Teammate 1: ______________ Teammate 2: ______________
How Do You Read Stock Quotes Online?
Teammate 3: ______________ Teammate 4: ______________ Teammate 5: ______________
Objectives: In this lesson, teams will learn how to get and interpret stock price data online. They will also be able to describe certain aspects of various corporations and know the meanings of important terms involving the stock market. Students will also find stock charts, company profiles, and financial information as part of the process in choosing stocks for the Stock Market Game simulation. Background: The online stock quote provides important data for you while playing the stock market game. To get stock quotes in the stock market game is just like when you shop in a supermarket and check price tags for items on the shelves prior to the purchase. The quotes for this simulation are from the NYSE & NASDAQ stock exchanges. Below is a typical stock quote table from Yahoo! Finance. A description of the terms is available on the last page of this handout. In addition, there are links such as news, profile, research, and more providing important information for students to make decisions in choosing a stock in this simulation. STOCK QUOTE EXAMPLE (Do Not Use For Questions Below): WAL MART STORES (NYSE:WMT)
Last Trade: Trade Time: Change: Previous Close: Open: Bid: Ask: 1y Target Est:
48.24
3:37PM ET 0.15 (0.31%) 48.39 48.49 N/A N/A 55.44
Day's Range: 52wk Range: Volume: Avg Vol (3m): Market Cap: P/E (ttm): EPS (ttm): Div & Yield:
48.22 - 48.74 42.31 - 52.15 3,354,900 16,577,800 201.07B 18.39 2.62 0.67 (1.40%)
Team Activity: Teams should go to Yahoo! Finance http://finance.yahoo.com/ to get detailed stock quotes for Wal-Mart Corporation and answer the following questions: 1. What is the name of the stock exchange on which Wal-Mart is presently trading now? 2. How much would students have to pay for one share of Wal-Mart if they bought the stock for the stock game at this moment? 3. What was yesterday’s closing price for Wal-Mart? 4. 5. 6. How many shares of Wal-Mart were traded since the market was open this morning? How many shares of Wal-Mart are traded daily on average? The price-earning ratio (P/E) of the stock market is presently at 28. How many times is Wal-Mart’s P/E above the market? Does Wal-Mart pay a dividend? How much does the Wal-Mart pay its investors per share? If students bought 10 shares of Wal-Mart at the lowest price of the year and sold it at the highest price for the year, how much money would they make?
7. 8.
9.
If students bought 100 shares of Wal-Mart at the current price but missed the chance to buy the shares at the lowest price for the day, how much more money would they have to pay?
10. A corporation’s Earnings Per Share or EPS is one of the most important statistics investors look at when choosing stocks. A corporation’s EPS shows the profits earned on one share of stock. The higher the EPS, the greater the profits. What is Wal-Mart’s EPS?
Click on “Historical Prices” along the left side of the stock quote and answer the following questions: 11. What was the closing price for Wal-Mart 3 months ago (click on historical data)?
12. Why do you think an investor should check out a stock’s historical prices over the past 3 months or even year?
ANALYZING A CORPORATION Click on the Balance Sheet link. Analyze the company’s balance sheet, which shows what the company is worth. •A balance sheet consists of two key elements: •Assets (how much the company owns) •Liabilities (how much the company owes) •The balance sheet shows the financial health of a company. -If the company owes more than it owns (liabilities are greater than assets), the company will be bankrupt soon and you probably do not want to purchase stock in a company about to go bankrupt.
13. What are Wal-Mart’s total assets? (Not total current assets) 14. What are Wal-Mart’s total liabilities? (Not total current liabilities)
15. Based on Wal-Mart’s balance sheet, how would you classify Wal-Mart’s financial health? (Strong or Weak)? Why?
DRAWING CONCLUSIONS 16. In one paragraph explain why, based on the financial data of Wal-Mart, your team would buy or pass? You must explain and use each of the following data pieces to support you conclusion within your paragraph: EPS, P/E ratio, total assets, total liabilities, current price, and historical prices.
STUDENT NAME: _____________________________________ PERIOD: Individual Activity: Choose one company on the “How to Find Stock Symbols?” Activity and conduct the same
analysis as you just did on WAL-MART. Students should go to Yahoo! Finance http://finance.yahoo.com/ to get detailed stock quotes for their selected company and answer the following questions: LIST THE STOCK YOU CHOSE HERE ALONG WITH ITS SYMBOL: __________________________ 1. What is the name of the stock exchange on which the stock is presently trading now? 2. How much would students have to pay for one share if they bought the stock for the stock game at this moment? 3. What was yesterday’s closing price? 4. How many shares were traded since the market was open this morning?
5. How many shares are traded daily on average? 6. 7. The price-earning ratio (P/E) of the stock market is presently at 28. How many times is your stock’s P/E above the market? Does the corporation pay a dividend? How much does it pay its investors per share?
8. If you bought 10 shares at the lowest price of the year and sold it at the highest price for the year, how much money would you make? 9. If you bought 100 shares at the current price but missed the chance to buy the shares at the lowest price for the day, how much more money would you have to pay? 10. A corporation’s Earnings Per Share or EPS is one of the most important statistics investors look at when choosing stocks. A corporation’s EPS shows the profits earned on one share of stock. The higher the EPS, the greater the profits. What is the corporation’s EPS? Click on “Profile” in the stock table and answer the following questions: 11. What is the corporation’s main business?
12. What were the corporation’s top line (revenues) and bottom line (net income) growth in the recent financial reporting period? Use the annual figures, not the quarterly figures. 13. Along the left hand side of the webpage, click ‘competitors.’ What is the corporation’s quarterly revenue expected to grow over the next 3 months? (Your answer will be a percentage)
14. Who is the president, CEO, of the corporation?
15. What was the closing price for the corporation 3 months ago (click on historical data)? Is this information significant to you as an investor? Why?
ANALYZING A CORPORATION Click on the Balance Sheet link. Analyze the company’s balance sheet, which shows what the company is worth. •A balance sheet consists of two key elements: •Assets (how much the company owns) •Liabilities (how much the company owes) •The balance sheet shows the financial health of a company. -If the company owes more than it owns (liabilities are greater than assets), the company will be bankrupt soon and you probably do not want to purchase stock in a company about to go bankrupt. 16. What are the corporation’s total assets? (Not total assets)
17. What are the corporation’s total liabilities? (Not total liabilities)
18. Based on the corporation’s balance sheet, how would you classify the corporation’s financial health? (Strong or Weak)? Why?
DRAWING CONCLUSIONS 19. In one paragraph explain why, based on the financial data of the corporation, your team would buy or pass? You must explain and use each of the following data pieces to support your conclusion within your paragraph: EPS, P/E ratio, total assets, total liabilities, current price, and historical prices.
Glossary of Terms
52-Week High The highest price for a stock during the past year. 52-Week Low The lowest price for a stock during the past year. k Ask The price at which a holder of a stock is willing to sell. Bid The price at which someone is willing to buy a stock. Change The dollar difference between the preceding day's closing price and the most recent price. Day's High The highest price of the stock during the current day's trading. Day's Low The lowest price of the stock during the current day's trading. Paid per Share Dividends Paid per Share The cash payment per share made by the company to its shareholders. Earnings Per Share (EPS) Net income divided by common shares outstanding. This is how much you earn per share you own. Exchange The market place that provides for the trading of the listed stocks. Last Trade The current trading price of one share of a company’s stock. Market Capitalization (Market Cap) The value of a company's outstanding shares, as measured by shares times current price. Moving Average An average calculated every new period by putting in latest value and taking out oldest value of previous period. NASDAQ (National Association of Securities Dealers Automated Quotation) The largest market without a central exchange that is broker/dealer-based. Trading is done using telephones and electronic terminals. NYSE (New York Stock Exchange) The largest stock market based on market capitalization. Open The price paid in a stock's first transaction of the current trading day. Ratio P/E Ratio Also known as the P/E multiple, this is the latest closing price divided by the latest 12 months' earnings per share. The higher the P/E ratio, the greater potential the stock has to earn in the future. The lower the P/E ratio, the better the value of the stock. (In other words, more bang for your buck) Percent Change The percentage difference between the preceding day's closing price and the current price. Previous Close The price of the stock at the end of the previous day's trading session. Shares Outstanding The total number of a company's publicly traded shares. Volume The total shares of a stock traded on the most recent trading day. Yield The dividend paid on a given stock based on its current price.