1. Identifying Symbols and Interpreting Stock Quotes SMG Lesson #3 http://www.thesimpledollar.com 2006 Foundation for Investor Education. All Rights Reserved. F.H. O ’ HaraBegin

2. Identifying Symbols and Interpreting Stock Quotes SMG Lesson 3

3. Ticker Symbols To enter transactions in The Stock Market Game (SMG), teams must enter the ticker symbol of the company or fund they wish to buy or sell. Ticker symbols are what stock exchanges use to identify listed companies.

4. Ticker Symbols Companies listed on the New York Stock Exchange (NYSE) have one to three letters in their ticker symbols. The NASDAQ Stock Market and American Stock Exchange identify companies and funds with symbols that maybe as long as five letters.

5. Newspaper Symbols The online SMG team portfolios provide teams with ticker symbol lookup tools. Your local paper may also list stock prices. However, newspapers stock listing do not use ticker symbols to identify companies in its stock listings.

6. Newspaper Symbols Newspapers have their own naming convention. All stock markets use the same symbol for a company Each newspaper may have its own name for the same company.

7. Newspaper Symbols For example, Citigroup ’ s ticker symbol is “ C. ” One newspaper uses “ ctygrp ” for the company, another uses “ citi ” and a third uses its real ticker symbol, “ C. ”

8. How to find Ticker Symbols What is the symbol for General Motors? GM What is the symbol for General Electric? GE

9. What is the symbol for Coca Cola? CCLAY CCLAF KO KOF CCHOF CCH CCHBF COKE CCE http://finance.yahoo.com

10. Dividend Part of a company ’ s profits (earnings) paid periodically to stockholders.

11. Volume The number of shares traded in a company's stock. Unusual market activity, either higher or lower than average, is typically the result of some external event.

12. P/E Ratio: Stands for price-to-earnings ratio. The P/E is the relationship between a company's earnings and its share price. It is calculated by dividing the current price per share by the past 4 quarters (the previous four 3 month periods) earnings per share.

13. What ’ s the use of P/E? P/E is the simplest number available to compare the quality of stocks in the same sector. It puts big companies and small companies on a relatively level playing field and trims them (roughly) to the quality of their business.

14. What ’ s the use of P/E? In general, a lower P/E ratio indicates either a: Bargain Troubled company Very steady consistent company Higher P/E either means the company is a “ best of breed ” or it is overvalued.

15. P/E Example At the end of the last fiscal year, Whirlpool (WHR) reported that their company earned $5.67 per share.WHR This means that for every share of stock of Whirlpool, the company earned $5.67. Today, Whirlpool ’ s stock price is 88.91. Dividing the price (P) by the earnings per share (E) gives you the P/E ratio: 15.69.

16. P/E Comparison One competitor of Whirlpool in the same sector is Black & Decker Corporation (BDK), which has a P/E of 13.07 and a F P/E of 13.02.BDK Whirlpool ’ s current P/E is 15.69, which means that currently Whirlpool has a higher P/E than Black & Decker This basically indicates that the sector is even.

17. Why Use P/E People who seek established companies with low P/E ratios are called value investors. They ’ re looking for stocks that have a good value and show every indication of being steady earners in the short to intermediate term.

18. Forward P/E Instead of using the company ’ s last reported earnings per share for the calculation, forward P/E uses the estimates of Wall Street analysts of what the company ’ s next earnings per share report will be. Usually, this estimate is an average of a bunch of analyst ’ s guesses.

19. Forward P/E Example The Whirlpool example again: Analysts are expecting the company to report earnings of $9.10 per share in their next report. Today, Whirlpool ’ s stock price is 88.91. Dividing the price (P) by the earnings per share (E) gives you the P/E ratio: This gives Whirlpool a forward P/E (often listed F P/E) of 9.80.

20. Forward P/E Comparison Whirlpool has a much lower forward P/E (9.80 vs. 13.02). This indicates that Whirlpool may be about to become a bargain You may want to see what Whirlpool has been up to lately by reading news reports about them.

21. Beta The beta is a statistical model that estimates how closely the stock ’ s performance matches the stock market in general. The higher the beta, the closer the stock matches the general market. Blue chip stocks generally have a higher beta, whereas speculative stocks generally have a lower beta. The lower the beta, the more risky the investment.

22. Understanding Beta Beta is correlation with the stock market. A stock with a beta of 1 will rise (or fall) in value at the same rate as the stock market.

23. Understanding Beta A beta of zero means the stock doesn ’ t follow the market at all, and does its own thing A good example is a CD, (Certificate of Deposit, a bank account with a guaranteed interest rate) where you get a fixed rate of return no matter what happens in the stock market.

24. Identifying Symbols and Interpreting Stock Quotes SMG Lesson #3 http://www.thesimpledollar.com 2006 Foundation for Investor Education. All Rights Reserved. F.H. O ’ HaraFin