Exploring the Stock Market: A Guided Worksheet

VIDEO: The Stock Market Explained INFOGRAPHIC: The Stock Market - Explained You’ve probably heard about the stock market, but what is it and how does it work? Watch this video and read this infographic to find out! Then, answer the questions. 1. When a company lists its stock on an exchange, it means investors can buy its stock. How does this benefit the company? It allows them to get more money from individuals buying into the stocks and allows them to grow faster 2. What are the two ways that investors can make money from stocks? They can trade those stocks in the stock market and they can get dividends from the companies profits 3. As an investor, what are the risks involved with buying one company’s stock? They could crash at any moment VIDEO: Trends in the Stock Market If you want to invest, you’ll need to understand big-picture stock market trends, which are oftentimes referred to as bull and bear markets. Watch this video to learn about these trends. Then, answer the questions. 1. Jamie asks, “What are the latest trends in the stock market?” In other words, Jamie is asking… a. Which companies used to be listed on a particular stock market index? b. How has the stock market performed over the past 10 years? c. How many companies are listed on the stock exchange? d. What are the upward and downward patterns of the stock market over a recent period of time? 2. What is the difference between a BULL and a BEAR market? a. A BULL market is when the stock market is rising and the economy is booming, while a BEAR market describes a declining market and a receding economy b. A BULL market is when there is a decline in the stock market and the economy is receding, while a BEAR market describes a rising market and a booming economy. 3. Which adjective would best describe a BEARish investor attitude? a. Optimistic/Positive b. Pessimistic/Negative 4. Why is it challenging to match your investing decisions with how the stock market is performing? a. It is hard to predict trends, and trends can only be identified once they’ve already happened b. The stock market is typically in a BEAR market for a specific period of time c. You have to invest large amounts of money to have your decisions match the performance of the stock market d. The stock market is typically in a BULL market for a specific period of time INTERACTIVE: Can You Beat the Market? In the previous video, we learned that it can be difficult to predict trends in the stock market. You’ll now have the opportunity to see why. Play this interactive game, which simulates investing in the stock market over 10 years. Your job is to SELL when you think you should take your money out of the market. Then, BUY back into the market when you think it’s the right time. (Note: You can only sell and buy ONCE.) After playing, answer the questions. 1. Play the game once. a. Did you beat the market? I did not beat the market b. How much did your $10,000 turn into? 14997 c. If you hadn’t made any trades at all, how much money would you have had? 15893 2. Play the game a second time. a. Did you beat the market? I did not beat the market b. Did you alter your strategy? Why or why not? No I did not change my strategy. I just tried to sell at a time I thought was high and sell when it was low, but I cant predict the future so I didn't really know 3. How does this game support the advice, “Buy and hold your investments instead of trying to time the market”? It shows you the benefit of holding your investment which results in greater profit instead of trying to time the market.