slide1 n.
Skip this Video
Loading SlideShow in 5 Seconds..
How to Play The Stock Market Game PowerPoint Presentation
Download Presentation
How to Play The Stock Market Game

Loading in 2 Seconds...

play fullscreen
1 / 61

How to Play The Stock Market Game - PowerPoint PPT Presentation

  • Uploaded on

How to Play The Stock Market Game. Stock Market IQ Quiz. Investment Basics: True or False. Stocks are items found in the storeroom of a grocery store. Only rich people invest in the stock market. Most stocks on the stock market are sold by the United States Government.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about 'How to Play The Stock Market Game' - emily

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

Investment Basics: True or False

  • Stocks are items found in the storeroom of a grocery store.
  • Only rich people invest in the stock market.
  • Most stocks on the stock market are sold by the United States Government.
  • If the stock market goes up 30 percent one year, it will fall by 30 percent in the next year.

Investment Basics: True or False

  • Any stock that goes up in price must eventually come back down.
  • Bears, Bulls, and Pigs are found in the stock market.
  • Stock prices are set by the Securities and Exchange Commission, a regulatory agency of the U.S. government.
  • Stock markets are open on business days around the clock, around the world.

Investment Basics: True or False

  • Sometimes companies buy their own stocks on the stock market.
  • It is hard to buy a good stock today because all the good ones have already been purchased.
  • Buying stocks is a sure way to make money.
  • Corporations sell new issues of stock on the New York Stock Exchange.

Investment Basics: True or False

  • “Insider” stock trading means that trading stocks takes place inside a building.
  • People can buy stocks on the internet.
  • When the stock market goes up, it causes the economy to grow.
  • From Learning from the Market, © National Council on Economic Education, New York, NY

Investment Basics: Risk/Return

The RISKIER the Investment

The HIGHER the Return


Investment Basics: Types

  • Insured Savings Accounts
  • Savings Bonds
  • Certificates of Deposit
  • Treasury Bonds
  • Corporate Bonds
  • Mutual Funds
  • Stocks
  • Collectibles
  • Commodities

Investment Basics: Choices in SMG

  • Stocks:
  • You own a piece of the company.
  • You make money if the company does well.
  • Bonds:
  • You loan money to a corporation or government.
  • You earn the interest.

Investment Basics: Choices in SMG

Mutual Funds:

A mutual fund is a collection of stocks, bonds and other securities owned by a group of investors and managed by a professional investment advisory firm.

You own one portion of the collection.


Investment Basics: Company Size


  • Often have high prices
  • Low risk of failure
  • Usually pay regular dividends


  • Potential for growth is greater than for larger companies
  • Generally prices are lower

Investment Basics: Types of Stocks

Common Stocks:

  • Pay dividends based on performance of the company
  • Have higher risk but may have higher reward
  • Listed on New York Stock Exchange, Amex and Nasdaq Exchanges

Investment Basics: Types of Stocks

Preferred Stocks:

  • Dividend amount is preset
  • Dividends are paid on preferred stocks before common stocks
  • Have lower risk but may limit reward
  • Identified as pf in listings

Investment Basics: Stock Splits

  • Stock Splits:
  • More shares are created at a lower price per share
  • Stockholders profit if stocks go up
  • Indicated with an (s) in the paper
  • Ex: Dell $109  $54

Investment Basics: Terminology

Blue Chipsthe largest and most profitable stocks

Bull Market a market that is rising

Bear Marketa market that is falling


Investment Basics: P/E Ratio

  • Price-to-earnings ratio.
  • Earnings = earnings per share or firm profit divided by number of shares.
  • Generally, more earnings per share given stock price results in a lower P/E ratio and a better buy.
  • P/E ratios vary by industry and should be compared to other like companies.
stock market game windows
Stock Market Game Windows
  • Available games:
    • 3 ten week periods
      • Fall - October – December
      • Spring – February - April
      • Late Spring – Mid March - May
    • One year long game
  • Current game dates:
the competition levels
The Competition: Levels
  • Grades 4-6
  • Grades 7-8
  • Grades 9-12
  • Post-Secondary
  • Youth Groups
  • Adult
the competition regions
The Competition: Regions
  • Fall, Spring and Late Spring teams also compete within a geographic region.
  • Regions are identified by EconomicsPennsylvania Centers for Economic Education service areas.
  • EconomicsPennsylvania Regional Map
  • Note: year long game levels are statewide.
stock market game basics
Stock Market Game Basics
  • Teams of students make investment trades to manage portfolios throughout the game.
  • 3-5 players per team recommended.
  • Each team begins with a hypothetical $100,000.
  • Stocks, bonds and mutual funds are available for trading.
stock market game basics1
Stock Market Game Basics
  • Teams may buy, sell, short sell, orshort cover their stocks and some mutual funds.
  • A 2% brokers fee is charged for each transaction
  • 2% interest is earned on cash balance.
stock market game basics2
Stock Market Game Basics
  • Common stocks listed on the American, New York, and NASDAQ Stock Exchanges may be traded.
  • Closed-ended mutual funds may be traded just like stocks traded on the three exchanges.
    • Open-ended mutual funds can also be traded but cannot be short sold or short covered.
stock market game basics3
Stock Market Game Basics
  • Stocks and mutual funds valued at less than $5.00 per share may not be bought.
  • Teams may borrow up to $100,000 to purchase stocks on margin – 7% interest is charged
  • The team with the highest portfolio equity at the end of the game wins. Portfolios are notliquidated at the end of the game.
trading in the smg
Trading in the SMG
  • Advisors need a working Email addressand Internet access to play
  • Transactions are made at the SMG WorldWide site at: or
  • SMG of PA operates on ‘real time’ trading
trading in the smg1
Trading in the SMG
  • Trades are processed within 15 – 20 minutes
  • Stock and mutual fund dividends, stock splits, and bond interest payments are automatically computed into team portfolios
  • Portfolios are updated overnight and available on a daily basis
  • Rankings are updated every weekend
trading in the smg2
Trading in the SMG
  • Stock and mutual fund ticker symbols are used and can be looked up on the game pages
  • Bond numbers assigned by the game are looked up on the game pages
trading in the smg3

Maturity Year

Trading in the SMG

8,000 Bonds available:

  • Corporate
  • Municipal (state only)
  • Treasury


Annual interest rate

T M or C

Seq #

trading in the smg4
Trading in the SMG
  • Trades entered after 4:00 p.m. will be processed at 9:35 a.m. the following day.
  • Rogue Stock Rule: If a stock has not been traded for seven days it will not be accepted and will not be permitted to be traded even though it is on the three major stock exchanges.
buying stock and mutual funds
Buying: Stock and Mutual Funds
  • Must be for a minimum of 100 shares
  • Must have a price of at least $5.00 per share
  • May set a maximum purchase price limit for stocks
selling stocks and mutual funds
Selling: Stocks and Mutual Funds
  • Must already own the asset
  • Stock and mutual fund sell orders for less than 100 are permitted.
  • May set a minimum selling price limit for stocks

Please Note: For real time trading price limits are generally not needed except for trades entered after the market close.

buying and selling bonds
Buying and Selling: Bonds
  • Maturity dates no shorter than 5 years
  • May not be short sold
  • Daily feed of pricing from S&P using previous day’s prices
buying and selling bonds1
Buying and Selling: Bonds
  • Bonds are priced per $100 of bond principal.

Cost of $4,000 bond with a price of $99.50:

4000/100 = 40

40 x 99.50 = $3,980

+ accrued interest + commission

For all Bond Sell Transactions the SEC Fee of 5.6 cents per $10,000 trading amount is always added.

short selling
Short Selling
  • Short selling starts with borrowing a stock from your broker
  • You sell the borrowed stock hoping to buy it back at a lower price and return (short cover) it to your broker for a profit
  • All rules for buying still apply
short covering
Short Covering
  • Must have already short sold the stock
  • May set a maximum price limit
  • All other rules for selling apply
example short selling and covering
Example: Short Selling and Covering

I feel that IBM stock is going to go down and want to short sell the stock.

  • I borrow the stock from the broker (2% brokerage fee)
  • I sell it. Now I’ve got cash.
  • I short cover by buying the stock back in the stock exchange at a lower price
example short selling and covering1
Example: Short Selling and Covering
  • I return the stock to the broker (2% brokerage fee).
  • I get the difference between the high price and the low price minus the brokerage fees.

Note: it’s important to remember that you borrow the stock from a broker and return the stock. You do not give the broker any money (except for brokerage fee).

portfolio value long position

# of shares

x current price per share

= Value of Long Stocks

Portfolio Value: Long Position
  • A long position is an asset you own.


portfolio value long position1
Portfolio Value: Long Position

Mutual Funds:

  • *Net Asset Value is computed once a day at the end of the day based on the value of the securities in their portfolios.

# of shares

xcurrent price per share (NAV)*

= Value of Mutual Funds Long Position

portfolio value long position2

$ value/100

x price per $100

= Value of Bonds Long Position

Portfolio Value: Long Position


  • Per $100 of bond face value
portfolio value short position
Portfolio Value: Short Position

A short position is an asset you owe.

  • Appears as a minus (-) to indicate a debt
  • Held short sell positions are marked to the market daily and the resulting gain or loss is added or subtracted from cash.

# of shares stock/closed mutual fund

x current price per share

= Value of Short Position

portfolio value equity
Portfolio Value: Equity
  • Total Value of Long Position
  • Stocks
  • Mutual Funds
  • Treasury/Municipal/Corporate Bonds
  • +Cash Balance

= Total Equity

additional information interest
Additional Information: Interest
  • Credited weekly on positive cash balances at an annual rate of 2%
  • Charged weekly on negative cash balances at an annual rate of 7%
  • Interest is calculated daily, summed for the week (Saturday through Friday) and posted on the following Tuesday.
  • Daily rate is based upon a 365 day year.
additional information borrowing
Additional Information: Borrowing
  • Teams may borrow funds to buy stock – called ‘buying on margin’
  • Uses ½ the holdings in the portfolio as collateral for the loan
  • Initial margin requirement (50% of Long Position) is subtracted from equity
  • Remainder is matched dollar for dollar for total buying power
additional information borrowing1
Additional Information: Borrowing

Formula for Initial Margin Requirement

  • 50% of Stocks & Mutual Funds
  • 40% of Treasury Bonds
  • 10% of Municipal Bonds
  • 25% of Corporate Bonds

Playing the

Stock Market Game


Playing SMG: Access Your Portfolio

Login into



Playing SMG: Logging In

Sample Login ID


Use underscores

Sample Password


All case sensitive


Playing SMG: Portfolio Start Page

The blue Trading tab contains all the functions necessary to compile research and make trades.


Playing SMG: Making a Trade

Select your choice of investment


Playing SMG: Buying Stock

Use the ‘Validate Ticker’ option to ensure you are buying the correct stock.


Playing SMG: Buying Bonds

Find lists of bonds.

Face (par) value of bond


Playing SMG: Buying Bonds

Click on Bond Number for all info

playing smg useful links
Playing SMG: Useful links
  • NYSE-
  • CNNfn-
  • CNBC-
  • EDGAR Database of Corporate Information-
  • Yahoo! Finance-