Virtual Stock Exchange Project Agriculture Economics

Market Opens - Mar 22, 2016

Name:

Virtual Stock Exchange Project

Signing UpVSE Stock Market Game Instructions

This assignment involves playing a simulated stock market game. You will play this game and compete against members of the class and Mrs Bishop! The game will be played on the Virtual Stock Exchange (VSE) web site. Virtual Stock Exchange is an educational tool to teach students about investing in the stock market. It is a simulated online brokerage firm that lets you do mock trading of all securities listed on the major stock exchanges in the U.S. Thus, you will be buying and selling stocks on the Internet just like you would if you had an account at an online broker.

This game is adopted from Virtual Stock Exchange for Eastern Michigan University students who are enrolled in Agriculture Economics, spring semester. The game involves playing a simulated stock market game with virtual $100,000. Players will compete against members of the class. The performance of players will be evaluated during the game and at the end of the game. The highest return on a portfolio will receive a bonus of 20 extra credit points added to the semester average.

YOU MUST SPEND ALL OF YOUR MONEY BY THE END OF THE GAME!

Let’s Get Started:Go to: marketwatch.com/game

1. Select “JOIN NOW”

2. Create an account

Select: “Not a member?

Join today!”

3. Create a profile

4. A validation email will be sent to your email address you used to create your account. Please check your inbox and click on the link within to complete the registration process.

Unclick these boxes unless you want to receive emails from

this website.

Use YOUR NAME and email address to sign up. You will need a valid email address

to do this activity. Don’t have one?

Create a Display Name. MUST be your first initial then last name or you will not receive credit for this

assignment! Example: G Bishop

Unclick all of these Newsletter Alert boxes so you don’t receive

junk mail!

5. Once you have completed your registration, go to: http://www.marketwatch.com/game/king-ag-econ

Select “Join Now” (You may need to sign in again)

Ag. Econ 2015 Game Password: agecon2016

8. You can now research stocks, make trades or place an order.

FAQ’s Registration Is MarketWatch registration a requirement? Yes. You must complete registration and create an account to join and play. It takes less than a minute and is, of course, free. Remember, you also gain access to key features on MarketWatch when you register for the game.

What will I use to login to the site each time I visit? Use the email address and password you created when you registered. If you forget your password, there's a link to help you in the login area.

Can I update my account once it's been established? Sure. Just click My MarketWatch from the upper-right corner of any page. This gives you access to your My Account information and games. Getting Started I registered, now what do I do? Step 1 - Visit the company trading page and make your picks for the first week. Step 2 - come back the following week and enter picks for the upcoming week.

How do I decide which stocks to include in my portfolio? Use the expansive collection of News & Research tools to help you decide. You can chart a stock's progress, examine in-depth financials, read its latest announcements and much more to help you make informed decisions. How often is game rank calculated? The players overall game rank is continuously updated while the game is in progress. Access this by clicking on Ranking in the navigation. Portfolio Can I make changes to my portfolio at any time? Yes. If the week has not started you can just click Company Trading from any page.

Some Initial Suggestions You are free to make any choices you want about your portfolio. However, you may want to keep in mind some basic investment principles that emerge from Modern Portfolio Theory.

1. The risk of a portfolio is measured by the volatility of the return on the portfolio. The more volatile the return the more risky the portfolio. A high-risk portfolio has the potential to make either a very high or very low return. Alternatively, a low risk portfolio has the potential to achieve a more moderate return. For example, the return on a high risk portfolio for the period January 6 through April 14 might range from a possible high of 100% to a possible low of – 50%. The return on a low risk portfolio for the same period might range from a possible high of 10% to a possible low of –5%.

2. A major way to adjust the level of risk of a portfolio is by changing the relative proportions of the portfolio held in cash and stocks. To increase the potential for a higher return, but also increase the chance of a lower return, you can invest a larger portion of your portfolio in stocks and a smaller portion in cash. For example, a portfolio that consists of 80% stock and 20% cash is more risky than a portfolio with 50% stocks and 50% cash. If you are a big risk taker, then you may want to hold your entire portfolio in stocks, and even borrow more money from your broker on margin to buy more stocks. While this increases the probability of making a big return, it also increases the probability of making a big loss.

3. It is possible to lower your risk without sacrificing your expected return by investing in a well diversified portfolio of at least 15 to 25 stocks and or mutual funds. Diversified stocks are stocks of companies whose stock prices and returns do not move closely together. For example, rather than purchasing a stock portfolio that consists of all technology stocks, you would purchase stocks of companies in different industries and sectors of the economy. Also, you would purchase stocks of large, medium, and small size companies, rather than purchasing all small size companies or all large size companies.

If you have little or no prior knowledge about the stock market and choosing stocks, you might want to use one or more of the following strategies to decide what stocks to buy.

1. Buy the stocks of one or more of your favorite companies.

2. Ask friends, relatives, and others for stock tips.

3. Select a portfolio of 15 to 25 stocks at random. For example, you might tape the financial pages of the newspaper on a wall, shut your eyes, and throw darts. Whatever stocks the darts hit you included in your portfolio. Some stock market experts believe that this type of randomly selected portfolio will perform at least as well as stock portfolios of experienced traders.

4. Use financial information and/or stock market analyst recommendations to choose stocks.

5. Use internet to obtain information on “Hot Stock Lists” and “Sample Portfolios.” Most investment websites have suggested portfolios of stocks based on different investment strategies, recommendations of stock market analysts, or stocks that have the biggest recent percentage gains.

Investment Web sites that you might want to check out include: MSN Investor (http://moneycentral.msn.com/ SmartMoney.com (http://www.smartmoney.com) Yahoo Finance (http://finance.yahoo.com) CNN Money (http://money.cnn.com/data/markets/) Market Watch (http://www.marketwatch.com/)

Part IThe Trading!!

Requirements

1. After you successfully register as a member of VSE, give Ms. King your name and username.

2. Trading will open on March 22, 2016 and the market will close on May 12, 2016.

3. During the game you are required to adjust your portfolio at least twice per week. You will be discussing your rationale for your adjustment decision in class.

4. We will have time in the Computer Lab for you to buy/sell stocks: *May 15th, portfolio’s rankings will be printed and the winner will be determined.

Portfolio Constraint For this game, you must satisfy the following portfolio constraint:

1) You must have at least FOUR different stocks 2) You must have at least TWO agriculture stock 3) You must spend ALL of your money by the end of the game

Rules of the Game You begin the game with an online brokerage account with $100,000 in cash. You can use this cash to purchase a portfolio of stocks. Any cash that is not currently invested in stocks will earn an annual interest rate of 1% in your brokerage account. When buying or selling a stock, you must submit an order. You can submit either a market order, limit order, or stop loss order. If you submit a market order while the market is open between 9:30 A.M. and 4:00 P.M it will usually be executed within 20 minutes. If you submit a market order after the market closes at 4:00 P.M. it will be executed when the market opens the following day. Each time you buy or sell a stock, you must pay a brokerage commission of $7.95. This commission is deducted from the cash balance in your account after each trade you make. This is the same commission that the discount brokerage firms charges for online stock trades. Your brokerage account is a margin account, so you can buy stocks on margin or sell stocks short if you so desire. If you buy stocks on margin (i.e., borrow money from your brokerage firm to buy stocks) you must pay an annual interest rate of 4% on the amount of money borrowed.

Part IIFor the 7 week trading period, you will be keeping track of current event articles and reviews that have caused a change in the supply or and/or demand for you agriculture stock and how prices may have been affected. Magazines, newspapers, and the internet are excellent sources of information. You need to complete a review THREE times to be turned in on the following dates: April 6th April 20th May 6th

Due at the BEGINNING of class. Will be docked as late if not PRINTED and ready to go. Yes, that means typed.

Your review should include: A) Date of article B) Summary Title: title of article, author and source C) Details summary of economic event in article D) Description of how event may affect supply of and/or demand for you stock E) Explanation of how an event may impact the price of your stock -higher, lower, no change F) Actual printed article.

Use rubric below to prepare your summary:

Warning: Be prepared to share article with class.

Requirement Your Score

Points Possible

Select a news article (from internet, newspaper or magazine) that discusses and economics event that affects your agriculture stock.

10

Half - One page summary (1” margins, double spaced, 12 point font)

10

Included the title, author and source of the article as your summary title.

5

Included: summary details of economic event and description of how it may affect supply of and/or demand for you stock

10

Attached a copy of your article to your typed summary 5

Explained of how this event may impact the price of you stocks 10

TOTAL 50

Part III Stock Market Game Response Paper

Due: May 16th, beginning of period

Points: 80 Test points

Purpose: To quantify and qualify your learning and experience in playing the Market Watch stock market game and participating in in class discussions/lectures.

DIRECTIONS: You will be writing a response paper based on your experience, data and material that you have learned about the stock market through playing this game and taking Agriculture Economics. Follow the instructions below.

Title Page 5 Points First and Last Name May 16th, 2015 King Agriculture Economics

Background 5 Points (At least 5 sentences) Discuss the basics of the stock market: What is the stock market? How did the stock market come about? What are the different markets? What makes them different/same? What is a Bear market? What is a Bull market? Which are we in now?

Introduction 5 points (At least 5 sentences) What was the object of the Market Watch game? What were the requirements? How much money could you spend? What stocks did you want or need to buy?

Stock Report Following is to be completed for FOUR of your stock at the end of the game: Stock 1: Name of Stock (Repeat for Stock 2, Ag Stock 1 and Ag Stock 2) 40 Points Name of stock and TCKR symbol: Current Executive/Officer name: Logo (include picture): Industry: Sector: Fiscal Year-end:

Revenue: Net Income: 2013 Sales Growth: Employees: Top 5 Key Competitors 1. 2. 3. 4. 5. Short Description of the Company 3-5 sentences 52 Week High ______ 52 Week Low ______ Shares I have invested ______ and Market Value in my portfolio ______ Investment Reasoning Discuss why you choose to invest in this stock (5-8 sentences). How did you find it? Did you do any research on it before you invested? How has it performed during our game? Have you bought and sold shares of this stock? What news/current events have effected the price of this stock? If you had the chance to invest someday with your own money, would you invest in this company?

Conclusion 10 Points (5-8 sentences) What have you learned from playing this game and from Agriculture Economics about the stock market? What has been the most challenging part? and why? What was part was the most fun and why? What suggestions would you make to next years Agriculture Economics students about playing Market Watch? What was the biggest learning experience you walked away with from this course?

References 5 Points Use “Son of a Citation machine” or Purdue “OWL” APA, format or “Easybib” 1. 2. 3. 4. 5.

Format 10 points 1” margins 12 point font, Arial Printed out and staples

FORMAL RUBIC WILL BE PROVIDED