Florida Stock Market Challenge September 8-November 14, 2014 floridasms.com

Importance of Financial Literacy “Improving basic financial education at the elementary and secondary school level is essential to providing a foundation for financial literacy that can help prevent younger people from making poor financial decisions that can take years to overcome.” Alan Greenspan Chairman The Federal Reserve

Did You Know? Individually, kids age 5 to 17 spend an average of $3500 to $4000 annually. Collectively, kids age 5 to 17 spend approximately $141 billion annually. Approximately 28% of 12-year-olds do not know that credit cards are a form of borrowing. Only 14.6% of high school seniors who participated in a survey think that stocks would have a higher rate of growth over 18 years than savings accounts, checking accounts, or U.S. Government savings bonds. Almost 40% of 12-year-olds do not know that banks charge interest on loans. The difference between cash, checks, and credit cards cannot be explained by 60% of pre-teens. The median amount of allowance and cash 12 to 16-year-olds get from parents/guardians is $50 per week. Information from www.themint.org. The mint is a collaborative effort between the Northwestern Mutual Foundation and the National Council on Economic Education

Did You Know? Among 16-18 year olds surveyed, 86% said they would rather learn about money management in class than make financial mistakes in the real world. 93% of Americans believe all H.S. students should be required to take a class in financial education. Only 4 states require H.S. students to take a semester-long course in personal finance (Utah, Tenn., Virginia, and Missouri). Only 11.6% of K-12 teachers have taken a workshop on teaching personal finance

What Is the Florida Stock Market Challenge? Established in 1986 by the Florida Council on Economic Education, the Florida Stock Market Challenge is a motivating approach to learning about the American economy. Allows students to develop and manage a hypothetical $100,000 investment portfolio, as well as compete for the best portfolio performance. Offered to students in grades 4 – 12 as a 10 week simulation each fall and spring Easily integrated into social studies, mathematics, and language art classes.

NG Sunshine State Standards Correlations The Stock Market Challenge is correlated to the standards for language arts, mathematics, and social studies for grades 3 – 12.

Statewide Competition Eligibility Must hold a minimum of three different stocks and/or mutual funds in your portfolio at the end of the simulation. Must have an active portfolio for a minimum of 7 weeks Ranking Method Portfolio performance is compared with that of the S&P 500 Index during the same period of time.

Student Awards Regional & State Statewide Champion - (1) - A Certificate of Participation - A $250.00 gift certificate to the Advisor - $50 Pizza Party Gift Card - Invitation to this year’s Governor’s Awards - Visit to the Federal Reserve Building in Jacksonville or Miami Regional First Place Teams (6) - A Certificate of Participation - A $100.00 gift certificate to the Advisor - A $50.00 Pizza Party Gift Card Regional Second & Third Place Teams (6) - A Certificate of Participation - A $50.00 Pizza Party Gift Card

Making Trades Internet Only http://www.floridasms.com/ Stock transactions receive 15-20 minute delay prices when orders placed during market hours Mutual funds receive end of day prices

Trading Stocks You may buy, sell, sell short, and cover a short almost all NYSE and NASDAQ-AMEX stocks (common and preferred) that are trading at 5.00 or more. IPOs are usually available the afternoon that the new stock starts trading on the exchanges. Stock trades may be in any whole number of shares greater than 25 (i.e., 25 share minimum but you can trade 26 shares or more).

Transaction Types Buy – taking a “long position” with the hope that the stock will increase in price. Sell – taking the position that the stock will decrease in price. Short Sell – selling a stock that you don’t actually own with the hope that you can later buy the stock back at a lower price. Short Cover – buying the stock to pay back what you borrowed.

Trading Mutual Funds You may buy or sell mutual funds. Mutual funds are typically traded in dollar amounts and not by number of shares, but you can trade them either way on the Florida SMS. They must be bought or sold in lots of $500. Like stocks, in order to trade mutual funds you must have the ticker symbol. All mutual fund ticker symbols are five letters long ending in "X". Ticker symbols that are 5 letters and end in “XX” are money market funds and cannot be traded.

Trading Bonds You may buy and sell bonds on the Florida SMS, but you cannot short bonds. Bonds are difficult to research. A limited selection of 103 Corporate Bonds, Treasury Bonds, Strips, and Bond Mutual Funds is listed on the bond transaction screen. All bonds have a par value of $1,000. When you buy a bond, you must pay the accrued interest on the bond. On your statement, the accrued interest and commission are added together. You cannot short a bond.

Volume and Purchase Restrictions Throughout the simulation, teams may invest no more than $25,000 in any one stock. For example, if you buy $25,000 in any one stock and the price increases, you are not required to sell any portion of that stock to remain at $25,000. You may not buy or short sell stocks trading for under $5.00/share (no penny stocks). The maximum number of shares a team may trade is limited to one-half the actual volume on the stock that day. Mutual funds must be traded in lots of $500. All stocks have a 25 share minimum but do not have to be in multiples of 25 shares per transaction. For example, you can now buy 26 shares or 157 shares, but not 24 shares. You may not hold a short and a long position in the same stock at the same time. Duplicate trades on the same day are not allowed.

Transaction Limits Each team is limited to 200 transactions during the 10-week period. Each buy, sell, short sell or short cover counts as a transaction. For example, if you buy a stock and sell another stock you will be charged with 2 transactions. Teams may also not invest more than $25,000 in any one stock during the simulation

Commission A broker's commission is applied to most transactions. The commission for stock trades is a flat fee of $25.00 on each transaction regardless of the number of shares. If you sell one stock and buy another you will be charged two commission fees. A commission is not charged when buying or selling mutual funds.

Margin Requirements 50% You can buy and short sell stocks on margin. Buying power is twice the available equity. You can buy and short sell stocks on margin.

Dividends & Stock Splits Stock and cash dividends and stock splits are automatically computed into your portfolio. Students must have a position in the stock on the ex-dividend day which is usually two business days before the record date.

Interest Interest will be earned on all available cash balances and credited at the close of each day. During the simulation, cash balances will earn 3% interest, compounded daily. Interest will be charged on all loan balances and will be debited a t the close of each day. During the simulation, loan balances will charge 8% interest.

PORTFOLIO STATEMENTS Team activity or portfolio statements are available 24/7 on floridasms.com. Team activity and team rankings are updated at the end of each business day. At the end of the competition, portfolios will be automatically liquidated and values determined by the prices at close on November 18th.

Competition Eligibility Teams wishing to be eligible to be declared winners must follow this rule: Teams must make at least 3 trades by the 4th week and maintain at least 3 stocks in their portfolio for the last half of the trading period.

For more information, please visit www.fcee.org