Problem of the day….

• What is an IPO?

Problem of the day…

• The bank returns a check cashed by you because there was insufficient funds to cover the check. The check is called:

Stock Market Basics

Novice Level

• Bought 100 Shares x $10.00 = $1,000• Sold 100 Shares x $20.00 = $2,000• $2,000 - $1,000 = $1,000• You gained $1,000• Assuming no commission was taken by the

broker

Apprentice Level

• Bought 155 Shares x $12.00 = $1,860• Sold 155 Shares x $23.00 = $3,565• $3,565 - $1860 = $ 1,705• You gained $1,705• Assuming no commissions

Master Level

• Bought 2,200 shares x $20.00 = $44,000• Sold 2,200 shares x $18.00 = $39,600• $39,600 - $44,000 = - $4,400• Loss of $4,400• Assuming on commission

Grand Master

• Bought 200 shares x $20.76 = $4,152• Sold 100 shares x $ 23.67 = $2,367• Sold 100 shares x $19.21 = $1,921• $2,367 + $1,921 - $4,152 = $136• You gained $136 • Assuming no commission

Return on Investment

• Percentage increase or decrease

• New Number – Old Number / Old Number

• (N – O) / O• Example:• $60.00 original number• $70.00 current number• Calculate percentage increase

or decrease:• (70 – 60) /60 = 10/60 =• 16.67% gain

Return on Investment

• Beginning Balance of $5,000 in brokerage account

• Don’t add or subtract from principal• Current Balance of $4,900• Calculate return on investment• (4,900 – 5,000) / 5,000 = -100/5000• = -2%

Calculate Return on InvestmentReview:

Go back and calculate the return on investment from the four previous problems: (novice to grand master)

Answers

• Novice: (2,000 – 1,000)/ 1,000 = 1,000/ 1,000= 100%

• Apprentice: ( 3,565 – 1,860) / 1,860 = 1,705/1,860 = 91.67%

• Master: (39,600 – 44,000) / 44,000 = – 4,400/44,000 = - 10 %

• Grand master: (2,367 +1,921 – 4,152)/ 4,152 =• 3.28%

Closure/ HomeworkCalculate the return on your investments in our stock market game

Assume no commissions right now