Agenda  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 )  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