Course

Document Sample
Course Powered By Docstoc
					 Course             6200/6600 Principles   Unit B             Principles of Finance
                    of Business and
                    Finance
 Essential          4.00                B2 31%           Understand the role of
 Standard                                                finance in business.
 Objective          4.03                B2 12%           Understand saving and
                                                         investing options for
                                                         clients.
 Essential           How do investors determine appropriate saving and investing
 Questions             options?
                     What factors should be considered in evaluating saving and
                       investing options?

                                UNPACKED CONTENT

I. Appropriate saving and investing options depend on the investors’ time and risk
   tolerance. Saving and investing options are:
       A. Savings plans
             1. Savings account
             2. Certificate of deposit (CD)
             3. Money market account
       B. Securities include stock investments, bond investments, mutual funds, and
          exchange-traded funds.
             1. Stock investments include:
                    a. Preferred stock
                    b. Common stock
             2. Bond investments include:
                    a. Government bonds
                           i. Municipal bonds
                           ii. U.S. savings bonds
                           iii. Other Federal Securities
                    b. Corporate bonds
             3. Mutual funds
             4. Exchange-traded funds




 6200/6600 Principles of Business and Finance    Summer 2010               Page 276
      C. Alternative investments options are:
            1. Real estate
            2. Commodities and futures
                    a. Agricultural
                    b. Gold, silver, and precious metals
                    c. Currency and financial instruments
            3. Collectibles

II. Factors investors may consider in evaluating saving and investing options are:
       A. Safety and risk
       B. Potential yield
       C. Liquidity
       D. Taxes




 6200/6600 Principles of Business and Finance    Summer 2010               Page 277
               INSTRUCTIONAL ACTIVITIES                         RELEVANCE     RESOURCES
                                                              TO OBJECTIVE
1       Saving and Investing Basics Introduction              Helps students Textbook
         Have students read Focus on Real Life on page       UNDERSTAND
          480 in Intro to Business, 6e, Thomson South-        (B2) reasons
          Western textbook.                                   why money is
         Facilitate a discussion about saving or investing   saved or
          money using these discussion questions:             invested.
          1. Is anyone saving or investing money? If so,
             why?
          2. What are some benefits of saving and
             investing money?
2       Wealthy Individuals                                   Helps students     Forbes 400
         Have students complete Forbes 400 Wealthiest        begin to           Wealthiest
          Individuals Activity.                               UNDERSTAND         Individuals
         Facilitate students sharing thoughts about the      (B2) the           Activity
          people they researched and other information        relationship
          obtained obtain them.                               between wealth     Website:
         NOTE: Give the link located in the resource         and investing      (NOTE: Check
          column to students. Students will need access to                       for most
          a computer in order to complete this activity.                         current link)
                                                                                 http://www.forb
                                                                                 es.com/lists/20
                                                                                 09/10/billionair
                                                                                 es-2009-
                                                                                 richest-
                                                                                 people_The-
                                                                                 Worlds-
                                                                                 Billionaires_Ra
                                                                                 nk.html
3     Saving and Investing Basics                             Helps students     Textbook
        Facilitate students completing the Saving and        UNDERSTAND
         Investing Basics Organizer. Students may             (B2) the basics    Saving and
         obtain information by reading pages 480-481 in       of saving and      Investing
         Intro to Business, 6e Thomson South-Western          investing.         Basics
         textbook OR participating during the presentation                       Organizer
         of PowerPoint Presentation 4.03, slides 1-7.
       During the next task, students may add notes to                          PowerPoint
          their organizer. Review the following points:                          Presentation
          1. Reasons individuals, businesses, and                                4.03, slides 1-7
             government borrow money
          2. Main goals of saving and investing
          3. Impact on growth of saving due to the
             frequency of compounding interest
Instructional Activities continue on next page.

    6200/6600 Principles of Business and Finance    Summer 2010                 Page 278
            INSTRUCTIONAL ACTIVITIES                          RELEVANCE         RESOURCES
                                                             TO OBJECTIVE
4     Saving and Investing Basics Terms                     Helps students     Saving and
      Have students complete Saving and Investing           UNDERSTAND         Investing
      Basics Terms section of Very Important                (B2) terms         Basics section
      Business Terms Activity.                              associated with    of
                                                            saving and         Very Important
                                                            investing          Business
                                                                               Terms Activity
5     Saving Options Introduction                           Helps students     Textbook
       Facilitate students completing Saving Options       CLASSIFY (B2)
        Organizer. Students may obtain information by       saving options     PowerPoint
        reading page 482 in the Intro to Business, 6e,                         Presentation
        Thomson South-Western textbook OR                                      4.03, slides 8-9
        participating during the presentation of
        PowerPoint Presentation 4.03, slides 8-9.                              Saving Options
       Facilitate a discussion about possible situations                      Organizer
        for when each type of savings plan may be
        used. Note: Students should record examples
        on the organizer.
       Collect organizers, and then sort to check who
        did and did not complete one. Check for
        whether students provided examples of each
        type of savings plan. Examples will help
        students to classify savings plans.
       Based on results of the previous task, facilitate
        a discussion on examples for classifying
        savings plans. NOTE: This activity is a
        formative assessment.
Instructional Activities continue on next page.




6200/6600 Principles of Business and Finance      Summer 2010                 Page 279
             INSTRUCTIONAL ACTIVITIES                             RELEVANCE          RESOURCES
                                                                 TO OBJECTIVE
6     How Savings Grow                                          Helps students      How Savings
        Demonstrate how to calculate interest for the          APPLY (C3)          Grow Activity
           first item on each section of the How Savings        procedures for
           Grow Activity using the below formulas:              calculating         How Savings
           o Simple interest rate formula: P=Principal,         simple and          Grow Activity
                R=Rate, T=Time and I=Interest                   compound            Key
                I=P * R * T.                                    interests.
           o Compound interest formula: A=Amount,                                   Website:
                P=Principal amount (the initial amount you                          http://www.mat
                borrow or deposit), r=Annual rate of                                hwarehouse.co
                interest (as a decimal), and n=Number of                            m/compound-
                times interest is compounded                                        interest/formula
                A=P(1+r/n)nt                                                        -calculate.
           o For examples of calculating compound                                   php
                interest refer to website listed in resources
                column.                                                             Saving Options
        Facilitate students completing How Savings                                 Organizer
          Grow Activity.
        Have students retrieve Saving Options
          Organizer to record additional notes during
          the next tasks.
        Facilitate a discussion to compare the growth
          between simple and compound interests using
          these discussion questions:
          1. How much difference does a few
                percentage points make over time? Why?
          2. Does it matter how often interest is
                compounded? Why?
7     Main Types of Stocks                                      Helps students      Textbook
       Have students read Focus on Real Life on                UNDERSTAND
          page 486 in Intro to Business, 6e, Thomson            (B2) stock as an
          South-Western textbook.                               investment
       Facilitate a discussion about stock investments         option.
          using these discussion questions:
         1. What is a benefit of investing in stock?
         2. What is important to know about companies’
              growth potential related to stock
              investments?
         3. What should you do when you are ready to
              invest in stock?
Instructional Activities continue on next page.




6200/6600 Principles of Business and Finance         Summer 2010                   Page 280
             INSTRUCTIONAL ACTIVITIES                           RELEVANCE           RESOURCES
                                                               TO OBJECTIVE
8     Stock Options Terms                                     Helps students       Stock Options
      Have students complete the Stock Options                UNDERSTAND           section of
      section of Very Important Business Terms                (B2) terms           Very Important
      Activity.                                               associated with      Business
                                                              stock options        Terms Activity
9     Main Types of Stock Options                             Helps students       Textbook
        Facilitate students completing the Stock             COMPARE (B2)
           Options Organizer. Students may obtain             the two main         Stock Options
           information by reading pages 486-490 in the        types of stock       Organizer
           Intro to Business, 6e, Thomson South-              and become
           Western textbook OR during the                     more familiar        PowerPoint
           presentation of PowerPoint Presentation            with trading         Presentation
           4.03, slides 10-15.                                stock activities.    4.03, slides 10-
        During the next task, students may add notes                              15
           to their organizer. Review the following points:
           1. The differences between common and                                   Calculator
               preferred stock                                                     (optional)
           2. Major role of stockbrokers
           3. Major activities that take place at the stock                        Key:
               exchange                                                            Stock A-11%
           4. Market value of stock defined                                        Stock B-2%
           5. How to read a stock market table                                     Stock C-7%
           6. Factors that may influence the selection of
               stock
       Inform students about bull and bear markets
        using the following information:
        Bull market refers to prices of securities rising
        for a long period of time.
        Bear market refers to prices of securities falling
        for a long period of time.
       Facilitate a discussion on what type of market
        exists today.
       Collect organizers, and then sort to check who
         did and did not complete one. Completion of the
         organizer will help students with classifying
         stock investment options.
Instructional Activities continue on next page.




6200/6600 Principles of Business and Finance       Summer 2010                    Page 281
            INSTRUCTIONAL ACTIVITIES                           RELEVANCE         RESOURCES
                                                              TO OBJECTIVE
10     Comparing Stock                                      Helps students     Comparing
       Display website in resources column and              COMPARE (B2)       Stocks Activity
         demonstrate how to use the site’s features.         stock value of
         Note: All users will have to set up an account in   companies in       Website:
         order to use website features. The Help Menu        order to make      www.freestock
         contains the topic Getting Started. NOTE:           trade decisions    charts.com
         Students will need to have access to a
         computer lab.
       Facilitate students completing Comparing
        Stocks Activity.
       Assign students to groups. Consider grouping
        students by industry such as electronics,
        automobiles, or stores.
       Facilitate students as they present to each other
        their stock value of companies, value
        influences, and desire to trade or keep stocks.
       Facilitate groups as they present their
        suggestions for trading or keeping the stocks to
        the class.
11    Bonds and Mutual Funds Investments                     Helps students     Textbook
      Introduction                                           UNDERSTAND
       Have students read Focus on Real Life on             (B2) bonds and
        page 491 in Intro to Business, 6e, Thomson           mutual funds as
        South-Western textbook.                              investment
       Facilitate a discussion about bonds and mutual       options
        funds investments using these discussion
        questions:
          1. What is a benefit of investing in bonds?
          2. What are some concerns associated with
             investing in bonds and mutual funds?
          3. What are mutual funds?
          4. How do stated interest rates impact the
             value of a bond?
Instructional Activities continue on next page.




6200/6600 Principles of Business and Finance      Summer 2010                  Page 282
            INSTRUCTIONAL ACTIVITIES                           RELEVANCE            RESOURCES
                                                             TO OBJECTIVE
12    Classifying Bonds and Mutual Funds                     Helps students        Textbook
        Facilitate students completing the Bonds and        CLASSIFY (B2)
         Funds Organizer. Students may obtain                different types of    Bonds and
         information by reading pages 491-494 in the         bonds and             Funds
         Intro to Business, 6e, Thomson South-               mutual funds          Organizer
         Western textbook OR participating during the
         presentation of PowerPoint Presentation 4.03,                             PowerPoint
         slides 16-18.                                                             Presentation
       Note: The description of exchange-traded fund                               4.03, slides 16-
       (ETF) is not included in the textbook. A                                    18
       description is in the PowerPoint presentation. The
       description included in the presentation is that
       ETF is a portfolio of stocks, bonds or other
       investments that trade on a stock exchange like
       regular stock.
        During the next task, students may add notes to
         their organizer. Review the following points:
           1. Reason bonds are issued
           2. Main types of government bonds
           3. Difference between investing in company
              stocks and bonds as it relates to being an
              owner versus being a lender
           4. Impact of stated interest rate on bond
              values
           5. Companies’ major tasks in assisting
              investors of mutual funds
       Collect organizers, and then sort to check who
         did and did not complete one. Completion of the
         organizer will help the students with classifying
         bonds and mutual funds.
13    Bonds and Funds Terms                                  Helps students        Bonds and
      Have students complete the Bonds and Mutual            UNDERSTAND            Funds section
      Funds section of Very Important Business               (B2) terms            of Very
      Terms Activity.                                        associated            Important
                                                             bonds and funds       Business
                                                                                   Terms Activity
Instructional Activities continue on next page.




6200/6600 Principles of Business and Finance      Summer 2010                     Page 283
            INSTRUCTIONAL ACTIVITIES                                RELEVANCE            RESOURCES
                                                                   TO OBJECTIVE
14    Comparison of Mutual and Exchange-Traded                    Helps students        Comparing
      Funds                                                       COMPARE(B2)           Mutual and
       Have students complete Comparing Mutual                   mutual and            Exchange-
        and Exchange-Traded Funds Activity                        exchange-traded       Traded Funds
       Allow students to post their organizers and               funds                 Activity
         other students do a gallery walk of the
         organizers. Note: While students are viewing                                   Comparing
         the organizers point out the similarities and                                  Mutual and
         differences of the funds.                                                      Exchange-
                                                                                        Traded Funds
                                                                                        Activity Key
15    Comparing Bond Investments                                  Helps students        Comparing
       Demonstrate how to calculate current yield of a           COMPARE (B2)          Bond
        bond investment using the following formula:              bond                  Investments
        Formula:                                                  investments           Activity
        Dollar Amount of Annual Interest Income = Current Yield
        Current Market Value                      of                                    Website:
                                                  a Bond
                                                                                        www.investingb
           Example: Annual Interest Income = $80                                        onds.com/mark
                      Current Market Value = $998                                       etataglance.as
                      Current Yield = 8%                                                p?catid-32
        Note: Students will not have to calculate yield of
        a bond. The formula may help with interpreting
        table information on website needed to complete
        the next task.
        Facilitate students completing Comparing
         Bond Investments Activity.
        Assign students to groups and facilitate as they
         present to each other their findings about
         researched performances of bonds.
        Facilitate groups as they present their findings
         to the class.
16    Time to Invest in Mutual Funds                              Helps students        The Right Type
       Have students complete The Right Type of                  UNDERSTAND            of Mutual Fund
         Mutual Fund Activity.                                    (B2) the different    Activity
       Assign students to groups of four to six.                 types of mutual
       Assign each group one of the main types of                funds
         mutual funds.
       Facilitate students discussing how the mutual
         fund could meet the various investment goals.
Instructional Activities continue on next page.



6200/6600 Principles of Business and Finance            Summer 2010                    Page 284
           INSTRUCTIONAL ACTIVITIES                          RELEVANCE          RESOURCES
                                                            TO OBJECTIVE
17   Other Investment Options                              Helps students      Other
     Facilitate students completing the Other              CLASSIFY (B2)       Investment
     Investment Options (real estate, commodities,         other types of      Options
     and collectibles) Organizer. Students may             investments         Organizer
     obtain information by reading pages 495-503 in        such as real
     the Intro to Business, 6e, Thomson South-             estate,             PowerPoint
     Western textbook OR as teacher presents and           commodities,        Presentation
     facilitates a discussion using PowerPoint             and collectibles    4.03, slide 19
     Presentation 4.03, slide 19.
      Collect organizers, and then sort to check who
       did and did not complete one. Especially look
       for examples of other investment options.
       Examples will help students to classify other
       investment options.
      Based on results of the previous task, facilitate
       a discussion about examples for classifying
       other investment options. NOTE: This activity is
       a formative assessment.
18   Other Investments Options Terms                       Helps students      Other
     Have students complete the Other Investments          UNDERSTAND          Investments
     Options section Very Important Business               (B2) terms          Options section
     Terms.                                                associated with     of Very
                                                           other               Important
                                                           investments         Business
                                                                               Terms
19   Financial News                                        Helps students      Video or news
     Note: Prior to introducing this objective, select a   UNDERSTAND          segment of
     recent news article, relevant financial video, or     (B2) issues that    financial news
     news show segment such as CNBC, Kudlow and            may affect
     Company, Lou Dobbs’ Moneywatch, etc.                  saving and          Possible
      Facilitate students viewing the segment and         investment          websites for
       journalize the main topic covered, major issues     options.            videos:
       about the topic, and how the issues about the                           www.hulu.com
       topic may affect saving and investing options.
                                                                               http://stosselint
                                                                               heclassroom.
                                                                               org/

Instructional Activities continue on next page.




6200/6600 Principles of Business and Finance      Summer 2010                 Page 285
            INSTRUCTIONAL ACTIVITIES                      RELEVANCE               RESOURCES
                                                         TO OBJECTIVE
20   Factors for Evaluating Saving and Investing        Helps students           Textbook
     Options                                            UNDERSTAND
      Demonstrate to the students how to start the     (B2) factors to          Saving and
        next task.                                      consider for             Investing
      Facilitate students developing an organizer of   evaluating               Evaluation
        factors to consider for evaluating saving and   saving and               Factors
        investing options. NOTE: A guide for content to investing options        Organizer
        be included in the organizer is available since                          Guide
        answers will vary.
      Have students read pages 483-485 in Intro to                              PowerPoint
        Business, 6e, Thomson South-Western                                      Presentation
        textbook OR participating during the                                     4.03, slides 20-
        presentation of PowerPoint Presentation                                  21
        4.03, slides 20-21.
21   Factors for Evaluating Saving and Investing        Helps students           Factors for
     Terms                                              UNDERSTAND               Evaluating
     Have students complete Factors for Evaluating      (B2) terms               Saving and
     Saving and Investing section of Very Important associated with              Investing
     Business Terms.                                    classifying              section of Very
                                                        economic                 Important
                                                        conditions               Business
                                                                                 Terms
22    Assisting Clients in Evaluating Saving and            Helps students       Which Option
      Investing Options                                     COMPARE (B2)         Is Best?
       Divide students into teams of three or four.        factors to           Activity
       Facilitate teams completing Which Option is         consider when
        Best? Activity. Teams may use Intro to              deciding among       Scoring Rubric
        Business, 6e, Thomson South-Western                 saving and           for Which
        textbook, completed organizers and                  investing options    Option is Best?
        activities to obtain information.                                        Activity
       Present the Scoring Rubric for Which Option
        is Best and use it for providing feedback to                             Material and
        students about visual presentations. NOTE:                               equipment to
        Use discretion in determining points or letter                           complete and
        grade value for proficient, progressing, and                             present
        beginning levels.                                                        investment
       Facilitate the groups as they present their                              portfolios
        portfolios to the class. During the presentation,
        facilitate a discussion, as appropriate, to point
        out how closely the selected investment options
        would meet or not meet the expectations of the
        clients.
Instructional Activities continue on next page.

6200/6600 Principles of Business and Finance      Summer 2010                   Page 286
     23    Supplemental                                            Helps students     Textbook
           Investors and Investments                               UNDERSTAND
            Introduce the concept that investors’ demands to      (B2) how
              invest impact employment opportunities.              investors’
            Have students read Planning a Career in               demands to
              Investments on page 479 in Intro to                  invest money
              Business, 6e, Thomson South-Western                  may be
              textbook.                                            impacted by
            Facilitate a discussion using these                   economic
              questions/points:                                    conditions
              1. How do investors’ demands impact the
                 economy?
              2. Point out how student’s responses relate to
                 the economic conditions.
            Schedule guest speaker(s) to present on topics
              covered in this objective.

L-         –Literacy Strategy: The very important business terms activity is a writing
     assessment that allows students to write statements about why each term is important to the
     content for which it is being used. Students are able to reflect on the terms in order to process
     their own thoughts and learning of how the terms are important to the content area.
        –Numeracy Strategy: To make a Math-to-Life Connection is to see a relationship
        between a math concept and a real-life situation. Finding math-to-life connections greatly
        increase the relevance of new information and skills being learned.




     6200/6600 Principles of Business and Finance       Summer 2010                 Page 287
    Instructional Support Material
               Textbook                                      Websites
Intro to Business, 6e, Thomson South-        http://www.forbes.com/lists/2009/10/billion
Western                                      aires-2009-richest-people_The-Worlds-
                                             Billionaires_Rank.html

                                             http://www.mathwarehouse.com
                                             /compound-interest/formula-calculate.Php

                                             www.freestockcharts.com

                                             www.investingbonds.com/marketataglance
                                             .asp?catid-32

                                             www.hulu.com

                                             http://stosselintheclassroom.org/
             Handouts (included)                                 Other
   Forbes 400 Wealthiest Individuals         PowerPoint Presentation 4.03
    Activity                                     (separate file)
   Saving and Investing Basics Organizer     Calculator (optional)
   Very Important Business Terms Activity    Part of Stock Options Organizer Key:
   Saving Options Organizer                         o Stock A-11%
   How Savings Grow Activity                        o Stock B-2%
   How Savings Grow Activity Key                    o Stock C-7%
   Stock Options Organizer                   Video or news segment of financial
   Comparing Stocks Activities                  news
   Bonds and Funds Organizer                 Material and equipment to complete
   Comparing Mutual and Exchange-               and present investment portfolios of
    Traded Funds Activity                        Which Option is Best? Activity
   Comparing Mutual and Exchange-            Assessment Prototypes (included)
    Traded Funds Activity Key
   Comparing Bond Investments Activity
   The Right Type of Mutual Fund Activity
   Other Investment Options Organizer
   Saving and Investing Evaluation
    Factors Organizer Guide
   Which Option Is Best? Activity
   Scoring Rubric for Which Option is
    Best? Activity




6200/6600 Principles of Business and Finance     Summer 2010                Page 288
Name: ______________________           Class: _______           Date: _______

Forbes 400 Wealthiest Individuals Activity
Directions: In an effort to better understand how wealth is tied to investing, please complete the following tasks:

1. Use the list of wealthiest individuals from the website provided by your teacher.
2. Complete the chart by providing information for three of the people on the Forbes 400 Wealthiest Individuals list.
   Choose at least one person from a country other than the United States.

    Person        Age      Country      Amount       Industry     Education             Summary about the person
                                         and                        and
                                       Source of                 Background
                                        Wealth
1




2




3




What are your thoughts about the people researched and other information you obtained?
_________________________________________________________________________________________________
_________________________________________________________________________________________________


6200/6600 Principles of Business and Finance       Summer 2010                  Page 289
Name: ______________________          Class: _______      Date: _______

Saving and Investing Basics Organizer
Directions: Provide responses for the listed items.

                           Saving and Investing Basics
Why do individuals, businesses, and government borrow money?




                     Saving influences on economic activity
Describe how saving may influence economic activity.




                            Saving and Investing goals
What are the main goals of saving and investing?




6200/6600 Principles of Business and Finance      Summer 2010             Page 290
Saving and Investing Basics Organizer Continued

                                 Savings growth
How is growth of savings measured?




   Describe the types of interest      How are the different interest calculated?
Simple Interest




Compound Interest




How does the frequency of compounding interest impact the growth of savings?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________




6200/6600 Principles of Business and Finance   Summer 2010              Page 291
Name_________________________             Class ________________ Date _________

Very Important Business Terms Activity
Directions: In the right-hand column of the table, describe why the terms listed in the
left-hand column are important to the listed topics.

Very Important        Why is the term important to the topic?
Business Terms
Saving and Investing Basics
Saving                Saving is imperative to a financial plan, which makes available
                      money for investing.

Investing



Stock Options
Preferred stock



Common stock



Stockholder



Stock exchange



Market value



Bonds and Mutual Funds Options
Municipal bonds



Corporate bonds




6200/6600 Principles of Business and Finance       Summer 2010                 Page 292
Very Important Business Terms Activity Continued

Mutual fund



Other Investment Options
Real estate



Equity



Assessed value



Commodities



Futures contract



Collectibles



Factors for Evaluating Saving and Investing Options
Yield



Liquidity




6200/6600 Principles of Business and Finance   Summer 2010   Page 293
Name: ______________________          Class: _______         Date: _______

Saving Options Organizer
Directions: Provide information about the listed savings plans and provide at least two
examples of when each type may be used.

Describe savings plans, include details about penalties for withdrawals, and
examples.
Savings Account             Certificate of Deposit (CD) Money Market Account




Examples:                     Examples:                     Examples:
Save $300 for an upcoming     Save money for at least six   Save money at a higher
trip                          months for a holiday          interest rate for an
                              celebration                   upcoming project




6200/6600 Principles of Business and Finance      Summer 2010                Page 294
Name: ______________________          Class: _______        Date: _______

How Savings Grow Activity
Directions: Calculate the balance and interest.

Section A: Calculate simple interest.
Use the simple interest rate formula: P=Principal, R=Rate, T=Time and I=Interest Rate
P * R * T= I.
Example: $500*.03*1=$15

    Principal              Rate                   Time       Amount of       Ending
                                                              Interest       Balance
       $500                 3%               1 year             $15
       $500                 8%               1 year
       $500                 8%               2 years
       $500                 8%               3 years
     $4,500                 8%               3 years
     $4,500                10%               3 years

Section B: Calculate interest compounded annually.
Use the compound formula: A=Amount, P=Principal amount (the initial amount you
borrow or deposit), r=Annual rate of interest (as a decimal), and n=Number of times
interest is compounded
A=P(1+r/n)nt

      Year              Beginning            8% Interest       Ending Balance
                          Balance
        1                  $500                    $40              $540
        2
        3
        4
        5

Total Amount of Interest




6200/6600 Principles of Business and Finance       Summer 2010              Page 295
How Savings Grow Activity Continued

Section C: Calculate interest compounded quarterly at 8% annual interest rate.
1. Multiply the principal (beginning balance) by ¼ of the interest rate to determine the
   amount of interest paid for the first quarter.
2. Multiply the (principal + first quarter interest) by ¼ of the interest rate to determine
   the amount of interest paid for the second quarter. Interest paid for remaining
   quarters is based on principal and interest paid the previous quarters.
2. Add the four quarters of interest together to determine the total interest for year.
3. Add beginning balance and total interest for the year to determine ending balance.
4. The ending balance becomes the beginning balance for the next year.



Year    Beginning  First         Second      Third      Fourth       Total    Ending
         Balance  Quarter        Quarter    Quarter     Quarter    Interest   Balance
          $500
  1
  2
  3
  4
  5
  6




6200/6600 Principles of Business and Finance        Summer 2010                  Page 296
How Savings Grow Activity KEY
Directions: Calculate the balance and interest.

Section A: Calculate the simple interests.
Use the simple interest rate formula: P=Principal, R=Rate, T=Time and I=Interest Rate
P * R * T= I.
Example: $500*.03*1=$15

    Principal               Rate                   Time      Amount of        Ending
                                                              Interest        Balance
       $500                  3%                   1 year        $15            $515
       $500                  8%                   1 year           $40          $540
       $500                  8%                   2 years          $80          $580
       $500                  8%                   3 years         $120          $620
      $4,500                 8%                   3 years         $1,080       $5,580
      $4,500                10%                   3 years         $1,350       $5,850



Section B: Calculate interest compounded annually.
Use the compound formula: A=Amount, P=Principal amount (the initial amount you
borrow or deposit), r=Annual rate of interest (as a decimal), and n=Number of times
interest is compounded
A=P(1+r/n)nt


      Year              Beginning            8% Interest       Ending Balance
                          Balance
        1                   500                     40                $540
        2                   540                    43.2              583.20
        3                  583.2                   46.66             629.86
        4                 629.86                   50.38             680.24
        5                 680.24                   54.42             734.66
        6                 734.66                   58.77             793.43

Total Amount of Interest                      $293.43




6200/6600 Principles of Business and Finance        Summer 2010               Page 297
How Savings Grow Activity Continued

Section C: Calculate interest compounded quarterly at 8% annual interest rate.
1. Multiply the principal (beginning balance) by ¼ of the interest rate to determine the
   amount of interest paid for the first quarter.
2. Multiply the principal + first quarter interest by ¼ of the interest rate to determine the
   amount of interest paid for the second quarter. Interest paid for remaining quarters is
   based on principals and interest paid the previous quarters.
3. Add the four quarters of interest together to determine the total interest for year.
4. Add beginning balance and total interest for the year to determine ending balance.
5. The ending balance becomes the beginning balance for the next year.



Year    Beginning  First         Second      Third      Fourth       Total    Ending
         Balance  Quarter        Quarter    Quarter     Quarter    Interest   Balance
         $500.00
  1      $500.00   10.00          10.20       10.40      10.61      41.21      541.21
  2      $541.21       10.82      11.04       11.26      11.49      44.61      585.82
  3      $585.82       11.72      11.95       12.19      12.43      48.29      634.11
  4      $634.11       12.68      12.94       13.19      13.46      52.27      686.38
  5      $686.38       13.73      14.00       14.28      14.57      56.68      742.96
  6      $742.96       14.86      15.16       15.46      15.77      16.08      820.29




6200/6600 Principles of Business and Finance          Summer 2010               Page 298
Name: ______________________           Class: _______     Date: _______

Stock Options Organizer
Directions: Provide information about the listed items.

                              Main types of stocks
      Preferred stock description               Common stock description




                 Similarities between common and preferred stock




                 Differences between common and preferred stock




Possible activities involved in trading stocks
Describe the role of stockbrokers.




What is the purpose of the stock exchange?




6200/6600 Principles of Business and Finance      Summer 2010             Page 299
Stock Options Organizer Continued

What is market value of stock?



---------------------------------------------------------------------------------------------------------------------
                                                  Stock Table

     A                      B                  C        D         E          F         G         H            I
  52 Week                 Sales
High    Low            Stock   Div           Yld       PE        Vol       High      Low       Last         Chg
                                                                100s
12 1/8       8          AAR          .44      6.2      15         6         6 3/4       6       6 1/2       -1/8
                                                                                      5/8
49 1/2 31 1/4           ACF        1.76       7.4       7       477       36 1/4      37       37          +3/4
                                                                                      5/8
26 1/2 16               AMF        1.36       6.7       7       133       17 1/2      17      17 1/2        -3/8
                                                                                      1/2
 6 1/8      3 1/8       ARA         2         7         8         10      33 7/8      33       33            -1
                                                                                      7/8

Using the information from the above stock table, provide a description of the content of
each column.

A. _________________________________________________________________

B. _________________________________________________________________

C. _________________________________________________________________

D. _________________________________________________________________

E. _________________________________________________________________

F. _________________________________________________________________

G. _________________________________________________________________

H. _________________________________________________________________

I. _________________________________________________________________

6200/6600 Principles of Business and Finance                     Summer 2010                         Page 300
Stock Options Organizer Continued

Identify economic factors that could influence investors in deciding on types of stocks?

1. ____________________________________________________________________

2. ____________________________________________________________________

3. ____________________________________________________________________

4. ____________________________________________________________________


Company factors that could influence investors in deciding on stock options
             Dividend Yield                      Price-earnings (P/E) ratio
Describe how dividend information may be Describe how price-earnings information
used by investors and list the formula.  may be used by investors and list the
                                         formula.




Calculating yield formula                              Example
Current value=closing price for the day                68.95
Original price=value paid for stock                    45.00
Yield=Percentage of money earned                       53%

current value – original price = yield                 68.95-45 = 53%
        original value                                    45


Stock                  Original price         Current Value           Yield
Stock A                $70.14                 $78.01

Stock B                $44.82                 $45.79

Stock C                $40.47                 $43.50



6200/6600 Principles of Business and Finance      Summer 2010                 Page 301
Name: ______________________        Class: _______        Date: _______

Comparing Stocks Activity
Directions: Using the website www.freestockcharts.com as a resource, provide the
requested information.

       Company                      Company 1                    Company 2
Name of company

Stock symbol (Use search
command under file to
locate company and display
stock chart)
Price one year ago (Use
company tab located at the
bottom center of the chart.
Click on chart for closing
price.)
Price six months ago

Price one day ago

What is the difference in the
stock prices for the past
three years?
Based on knowledge, what
factors may have impacted
the prices?
Based on price
performances, would you
trade any shares of the
stock? Why?




6200/6600 Principles of Business and Finance   Summer 2010                Page 302
Name: ______________________           Class: _______         Date: _______

Bonds and Funds Organizer
Directions: Provide requested information for the listed items.

                                           Bonds

Why are bonds issued?




What type of bonds do city and state
government levels issue and why?



Describe the types of bonds and other
federal securities the federal government
issues.




Describe the types of bonds issued by
companies.



Describe the difference between investing in company stocks and bonds as it relates to
being an owner verses being a lender.
Stocks                                     Bonds




How does stated interest rate impact the
value of a bond?




6200/6600 Principles of Business and Finance       Summer 2010                Page 303
Bonds and Funds Organizer Continued

                    Mutual and Exchange-Traded Funds (ETF)

Describe possible tasks completed by investment companies to assist investors with
mutual funds.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

Main types of mutual funds
 Name of mutual fund                     Description of mutual fund




Describe exchange-traded funds.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________




6200/6600 Principles of Business and Finance   Summer 2010             Page 304
Name: ______________________           Class: _______          Date: _______

Comparing Mutual and Exchange-Traded Funds Activity
Directions: Display in a graphic organizer how mutual funds and exchange-traded
funds are similar and different using the characteristics in the provided scenario.

       Melissa convinced David to invest money in fund securities since a variety of

securities will be included. Melissa invested in mutual-funds and David invested in

exchange-traded funds. Melissa liked that her dividends would be reinvested so that

she could possibly earn more. David read his investment portfolio again, and realized

that dividends earned on his funds are usually not reinvested.

       He started his account with $400 by his choice. He did not have to adhere to a

minimum amount. Melissa started her mutual fund investment with a balance of $5,000.

She regretted having to start her account with that large amount of money. Melissa and

David know that they will have to pay fees for their investment transactions and they will

face different levels of risks. Melissa kept up with the value of her mutual funds regularly

at the end of closing days of trading since that is when values are available. David could

check the value of his exchange-traded funds anytime. They are both looking forward to

earning dividends.




6200/6600 Principles of Business and Finance       Summer 2010                 Page 305
Comparing Mutual and Exchange-Traded Funds Activity KEY
Directions: Display in a graphic organizer how mutual funds and exchange-traded fund
are similar and different using the characteristics in the provided scenario.



  Mutual Funds

       Value determined at the
        end of the trading day

       Usually a minimum balance
        required

       Dividends are reinvested



                                  Pool of money
                                   from a variety of          Exchange-Traded
                                   investors                       Funds
                                                                  (ETFs)
                                  Different kinds of          Real-time value
                                   securities included
                                                               Usually no minimum
                                  Different levels of          balance required
                                   risk
                                                               Dividends are not
                                  Fees charged for             reinvested (usually)
                                   transactions




6200/6600 Principles of Business and Finance      Summer 2010               Page 306
Name: ______________________          Class: _______         Date: _______

Comparing Bond Investments Activity
Directions: Provide requested information for the listed items using the website
www.investingbonds.com/marketataglance.asp?catid-32 .

                               Comparing Bonds Table

    Bond Information                    Bond 1                         Bond 2
Issuer of NC municipal
bond

Bond current yield

Bond semiannual yield

Bond annual yield

Based on the above
information, describe the
bond performance.




Issuer of government
bond
Treasury current yield

Treasury yield for one
month
Treasury yield for one year

Based on the above
information, describe the
treasury performance.




6200/6600 Principles of Business and Finance      Summer 2010                Page 307
Comparing Bond Investments Continued

    Bond Information                  Bond 1                 Bond 2
Issuer of corporate bond

Bond current yield

Bond semiannual yield

Bond annual yield

Based on the above
information, describe the
bond performance.




6200/6600 Principles of Business and Finance   Summer 2010       Page 308
Name: ______________________          Class: _______          Date: _______

The Right Type of Mutual Fund Activity
Directions: Match the mutual fund in the left-hand column with the most appropriate
situation in the right-hand column by placing the alphabet representing the situation next
to the mutual fund.

          Type of mutual fund                       Situation to use mutual fund
Aggressive–growth stock funds _______         A. Ben wants to invest in primarily in
                                                stocks from other countries such as
                                                Japan, India, China, South Africa, and
                                                Australia.



Income funds _______                          B. Tish wants help in investing in
                                                companies that specialize in the
                                                entertainment industry.


International funds _______                   C. Ted wants a portfolio that consists of
                                                him owning shares and loaning money.



Sector funds _______                          D. Mary, a high school senior, wants high
                                                dividends on a mutual fund investment
                                                for a period of one to four years. She
                                                plans to use the money for a trip abroad
                                                for three months after graduating from
                                                college. She is willing to risk her entire
                                                savings of $5,000.

Bond funds _______                            E. Jack prefers to receive pay regularly
                                                from his investments.



Balanced funds _______                        F. Ann wants to invest in a portfolio that
                                                 consists primarily of companies such as
                                                 Verizon, Humana, and General Electric.




6200/6600 Principles of Business and Finance      Summer 2010                 Page 309
The Right Type of Mutual Fund Activity KEY
Directions: Match the mutual fund in the left-hand column with the most appropriate
situation in the right-hand column by placing the alphabet representing the situation next
to the mutual fund.

          Type of mutual fund                       Situation to use mutual fund
Aggressive–growth stock funds D               A. Ben wants to invest in primarily in
                                                stocks from other countries such as
                                                Japan, India, China, South Africa, and
                                                Australia.



Income funds       E                          B. Tish wants help in investing in
                                                companies that specialize in the
                                                entertainment industry.


International funds        A                  C. Ted wants a portfolio that consists of
                                                him investing in both stocks and bonds.



Sector funds   B                              D. Mary, a high school senior, wants high
                                                dividends on a mutual fund investment
                                                for a period of one to four years. She
                                                plans to use the money for a trip abroad
                                                for three months after graduating from
                                                college. Mary is willing to take a high
                                                risk on her entire savings of $5,000 to
                                                see a quick increase in her funds.

Bond funds     F                              E. Jack prefers to receive pay regularly
                                                from his investments. Jack prefers to
                                                receive regular pay from stocks that he
                                                personally invested.

Balanced funds         C                      F. Ann wants to invest in a portfolio that
                                                 consists primarily of companies such as
                                                 Verizon, Humana, and General Electric.




6200/6600 Principles of Business and Finance      Summer 2010                 Page 310
Name: ______________________        Class: _______      Date: _______

Other Investments (real estate, commodities, and collectibles) Organizer
Directions: Discuss the requested item listed in the table.
    Type of           Description                           Examples
  Investment
Real Estate




Advantages of
investing in
real estate


Disadvantages
of investing in
real estate


Commodities
and futures




Collectibles




6200/6600 Principles of Business and Finance   Summer 2010              Page 311
Saving and Investing Evaluation Factors Organizer Guide Directions for Teacher
Allow students to develop an organizer of factors for evaluating saving and investing
options. Use the items in the table as a guide to determine appropriate content for
students to include in organizer.

  Factors for evaluating                             Description
  saving and investing
         options

Safety and risk              Guarantee of money invested to be returned

                             Diversity of investment options

                             Low tolerance risk

                             High tolerance risk
Potential return             Acceptable yield

                             High yield

                             Low yield
Liquidity                    High liquidity

                             Low liquidity
Taxes                        Taxed earnings

                             Tax-exempt earnings




6200/6600 Principles of Business and Finance       Summer 2010             Page 312
Name: ______________________           Class: _______          Date: _______

Which Option is Best Activity
Directions: Your financial planning team is to complete the following for two clients from
the Clients Table. Your teacher may assign your team’s clients.

   1. Among the investment categories determine which investment options would
      most likely meet the expectations of your clients.
   2. Develop an investment portfolio, including justification for options recommended,
      for each client. Be prepared to present investment portfolios

                                     Clients Table

    Name              Age          Personal          Funds            Comments
                                    goals          available to         made by
                                                     invest              clients
Phyllis Jones          25          High Risk         $4,500        “Roll the dice
                                                                   with my
                                                                   money!”
Amare                  72           Low Risk       $1,800,000      “I am
Williamson                                                         concerned
                                                                   about providing
                                                                   for my family.”
Reggie Creed           44          Moderate         $200,000       “I want to make
                                     Risk                          sure my money
                                                                   will grow long
                                                                   term.”
Hong Chao              40          High Risk        $500,000       “I am
                                                                   considering
                                                                   purchasing a
                                                                   new house in
                                                                   the next two
                                                                   years.”
Amanda                 30           Low Risk         $90,000       “I don’t really
Vasquez                                                            know much
                                                                   about
                                                                   investments.”




6200/6600 Principles of Business and Finance       Summer 2010                 Page 313
Which Option is Best Activity Continued

1. Savings

                  Company                       Type      Rate             Time
First Financial                         Savings account   1%              N/A
Citizen’s Bank of Anytown               Savings Account   1.25%           N/A
The High-Yield Savings Mutual           Mutual Fund                       N/A
                                                          3.5%
Fund
First Federal Bank                      CD                3%              5 years
Joe’s Savings and Auto Loans            Pawn Shop         5%              N/A



2. Low Risk Stocks

                                Stock                      Estimated   Dividend (per
          Company                              Industry
                                price                        return        year)
Falcon Industries                $58    Defense           3%              $2.60
Greater Office                  $24     Office Products                   $1.25
                                                          6%
Operation Processing
Prudential Unlimited             $15    Energy            4%              $2.50

Practer and Gimble              $110    Home Products     6%              none

Fig Bars Unlimited               $28    Foods             5%              $3.00



3. Medium Risk Stocks

                                Stock                      Estimated   Dividend (per
          Company                              Industry
                                price                        return        year)
Nickel Defense, Inc.             $32    Defense           3%              $2.00

Petal to the Medal              $66     Flowers           6%              $1.00

Online learning, Inc.            $89    Education         4%              $3.50

ABM                              $41    Technology        6%              $0.50

Rocketworks                      $12    Aerospace         5%              $1.50




6200/6600 Principles of Business and Finance     Summer 2010           Page 314
Which Option is Best Activity Continued

4. High Risk Stocks

                               Stock                          Estimated    Dividend (per
         Company                               Industry
                               price                            return         year)
Icecream.com                   $115      Internet            28%              none

Best Games                     $38       Video games         19%              none
                               $167      Consumer                             none
EPod, Inc.                                                   15%
                                         electronics
Termpapers.com                  $99      Internet            50%              none

Preventasick                    $28      Pharmaceutical      29%              $0.15



5. Bonds

                                                             Face Value
         Company              Interest         Industry                    Price of Bond
                                                              of Bond
General Meters                 3.3%      Defense               $1,000            $900

Tastee Cones                   2.4%      Office Products          $5,000        $4,500

The Steak Mart, Inc.           5.0%      Energy               $10,000          $10,500

Frank’s Used Autos             8.5%      Home Products        $100,000        $120,000

Energy Dynamics                2.0%      Foods                    $2,000        $1,700




6200/6600 Principles of Business and Finance        Summer 2010            Page 315
   5.03 Which Option is Best Activity Continued

6. Mutual Funds

                               Fund                         Estimated
         Company                               Type                           Cost
                               price                          return
                                       Tracks 500
                                                                        3% load
Fidelitar Top 500                      largest U.S.            9%
                               $23                                      1% annual fee
                                       companies
                                       Invests in
Berdugo Low-Priced                                                      2% load
                                       undervalued             8%
Stock                          $14                                      2% annual fee
                                       stocks
                                       Invests in only
                                                                        3% load
Crown Biotechnology                    biotechnology          19%
                                $85                                     5% annual fee
                                       companies
                                       Invests in Dow
Weiland Dow                                                             2% load
                                       Industrials stocks      9%
Industrials                     $60                                     2% annual fee
                                       Invests only in
Stone Capital Health                                                    3% load
                                       health care            15%
Care                            $29                                     6% annual fee
                                       companies


7. Real Estate

                                                             Estimated      Estimated net
        Types               Price              Reason       appreciation     Income (per
                                                             (per year)         year)
Residential               $200,000       Personal Home          3%                N/A

Residential               $500,000       Rental                 4%               $5,000
Commercial                $1,600,000     Rental                 6%             $100,000

Commercial                 $250,000      Rental                 3%               $5,000

Vacant Land                $100,000      Speculation            8%                N/A




6200/6600 Principles of Business and Finance    Summer 2010                Page 316
Which Option is Best Activity Continued

8. Commodities

                              Futures                     Estimated
         Commodity             Price                       cost in     Risk level
                                                            future
Corn                           $23                           $25         moderate

Wheat                          $10                            $14        moderate

Gold                            $17                           $21           low

Timber                          $45                           $49          high

Oil                             $44                           $70          high



9. Collectibles

                                                          Estimated
            Type                                Cost                   Risk level
                                                            return
1909 Honus Wagner                          $164,000                     High
                                                               ?
baseball card
1978 Luke Skywalker                            $525                     High
                                                               ?
action figure
1860 Letter from Abe                       $1,100,000                   High
                                                               ?
Lincoln
1965 Ford Mustang                              $35,000
convertible                                                    ?        High

1982 Entire set of                             $3,500
original Transformers                                          ?        high
action figures




6200/6600 Principles of Business and Finance    Summer 2010           Page 317
Team members _______________________________                Date ________________

Scoring Rubric for Which Option is Best
Advanced, proficient, progressing, and beginning levels are based on whether
tasks criteria are met.
Advanced: All three of the proficient level criteria are met PLUS
       Completed an investment portfolio for at least one additional client.

Comments


Proficient: All three tasks are accomplished. This is the core of what must be
achieved.
        Determined which investment option(s) would most likely meet the expectations
        of both clients.
        Developed an investment portfolio for each client.

       Presented an investment portfolio for each client.

Comments




Progressing: Two of the three proficient level tasks are accomplished.




Comments




Beginning: One of the three proficient level tasks is accomplished. Team should
arrange to redo activity.


Comments




6200/6600 Principles of Business and Finance     Summer 2010              Page 318

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:6
posted:10/13/2011
language:English
pages:43