Agenda 11-17

1. Warm-Up 2. Discuss Safer Investments and Measures of

Stock Performance 3. Read Article “Picking Stocks” and answer

discussion questions and hypothetical examples in notebook

Objective: Students will discuss investments strategies and evaluate considerations when buying stock.

Warm-Up

1. In your life experience do you agree with the investment rule of “high risk high reward, low risk low reward”? Why or why not?

2. In your mind are stocks a safe investment? Why or why not?

Safer Investments &

Measures of Stock

Performance

Corporate Bonds vs. Municipal/Government Bonds

Par values of $10000 for corporate common, $1000 for munis

Corp bonds interest is taxable, munis is not taxed, Gov’t interest paid of at end of term

Munis safer b/c gov’t do not go out of business

Higher risk reward with Corp junk bonds

Gov’t bonds purchased at discount from redemption amount, long term investment

Treasury Notes, Bonds and Bills

Fed Gov’t issues notes/bonds when borrowing for over a year

Gov’t makes periodic interest payments

Regarded as safest of all financial investments

T-bills have 13, 26 or 52 week maturity

Do not pay interest, sold on discount basis (ex $10,000 T-Bill might sell for $9300)

Measures of Stock Performance

DJIA- How 30 large publicly owned companies have traded during a standard trading session in the stock market

Companies can be added or deleted (Apple newest 3-18-2015) S&P 500- based on the market capitalizations of 500 large

companies stock listed on the NYSE or NASDAQ Bull is a strong upward moving market, bear is a weak

downward moving market Both refer to markets over several months or years, not days

Options Market Call options give buyer option to back out of stock purchase for

future if price goes down Put option gives seller right to back out of a sale in future if

price goes up on a stock Most people buy and sell in spot market in which transactions

occur immediately