Teaching Math Through the Stock Market Game Math Behind the Market Teaching Math Through the Stock Market Game

By Mindy Robison Mindy.robison@canyonsdistrict.org Midvale Middle School

Accessing Lesson Plans www.stockmarketgame.org Login In the Classroom Publications Show All Publications Listed by Name (Next) Math Behind the Market

Table of Contents Before You Invest Selecting Your Investments Tracking Your Investments At the End of Trading

Math Strands Thinking Algebraically Interpreting Statistics Communicating Quantitatively Tackling Complex Problems

Lesson Plan Lesson Summary Lesson Objective NCTM Standards Mathematical Strands

Sample Lesson Plans Before You Invest What is a Company Page 2: Thinking Algebraically Percentages Patterns Page 3: Interpreting Statistics Ordering Page 10: Tackling Complex Problems Ratios Division

Sample Lesson Plans Before You Invest What is a Stock Page 12: Thinking Algebraically Integers Addition/Subtraction/Multiplication Page 15: Communicating Quantitative Information Understanding Tables Graphing

Additional Information Don’t have to do all the lessons Enrichments lessons Answer Keys Match to State Core Feel free to adapt and change

More Resources http://my.uen.org/myuen/69301/2 This is my UEN site that has the following worksheets available.

Understanding Stock Prices Target (TGT) Walmart (WMT) Last Trade 46.02 49.08 Trade Time 10/2/09 Change .55 (1.18%) .08 (.16%) Previous Close 46.57 49.00 Open 46.03 48.89 Day’s Range 45.73-46.54 48.84-49.34 52 wk Range 25.00-49.20 46.25-60.22 Volume 6,094,625 15,094,001 Avg Vol (3m) 8,358,320 17,048,100 Market Cap: 34.60 B 189.29B P/E 16.60 14.39 EPS 2.77 3.41 Div & Yield .68 (1.5%) 1.09 (2.2%)

What Questions? Understanding Basic Concepts Percentage Increase/Decrease Differences Price to Earnings Ratio Which Stock would you buy?

Another Resource Go to Financeintheclassroom.org Grouped into math lesson plans and activities by grade. Lessons are simple, easy to teach, and meet the state core. http://financeintheclassroom.org/

Stock Purchases & Commission http://www.uen.org/Lessonplan/preview.cgi?LPid=25375 7th Grade Mathematics Includes: Power Point Worksheet Answer Key

Determining Stock Cost Lets assume you have decided to buy Hershey (HSY). The price is $39.91. You decide you want to purchase 100 shares of the company. To find out how much the stock will cost you simply multiply the price ($39.91) by the number of shares (100) and you get: 39.91 · 100 = $3,991.00, but don’t forget about the commission!

Examples: You want to buy 500 shares of Ford, at the current trading price of $12.41 per share. Cost of the Stocks:  500 · 12.41 = $6,205.00 Commission:  .02 · 6,205.00 = $124.10 Total Price: 6,205.00 + 124.10 = $6,329.10

Extensions What would happen to the total cost of the transaction if the 2% commission: Went up? The total cost would be more. Went down? The total cost would be less. When investing your own money do you want high or low commissions? LOW – the transaction will cost less money. 

Price To Earnings Ratio http://www.uen.org/Lessonplan/preview.cgi?LPid=25290 7th Grade Mathematics Includes the following: Power Point Worksheet Answer Key

Price To Earnings Ratio   CompanySymbol Earnings Per Share Price #1 Price #2 Price #3 Price #4 Apple: AAPL $5.72 $78.20 $115.23 $145.67 $190.55 78.20 ÷ 5.72 = 13.67 115.23 ÷ 5.72 = 20.15 145.67÷ 5.72 =25.47 190.55 ÷ 5.72 =33.31

What Else? What happens to the Price to Earnings Ratios if: The Stock Price Goes Higher? The Stock Price Goes Lower? The Earnings Go Higher? The Earnings Go Lower?

Exponential Growth http://www.uen.org/Lessonplan/preview.cgi?LPid=24626 10th Grade Mathematics Includes: Power Point Worksheets (Growth & Decay) Answer Keys

Exponential Growth 2% Assume you have $5,000 to invest. Interest Rate 2 yrs compounded annually 2 yrs compounded continuously 20 yrs compounded monthly compounded daily 2% Formula: P(1+ r)t $5202.00 Formula: Pert $5204.05 Formula: P(1+r/n)nt $7456.64 $7459.04 Formula: A = P (1 + r/n)nt P = Principal r = Annual Rate n = # of times compounded per year t = Number of years

What Else? Talk about what happens when the interest rate changes. Discuss the differences between the ways the interest is figured. Help students realize how important time is to the equation.

Exponential Decay 10% Formula: y = a (1 – r)t Assume the car was purchased for $20,000 Depreciation Rate Value after 2 years Value after 5 years Value after 8 years Value after 10 years 10% $16,200 $11,809.80 $8609.34 $6973.57 Formula: y = a (1 – r)t a = initial amount r = percent decrease t = Number of years

What Else? Talk about what happens when the depreciation rate changes. Talk about the values you will get 20 or 30 years out – does it make sense? Discuss the pros and cons of buying new or used cars.

The Stock Market Game Study http://www.finrafoundation.org/web/groups/foundation/@foundation/documents/foundation/p119852.pdf http://www.finrafoundation.org/web/groups/foundation/@foundation/documents/foundation/p119855.pdf

The Stock Market Game Study Students who played the game: Scored Significantly Higher on Mathematics Test Scored Significantly Higher on Financial Literacy Tests Score higher regardless of teacher implementation

The Stock Market Game Study Teachers Financial practices were influenced Set financial goals Analyzed their risk tolerance Read the business section of the newspaper Watched financial programs

Resources www.stockmarketgame.org www.financeintheclassroom.org http://robisonlovesmath.wikispaces.com/ My email: mindy.robison@canyonsdistrict.org