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Learning, Earning, and Investing Investment Analysis

Learning, Earning, and Investing Investment Analysis

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Learning, Earning, and Investing Investment Analysis

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  1. Learning, Earning, and InvestingInvestment Analysis

  2. Funding for this workshop is provided by: National Council on Economic Education US Dept of Education University of Illinois Extension The Moody’s Foundation

  3. Instructors Dr. Angela Lyons Director, UIUC-Center for Economic Education University of Illinois Urbana-Champaign Jennifer Hunt Consumer and Family Economics Educator University of Illinois Extension

  4. You will receive… • Curricula with lessons and activities to use in the classroom • 6 CPDUs • Certification to reproduce and replicate workshop materials • Network of colleagues to share experiences • Resources available at U of I Extension

  5. Why Is Saving and Investing Education Important? Setting the Stage….

  6. Increasing Consumer Responsibilities • Movement towards the privatization of social security. • Over 92% of pensions today are defined contribution plans, not defined benefit plans.

  7. Financial World Has Become More Complex • The number of financial services offered to consumers has increased. • There has also been an increase in the number of financial products that are offered. • Credit-scoring technology has improved.

  8. People Are Involved in the Financial Markets • Millions of small investors have increased their net worth by participating in the stock and bond markets. • Millions of other investors depend on income from owning stocks and bonds.

  9. Importance of Financial Education Many Americans, especially young adults, lack the basic knowledge and skills needed to make informed financial decisions and manage their investments effectively.

  10. It’s Hard to Learn What You Are Not Taught • Financial education is a growing national priority. • Stock market simulations and games are very popular. • But young people can’t learn financial skills unless they are taught explicitly.

  11. Several studies of financial education programs, especially those with specific objectives such as increasing savings or decreasing debt, have succeeded in improving the financial behaviors of young people and other consumers.

  12. Where Do You Find Data? The Federal Reserve Board Ana M. Aizcorbe, Arthur B. Kennickell, and Kevin B. Moore. 2003.“Recent Changes in U.S. Family Finances: Evidence from the 1998 and 2001 Survey of Consumer Finances.” Federal Reserve Bulletin.

  13. Learning, Earning and InvestingAn Overview • 23 lessons • High school and middle school • Complete lesson plans • Web site ( • Accompanies stock market simulations or games • Linked to standards: NCEE, NCTM, Jump$tart • Field tested and reviewed

  14. Why Save? Investors and Investments Invest in Yourself What Is a Stock? Reading the Financial Pages: In Print and Online What Is a Bond? What Are Mutual Funds? How to Buy and Sell Stocks and Bonds Table of Contents Theme 1: Basics of Financial Investing

  15. What Is a Stock Market? • The Language of Financial Markets • Financial Institutions in the U.S. Economy Theme 2: The Markets

  16. Building Wealth Over the Long Term • Researching Companies • Credit: Your Best Friend or Your Worst Enemy? • Why Don’t People Save? • What We’ve Learned Theme 3: Financial Planning

  17. How Financial Institutions Help Businesses Grow • How Are Stock Prices Determined? • The Role of Government in Financial Markets • The Stock Market and the Economy: Can You Forecast the Future? • Lessons from History: Stock Market Crashes • Investing Internationally: Currency Value Changes • Investing Involves Decision Making Theme 4: The Markets and the Economy (High School only)

  18. Description Key concepts Objectives Time required Materials Procedure Visuals Activities Closure Assessment (multiple-choice and essay) Lessons * Glossary terms for all lessons (pp. 323-332)

  19. About the Materials: Table of Contents Sample Lessons FAQs Order Information Resources: Interactives Related Web Links Related Lessons Financial Calculators Glossary Visuals on PowerPoint Key Featuresof theLEI Web Site

  20. Web Site:

  21. Table of Contents: Lessons Concepts National Standards

  22. Resources: Interactives Investment Web links Related Lessons Visuals Stock Market Simulations Workshop Leader’s Guide

  23. Interactives • Compound Interest Calculator Illustrates graphically the dramatic effect that compounding can have on investments over time • Word Search Features a word search activity to introduce key financial terms • Chessboard of Financial Life Illustrates the power of compounding interest

  24. Reading the Financial Pages Focuses on several components presented on the financial pages of the newspaper • NCEE’s Historical Stock Market Simulation Features a simulation in which students invest $10,000 using the Callan Periodic Table of Investment Returns

  25. Quick Recap: LEI Session 1 Lesson 4: What is a Stock?Lesson 7: What are Mutual Funds?Lesson 12: Building Wealth for the Long-TermLesson 15: Why Don’t People Save?

  26. Lesson 5 Reading the Financial Pages:In Print and Online

  27. Stocks, Mutual Funds, and Bonds • Financial pages provide basic information about stocks, mutual funds, and bonds. • Financial pages also include general articles about the world of business and finance, government activities, and the activities of companies and industries. • The purpose of this lesson is to teach students how to read financial tables for stocks, mutual funds, and bonds.

  28. 3 Major US Stock Exchanges • NYSE New York Stock Exchange ( • NASDAQ National Association of Securities Dealers Automated Quotation System ( • AMEX The American Stock Exchange (

  29. Activity 1: Reading a Stock Table (p.58) Key Terminology (Visual 1, p. 55) • 52-Week High and Low Highest and lowest price of stock in the most recent 52-wk period. • Stock (SYM) Name of the company and stock symbol. • DIV Dividend - Annual payment per share to stockholders; usually paid quarterly.

  30. YLD % Yield – The dividend calculated as a percentage of the closing price; the return on your invested money that comes from dividends. • P/E ratio Price/Earnings Ratio – Stock price divided by the company’s annual earnings per share. • VOL Volume – Shares traded the previous day.

  31. CLOSE Closing price – Price of the stock at the end of the previous trading day. • NET CHG Net change in the stock price from the close of the previous trading day.

  32. Activity 2: Reading a Mutual Fund Table (p.61) Key terminology for each fund (Visual 2, p. 56) • NAV Net asset value per share of the fund at the close of trading day; the value of a share of the fund; calculated by adding up the value of the stocks, bonds, and other assets in the fund, subtracting fund’s liabilities and dividing the result by the number of fund shares available. • NET CHG Change in the NAV from the previous trading day. • YTD % RET Year-to-date percentage change in the fund value. • 3-YR % RET Percentage change in the fund value over three-year period.

  33. Activity 3: Reading a Bond Table (p.63) Key Terminology (Visual 3, p. 57) • CUR YLD Current Yield – Annual interest payment as a percentage of the current bond price. • VOL Trading day volume ( # of bonds bought and sold). • CLOSE Closing price of the bond. • NET CHG Net change in bond price in dollars and cents.

  34. Activity 4: Tracking Stocks Online (p.65-66) • Students pick a stock and track it over several days or weeks. • Students choose a Web site to find information about their stock.


  36. click on “Business”

  37. Other Web sites • • • • Subscriptions: • •

  38. Activity 5: Scavenger Hunt (p. 67-68) Students are sent on a scavenger hunt, where they use the financial tables in newspapers and Web sites to become familiar with how to locate information on specific stocks, bonds, and mutual funds.

  39. Lesson 13 Researching Companies

  40. Visual 1: Thinking Economically About Researching Stocks • Recognize that you cannot know it all. • Select a few companies to research. Then follow their progress closely. • Find a few good place to get stock information. • Stop looking for new information when you think the benefits received from more information are less than the costs of additional research.

  41. Visual 2: Surprises are Rarein the Securities Markets • Many individuals spend a great deal of time and effort trying to find companies whose stock prices might increase faster than average for the market. • Many financial institutions – brokerage companies, banks, life insurance companies – spend even more time and effort trying to identify companies whose stock prices might increase faster than average for the market. • It is difficult to earn unusual gains in the stock market because most of the information about most companies is already known. • People who earn above-average returns from their stock are usually surprised. But it is hard even for experienced investors to find surprises in the market.

  42. Visual 3 An Example: LeBron James • LeBron James joined the NBA out of high school. He is known for his ability to jump, pass, involve teammates and score. • Some regard LeBron James as the Michael Jordan of the future. • Could you make big money today by purchasing Nike stock, thinking that its value might be enhanced by the LeBron James connection?

  43. Fundamental Analysis of Company Performance (Analysis of Financial Statements - “The Basics”) Factors to pay close attention to: • Share Price • Price/Earnings Ratio • Annual Revenue or Sales • Earnings Per Share

  44. Activities 1 & 2 (p. 187-188) Comparing different methods for selecting stocks: • Pick stocks at random • Focus on companies you know or that seem popular • Research a company’s financial information • Seek expert advice

  45. Look for the “basics” of the company: • Headlines and press releases • Financial statements • Prospectus and annual reports

  46. NEWS AND INFO Headlines Company Events

  47. Articles about companies and industries SOUTHWEST AIRLINES (LUV) “Passenger jet slides off runway at Chicago airport”

  48. FINANCIALS Income Statement Balance Sheet Cash Flow