1. Stock Project
• First of all, what is a “stock”?

2. Stock Project
• First of all, what is a “stock”?
– The Economics textbook defines stock
as “a certificate of ownership in a
corporation.” Stock is part ownership
of a company.

3. Stock Project
• First of all, what is a “stock”?
– The Economics textbook defines stock
as “a certificate of ownership in a
corporation.” Stock is part ownership
of a company.
– Not all companies are publicly owned,
and therefore, not all companies sell
shares of stock.

4. Stock Project
• First of all, what is a “stock”?
– The Economics textbook defines stock
as “a certificate of ownership in a
corporation.” Stock is part ownership
of a company.
– Not all companies are publicly owned,
and therefore, not all companies sell
shares of stock.
– So, what’s the difference between a
publicly owned corporation and a
privately owned business?

5. Private Owned Business vs.
Public Corporation
• Anyone in America is free to start and
operate a business, whether it is a sole
proprietorship, a partnership, or a
corporation.

6. Private Owned Business vs.
Public Corporation
• Anyone in America is free to start and
operate a business, whether it is a sole
proprietorship, a partnership, or a
corporation.
• An individual may own a business (sole
proprietorship), or join resources with a
business associate (partnership).

7. Private Owned Business vs.
Public Corporation
• Anyone in America is free to start and
operate a business, whether it is a sole
proprietorship, a partnership, or a
corporation.
• An individual may own a business (sole
proprietorship), or join resources with a
business associate (partnership).
• A group of individuals may form a
corporation. It may be either private owned,
or public owned.

8. Private Owned Business vs.
Public Corporation
• Anyone in America is free to start and
operate a business, whether it is a sole
proprietorship, a partnership, or a
corporation.
• An individual may own a business (sole
proprietorship), or join resources with a
business associate (partnership).
• A group of individuals may form a
corporation. It may be either private owned,
or public owned.
• If it is publicly owned, then individuals may
purchase stock in the company. Each share
of stock is part ownership in the corporation.

9. Stock Ownership
• If a corporation issues 1,000 shares of
stock, and you purchase 1 share, then
you own 1/1000th of the company.

10. Stock Ownership
• If a corporation issues 1,000 shares of
stock, and you purchase 1 share, then
you own 1/1000th of the company.
• Why do companies issue shares of stock
for sale to the public?

11. Stock Ownership
• If a corporation issues 1,000 shares of
stock, and you purchase 1 share, then
you own 1/1000th of the company.
• Why do companies issue shares of stock
for sale to the public?
– By selling shares of stock, companies raise
the funds (capital) necessary to operate a
business.

12. Why sell shares of corporate stock?
• Imagine you invented a machine, and have good
reason to believe that if you could mass produce it, then
you could earn a profit selling it.

13. Why sell shares of corporate stock?
• Imagine you invented a machine, and have good
reason to believe that if you could mass produce it, then
you could earn a profit selling it.
• Problem: you do not have the funds necessary to
purchase a factory, machines, or hire workers to mass
produce your invention.

14. Why sell shares of corporate stock?
• Imagine you invented a machine, and have good
reason to believe that if you could mass produce it, then
you could earn a profit selling it.
• Problem: you do not have the funds necessary to
purchase a factory, machines, or hire workers to mass
produce your invention.
• Solution: you form a corporation, sell shares of
stock and raise the needed funds to begin mass
production.

15. Why sell shares of corporate stock?
• Imagine you invented a machine, and have good
reason to believe that if you could mass produce it, then
you could earn a profit selling it.
• Problem: you do not have the funds necessary to
purchase a factory, machines, or hire workers to mass
produce your invention.
• Solution: you form a corporation, sell shares of
stock and raise the needed funds to begin mass
production.
• If you can prove to investors that your company may
earn them a profit, then you may be able to acquire the
capital necessary to turn your idea into reality.

16. Stock Investment – Profit or Loss
• Obviously, you do not know for sure that you will
earn a profit. In other words, you are taking a
business risk. You are, therefore, an
entrepreneur.

17. Stock Investment – Profit or Loss
• Obviously, you do not know for sure that you will
earn a profit. In other words, you are taking a
business risk. You are, therefore, an
entrepreneur.
• If your company makes profit, then shareholders of
your company’s stock will also earn profit.

18. Stock Investment – Profit or Loss
• Obviously, you do not know for sure that you will
earn a profit. In other words, you are taking a
business risk. You are, therefore, an
entrepreneur.
• If your company makes profit, then shareholders of
your company’s stock will also earn profit.
• If your company loses money, then shareholders of
your company’s stock will share the company’s
loss.

19. Stock Investment – Profit or Loss
• Obviously, you do not know for sure that you will
earn a profit. In other words, you are taking a
business risk. You are, therefore, an
entrepreneur.
• If your company makes profit, then shareholders of
your company’s stock will also earn profit.
• If your company loses money, then shareholders of
your company’s stock will share the company’s
loss.
• That is the risk involved in stock investment. There
are potential benefits to stock investment, and
there are inherent risks.

20. Stock Investment – Profit or Loss
• Obviously, you do not know for sure that you will
earn a profit. In other words, you are taking a
business risk. You are, therefore, an
entrepreneur.
• If your company makes profit, then shareholders of
your company’s stock will also earn profit.
• If your company loses money, then shareholders of
your company’s stock will share the company’s
loss.
• That is the risk involved in stock investment. There
are potential benefits to stock investment, and
there are inherent risks.
• So, how does one make wise stock investments?

21. Stock Investment – Profit or Loss
• Obviously, you do not know for sure that you will
earn a profit. In other words, you are taking a
business risk. You are, therefore, an
entrepreneur.
• If your company makes profit, then shareholders of
your company’s stock will also earn profit.
• If your company loses money, then shareholders of
your company’s stock will share the company’s
loss.
• That is the risk involved in stock investment. There
are potential benefits to stock investment, and
there are inherent risks.
• So, how does one make wise stock investments?
• Do your homework: research before investing.

22. Researching Stock
• There are many ways to research a
company.

23. Researching Stock
• There are many ways to research a
company.
• For our example, we will look at
Yahoo.com’s Finance website
http://finance.yahoo.com/ to research
the Apple Corporation.

24. 1. Type the name of the
company you are researching
in this box. Typing in “Apple”
yields many results including
Apple, Inc. If we go to
Apple’s finance page….

26. 1. We can see:
-how much Apple stock is selling
for in real time.

27. 1. We can see:
-how much Apple stock is selling
for in real time.
-the company’s stock symbol
(AAPL)

28. 1. We can see:
-how much Apple stock is selling
for in real time.
-the company’s stock symbol
(AAPL), as well as the stock
exchange on which it is traded
(NASDAQ – the 2nd largest stock exchange
in the world after the NYSE – New York Stock
Exchange).

29. 1. We can see:
-how much Apple stock is selling
for in real time.
-the company’s stock symbol
(AAPL), as well as the stock
exchange on which it is traded
(NASDAQ – the 2nd largest stock exchange
in the world after the NYSE – New York Stock
Exchange).
-how much the price of one share
of AAPL stock has risen or fallen
today (as indicated by the
downward pointing arrow and the
amount $1.36).

30. 3. Yahoo Finance includes
graphs showing the stock’s value
over time. In this case, it shows
the stock’s price fluctuation today
on the stock exchange. You may
also click on any of the time
ranges below the chart to observe
its performance over days (1d,
5d), months (3m, 6m) or years
(1y, 2y, 5y).

31. 4. You can read more about what
the company produces and some
of its business history by clicking
on the company “profile.” That
kind of information is very
significant when determining
whether or not to invest one’s
money in a company’s stock.

32. Stock Project – Now What?
• Research different companies. Pick 5
to follow over the next 10 business
days.

33. Stock Project – Now What?
• Research different companies. Pick 5
to follow over the next 10 business
days.
• Determine how many shares of each
stock you will “purchase” using a
hypothetical $1,000.

34. Stock Project – Now What?
• Research different companies. Pick 5
to follow over the next 10 business
days.
• Determine how many shares of each
stock you will “purchase” using a
hypothetical $1,000.
– This requires juggling the numbers until
you figure out how many shares of each
stock you can afford without going over
the $1,000 mark. Get as close to $1,000
as possible in the original total investment
amount between the five different stocks.

35. Original Prices Example
# of Shares
Original # of # of Shares
x Final Price
Name of Stock Price per x
Original per Share
Share Shares Final Price
Price
Google 593.02 1 593.02
Kraft Foods 38.38 5 191.90
Sony 19.16 2 38.32
Nike 103.31 1 103.31
AT&T 29.98 2 59.96
Original Total Final Total
986.51
Investment Investment

36. Original Prices Example
# of Shares
Original # of # of Shares
x Final Price
Name of Stock Price per x
Original per Share
Share Shares Final Price
Price This example shows the original
investment in 5 stocks. Notice
Google 593.02 1 593.02 most expensive stock –
the
Google – sells for $593.02 per
share. The student could only
Kraft Foods 38.38 5 191.90
afford 1 share of Google stock.
However, Kraft Foods stock was
selling for only $38.38 per share,
Sony 19.16 2 38.32so the student was able to
purchase more shares of that
stock.
Nike 103.31 1 103.31
Once you have determined which
stocks – and how many shares of
AT&T 29.98 2 59.96each – to purchase, you will follow
the progress of those stocks for
the next 10 business days.
Original Total Final Total
986.51
Investment Investment

37. It only takes a few minutes at the
beginning of class each day to
record the closing price of each
stock you are following. Look for
the “Prev Close” (that’s the price
the stock was being sold at when
the stock market closed the
previous business day).
Be sure to record the price for each
of your stocks on each of the 10
business days.
You will use that information to
create a chart tracking each stock’s
progress.

38. Completing the Assignment
• In the end, you will create a chart showing the
price fluctuation for each stock over those 10
business days. It may be easiest to create a
separate chart for each stock.

39. Completing the Assignment
• In the end, you will create a chart showing the
price fluctuation for each stock over those 10
business days. It may be easiest to create a
separate chart for each stock.
• Your chart(s) may be hand drawn, or you may
use Microsoft Excel to create it.

40. Completing the Assignment
• In the end, you will create a chart showing the
price fluctuation for each stock over those 10
business days. It may be easiest to create a
separate chart for each stock.
• Your chart(s) may be hand drawn, or you may
use Microsoft Excel to create it.
• On the 10th business day, complete the last two
columns of the chart on the assignment sheet
by recording the Final Price per Share, and
then calculate the Final Total Investment.

41. Completing the Assignment
• In the end, you will create a chart showing the
price fluctuation for each stock over those 10
business days. It may be easiest to create a
separate chart for each stock.
• Your chart(s) may be hand drawn, or you may
use Microsoft Excel to create it.
• On the 10th business day, complete the last two
columns of the chart on the assignment sheet
by recording the Final Price per Share, and
then calculate the Final Total Investment.
• Calculate the difference between the original
investment and the final investment. Indicate
whether the difference was a profit or a loss.

42. Final Prices Example
# of Shares
Original # of # of Shares
x Final Price
Name of Stock Price per x
Original per Share
Share Shares Final Price
Price
Google 593.02 1 593.02 596.45 596.45
Kraft Foods 38.38 5 191.90 34.15 170.75
Sony 19.16 2 38.32 20.74 41.48
Nike 103.31 1 103.31 100.26 100.26
AT&T 29.98 2 59.96 35.06 70.12
Original Total Final Total
986.51 979.06
Investment Investment

43. Original Prices Example
# of Shares
Original # of # of Shares
x Final Price
Name of Stock Price per x
Original per Share
Share Shares Final Price
Price
Google
In this case, the
593.02 1 593.02 596.45 596.45
student originally
invested $986.51
Kraft Foods 38.38 5 191.90 34.15 170.75
Sony 19.16 2 38.32 20.74 41.48
Nike 103.31 1 103.31 100.26 100.26
AT&T 29.98 2 59.96 35.06 70.12
Original Total Final Total
986.51 979.06
Investment Investment

44. Original Prices Example
# of Shares
Original # of # of Shares
x Final Price
Name of Stock Price per x
Original per Share
Share Shares Final Price
Price
Google
In this case, the
593.02 1 593.02 596.45 596.45
student originally
invested $986.51,
and by the 10th
Kraft Foods 38.38 5 191.90 34.15 170.75
business day the
Sony investment had 19.16 2 38.32 20.74 41.48
dropped to
$979.06.
Nike 103.31 1 103.31 100.26 100.26
AT&T 29.98 2 59.96 35.06 70.12
Original Total Final Total
986.51 979.06
Investment Investment

45. Original Prices Example
# of Shares
Original # of # of Shares
x Final Price
Name of Stock Price per x
Original per Share
Share Shares Final Price
Price
Google
In this case, the
593.02 1 593.02 596.45 596.45
student originally
invested $986.51,
and by the 10th
Kraft Foods 38.38 5 191.90 34.15 170.75
business day the
Sony investment had 19.16 2 38.32 20.74 41.48
dropped to
$979.06. Thus the
Nike
student lost $7.45
103.31 1 103.31 100.26 100.26
by the 10th business
AT&T day. 29.98 2 59.96 35.06 70.12
Original Total Final Total
986.51 979.06
Investment Investment