1. Exploring Business & Marketing CCRS – Math (24-27)Solve multistep arithmetic problems that involve planning or converting units of measure Manipulate data from tables and graphs Compute straightforward probabilities for common situations (28-32) Interpret and use information from figures, tables, and graphs Unit Objectives/Learning Goals: Managing Finances and Budgeting: Develop and evaluate a spending/savings plan. Saving and Investing: Evaluate savings and investment options to meet short- and long-term goals.

2. * Playspent.org * Watch the introduction and choose “Find a Job” * Good Luck!

3. * Savings Plan: putting money aside in a systematic way to help reach a financial goal. * Savings plans are used to buy the goods and services we need and want. * Also used for future expenses and emergencies.

4. * Investing: using your savings to earn more money. * In order to invest your money, you must have money set aside in order to do so. * CAUTION: Investments are not guaranteed to make $$$$$ (NOT FDIC INSURED)

5. * Interest: money you receive for letting others use your money. * Savings put to work to earn interest is a form of investment. * See The Cost of Waiting Handout

7. * Simple Interest: computed only on the amount saved. * Example: David saves $50 a month. In a year his savings will be $600. He earns 10% annual interest. * After year 1, he will have made $60. - - for doing nothing!

8. * Compound Interest: computed on the amount saved plus the interest previously entered. * Interest can be compounded daily, monthly, quarterly, semiannually, or annually Which Grows faster the savings rate or the investing rate?

9. * When deciding how to invest your savings, three main factors should be considered. * Safety * Rate of Return (Yield) * Liquidity

10. * Safety: assurance that the money you have invested will be returned to you. * How safe are the following? * Savings Account at Local Bank * Purchasing a House * Investing in a Stock

11. * Rate of Return (Yield): the percentage of interest that will be added to your savings over a period of time. * How much will you “get back” in return for the invested amount of money. * Usually higher rates of return and greater risks of loss go together.

12. * Liquidity: the ease with which an investment can be changed into cash without losing any of its value. * When an investment can be turned into money quickly, it is said to be a liquid investment. * Compare $5,000 in a savings account in a bank to a piece of land that you bought for $5,000. * Which is more of a liquid investment?

13. * The Rule of 72 gives you the answer to the question of how long it will take to double your money at various rates of return. Interest RateYears to Double 1%72 2%36 3%24 4%18 5%14.5 6%12 7%10.3 8%9 9%8 10%7.2 11%6.5 12%6 15%4.8

14. Unit 5, Part 2: Stock as an Investment with your Savings!

15. * Pull Out Life Maps… What happens as your plans get further away… * Your need for savings will increase as your goals become more expensive. * Investing at a young age can lead to better security and economic independence later in life.

16. * Why Invest in Stocks? * Become part owner in a corporation! * Earn a high rate of return. * Rate of Return: Over the past 100 years, American Stocks have had an annual return of 9.7% * Over past 20 years, American Stocks have had an annual return of 13%!

17. * Ownership of Stocks * Ownership in a corporation is shown in printed form, called a stock certificate.

18. * Market Value: the price at which a share of stock can be bought and sold for in the market. * What affects price of stock? * How is the business doing? Financial reports, business releases. * State of Economy. (Which phase of business cycle?) * Political Developments

19. * Buy Pepsi today at $85.80 Buy 100 shares. $8,580. * Imagine 2 years from now…(November 2015) * Pepsi’s stock price on November 2015 is now $105.80!! * You sell your 100 shares now valued at $10,580! * You have essentially earned $2,000! (Amount Buy – Amount Sold)

20. * Buy Pepsi today at $85.80. Buy 100 shares. $8,580. * Imagine 2 years from now…(November 2015) * Pepsi’s stock price on November 2015 is now $61.80!! * You sell your 100 shares now valued at $6,180! * You have essentially lost $2,400! (Amount Buy – Amount Sold)

21. * There is no secret or special formula. * It requires: hard work and research. * Four-Step Process for Deciding on Stocks * Observe and Analyze Economic and Social Trends * Determine Industries that will be affected * Identify Companies in those industries * Decide whether to buy, sell or hold the stock of those companies.

22. * Your need for savings will increase as your goals become more expensive. * Investing at a young age can lead to better security and economic independence later in life.

23. * Article: Stock Ownership: A Delicious Topic!

24. * NYSE: New York Stock Exchange * AMEX: American Stock Exchange * Nasdaq: National Association of Securities Dealers Automated Quotations

25. * Buying Stock = “Trade” when the best bid meets the lowest offer to sell. * Stock prices are determined by supply and demand.

26. * Compare a Stock Exchange to Ebay… * Ebay and Stock Exchanges = Auction sites * Seller puts an item up for sale, and several people compete to buy the same item.

27. * Go Public: the process a company takes to offer shares of stock to the public for the first time. * Initial Public Offering (IPO): the first sale of a corporation’s public shares.

28. * Businesses offer stock for many reasons, that include: * Raise Capital * Expand Operations/Create Jobs * Fund Research and Development of Products * Pay Off Debt * Provide Employees with Benefits * Develop Marketing Strategies * Generate Additional Revenue

29. * In selecting a specific stock to buy, you should learn something about the business record of the corporation. * There is no secret or special formula. * It requires: hard work and research. * The opportunity to earn a high rate of return attracts people to invest in stocks.

30. * READ OUTLOUD in your Groups (rows). Each person reads a Paragraph. * As a group, complete the questions on page 20

31. * When considering stocks, ask the following questions: * Has the company been profitable over a period of years? * Does the company have growth potential in coming years? * How does the company compare with others in its industry?

32. * Revenue: The dollar amount of sales during a specific period, including discounts and returned merchandise. * When evaluating stocks, revenue growth serves as an indication of a company's health.

33. * YOUR TURN, SELECTING STOCKS * Pg 22 in PACKET finance.yahoo.com * Pick 2 competing companies from 3 industries… * Coke, Pepsi - Beverages CokePepsi * Microsoft, apple – Computers Microsoftapple * Mcdonalds vs Burger King – Fast Food McdonaldsBurger King

34. * Time to INVEST your money. You choose 3 of your six companies to invest in…plus one more for fun.. * INVESTOPEDIA.com * Follow instructions on page 24

35. * Investopedia Review Investopedia Review * Check Pg 22 * So how do we compare stocks to determine better buy? * Pepsi – PEP Coke- Pepsi – PEP Coke- * Which is Better Investment

36. * Earnings per Share: * = Net Income – Dividends / Average Outstanding Shares * EPS indicates the profitability of a company.

37. * P/E Ratio: Price (market value) per Share/Earnings per Share * it shows how much investors are willing to pay per dollar of earnings. It shows value.investors * In general, a high P/E means high projected earnings in the future. However, the P/E ratio actually doesn't tell us a whole lot by itself. It's usually only useful to compare the P/E ratios of companies in the same industry

38. 52 Week Range: The highest and lowest price at which a stock was sold in the past year (52 weeks). High Low Current Coke Pepsi

39. * What are the three ways to determine if now is the time to purchase a stock * P/E Ratio * 52-Week High Low * EPS * Need Help..like this stuff. Watch Jim Cramer. PlaybookWatch Jim Cramer. Playbook

40. Unit 5: Investments Investing in Bonds http://simulator.investopedia.com/Ranking/default.aspx#axzz1eLlhDyq4

41. * BOND: a certificate promising to pay a specific amount of money at a stated interest rate on a specific maturity (due) date. * A bond is basically a fancy IOU. * Bonds Explained Bonds Explained

42. * Organizations such as the federal government, corporations, churches, and schools issue bonds to raise money. * When these organizations issue bonds, they are borrowing money from the people who purchase the bonds.

43. * Government Bond: bonds issued by government to fund public services. * Considered very safe. The risk of the government not returning your money is very low. Rate of return is lower. * Corporate Bond: a bond sold by a corporation. * Depends on company, but the risk is higher than government bonds, therefore having an overall higher rate of return.

44. * Why would the government need to borrow money? * Defense * Buildings * Employees * To fund any and all public services.

45. * All government bonds use the money to fund public services. * Different types of bonds are for different uses * Savings Bonds: issued by federal government for national services. * Municipal Bonds: issued by state and local governments for state and local services. “Muni’s”“Muni’s”

46. * Municipal Bonds * Usually sold in amounts of $1,000. * Considered very safe investments. * Money borrowed is for local or state projects. * Road Construction, Schools, Hospitals, etc.

47. * United States Savings Bonds * Series EE Bonds ($50 - $10,000): bought at half its face value. * A $50 bond costs $25. The bond will earn interest for a specific period of time.

49. * Interest Earned: difference between the purchase price and redemption value. * Interest earned is determined by the length of time the bond is held. * Savings bonds are purchased at banks, through payroll, and over the Internet * You can “cash” your savings bonds at anytime, but the longer you hold the bond, the more interest you will make.

50. Unit 5: Bonds Corporate Bonds

51. * Everyone needs to borrow money * You may need to borrow money for lunch or a soda. * Businesses borrow money as well, but unlike you and me, it is awfully difficult to get borrowed money just with the promise to repay it the next day!

52. * Businesses have to agree not only to pay back the amount they borrowed, but also to pay a little extra in the form of a fee (interest) for borrowing the money. * Corporate Bonds: a loan sold to the public. * Bonds are sold just like stock – through public securities markets.

53. * Companies issue corporate bonds to raise money for a variety of purposes. * Building a new plant * Purchasing Equipment * Expanding Business

54. * When you buy a corporate bond, you lend money to the company that issued the bond. * In exchange, the company promises to return your money (principal)on a specified maturity date. * Until that date, the company usually pays you a stated rate of interest, generally semiannually (twice a year).

55. * For example: * Let’s say you purchased a Corporate Bond from General Motors. * The bond is a 10 Year, $1,000 bond. * The annual interest rate is 8%, paid semi- annually for 10 years. * You will collect $80 a year, for 10 years. ($800) * After 10 Years, General Motors will return your $1,000. * You will have started with $1,000 and ended with $1,800.

56. * Corporate bonds tend to carry higher interest rates than government bonds because there is a risk that the company could go bankrupt. * Unlike the government, which can just print more money if it really needs it!

57. * Par Value: the amount of money loaned by the investor. Also known as principal amount. * Maturity Date: the date when the bond issuer has to return the principal amount to the lender (investor). * Bond Yield: the return an investor would earn if a bond was purchased and held to maturity.

58. * Let’s return to our example from before: * You purchased a Corporate Bond from General Motors. * The bond is a 10 Year, $1,000 bond. * The annual interest rate is 8%, paid semi- annually for 10 years. * You will collect $80 a year, for 10 years. ($800) * Par Value = $1,000 * Maturity Date = November 2023 * Yield = 8%

59. * Sometimes companies have a hard time selling their bonds. * What they can do is lower the Par Value or price of the bond. * In our example from before, if General Motors was having a difficult time selling their bonds, they could sell a $1,000 bond for $950. The bond is still worth $1,000 – but you can buy at a discount!

60. * Remember, with Corporate Bonds there is always a chance your money may not be repaid….So, how do you know if you can trust a company to repay you? * Lucky for you, there are Bond Ratings.

61. * Bond Ratings: developed to indicate how financially stable the issuer of the bonds is. * Basically, the higher the rating, the higher quality of the bond, and the more likely you will get your money back on the maturity date.

62. * AaaExceptional security. (3%) * AaExcellent security. * AGood security. * BaaAdequate security. * BaQuestionable security. * BPoor security. * CaaVery poor security. * CaExtremely poor security. * CLowest security. (10%) Rating Interest Rate

63. * Corporate bonds that carry a higher rating, will have a lower interest rate. * You will likely receive all interest payments and principal. * If a bond is rated Ba, B, Caa, Ca, or C it is considered a “Junk Bond” * Junk Bond: called junk bonds, because the credit quality of the business is not high. * Junk Bonds in general, carry very high interest rates!

64. * Take a look at pg 46…we are going to look at calculating interest payments for different rated bonds.

65. * Bond search Bond search * ACCO….Who are they? ACCO….Who are they? * Why risky? (10%) Why risky? * ATT (4.45%) * Why not as risky?Why not as risky?

66. Mutual Funds http://simulator.investopedia.com/Ranking/default.asp x#axzz1eLlhDyq4

67. * Mutual Funds:Are a collection of stock funds set up and managed by investment companies * Multiple investors deposit money into account * Account Managers then purchase a wide variety of stocks and bonds. Stocks

68. * Mutual Fund investors own shares of the FUND itself, not individual stocks * Part of the dividend received from the fund, is used to pay for operating expenses

69. * Growth - Designed to build wealth over time * Blend Funds-Combination of Growth and Value * Value Funds-prices are low relative to the company's earnings, dividends * Income-invest in interest-paying bonds and, to a limited extent, dividend-paying stocks

71. * Within Each Category of Fund, investment companies offer many options of individual Mutual Funds to purchase * Each has their own Risk/potential profit scale.

72. * Putnam Investments... Growth Fund options

73. * Health Sciences Trust -The fund seeks to capitalize on the strength and diversity of companies within the health-care sector. The fund seeks companies that offer strong long-term growth prospects, regardless of their size. Holdings encompass an array of industries, including pharmaceuticals, health-care services, and biotechnology. * OTC & Emerging Growth Fund -The fund targets small and midsize companies believed to have exceptionally strong growth potential. Its portfolio may include stocks that are traded in the over-the- counter market (OTC) and stocks of emerging-growth companies listed on securities exchanges. The fund's focus on rapidly growing small and midsize companies makes it Putnam's most aggressive growth product. * Mutual Funds and ETFS??? Mutual Funds and ETFS???