.

Margin is Risky!!! Because of the interest rates, borrowing on margin becomes very risky and often is not used. However, there is no way to prevent a team from ‘going on margin’.

Margin & Margin Call For purposes of The Game, teams can borrow up to 50% of their total portfolio value. $100,000 + $100,000 = $200,000 initial + borrowed = total equity However, if the value their holdings drops to a level of 30%, they will be on margin call. When on margin call, teams will have three weeks to bring the value of the holdings to a level above the 30% minimum.

763.398.0090 [email protected]

Two Competitions Portfolio Equity Competition & InvestWrite Essay Competition

InvestWrite Essay Competition • 700 word essay • Go to to register • Submit your students essay by Dec 1, 2009 • Great Prizes

National Winners