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 and Source of Wealth Industry Education and Background Summary about the person

1

2

3

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

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Name: ______________________ Saving and Investing Basics Organizer Directions: Provide responses for the listed items. Saving and Investing Basics Why do individuals, businesses, and government borrow money?

Class: _______

Date: _______

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?

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Saving and Investing Basics Organizer Continued Savings growth How is growth of savings measured?

Describe the types of interest Simple Interest

How are the different interest calculated?

Compound Interest

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

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Name_________________________ 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

Class ________________ Date _________

Stock Options Preferred stock

Common stock

Stockholder

Stock exchange

Market value

Bonds and Mutual Funds Options Municipal bonds

Corporate bonds

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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

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Name: ______________________ 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

Class: _______

Date: _______

Examples: Save $300 for an upcoming trip

Examples: Save money for at least six months for a holiday celebration

Examples: Save money at a higher interest rate for an upcoming project

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

Class: _______

Date: _______

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

Total Amount of Interest

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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 Balance Quarter $500

Second Quarter

Third Quarter

Fourth Quarter

Total Ending Interest Balance

1 2 3 4 5 6

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Name: ______________________ Stock Options Organizer Directions: Provide information about the listed items. Main types of stocks Preferred stock description Common stock description

Class: _______

Date: _______

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?

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Stock Options Organizer Continued What is market value of stock?

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

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 Current value=closing price for the day Original price=value paid for stock Yield=Percentage of money earned current value – original price = yield original value

Example 68.95 45.00 53% 68.95-45 = 53% 45

Stock Stock A Stock B Stock C

Original price $70.14 $44.82 $40.47

Current Value $78.01 $45.79 $43.50

Yield

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Name: ______________________ Comparing Stocks Activity Directions: Using the website www.freestockcharts.com as a resource, provide the requested information. Company 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? Company 1 Company 2

Class: _______

Date: _______

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Name: ______________________ Bonds and Funds Organizer Directions: Provide requested information for the listed items. Bonds Why are bonds issued?

Class: _______

Date: _______

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?

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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. ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________

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Name: ______________________ 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.

Class: _______

Date: _______

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Name: ______________________ 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 Issuer of NC municipal bond Bond current yield Bond semiannual yield Bond annual yield Based on the above information, describe the bond performance. Bond 1 Bond 2

Class: _______

Date: _______

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.

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Comparing Bond Investments Continued Bond Information Issuer of corporate bond Bond current yield Bond semiannual yield Bond annual yield Based on the above information, describe the bond performance. Bond 1 Bond 2

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

Class: _______

Date: _______

Income funds _______

B. Tish wants help in investing in companies that specialize in the entertainment industry. C. Ted wants a portfolio that consists of him owning shares and loaning money.

International funds _______

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. E. Jack prefers to receive pay regularly from his investments.

Bond funds _______

Balanced funds _______

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

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

Class: _______

Date: _______

Advantages of investing in real estate

Disadvantages of investing in real estate

Commodities and futures

Collectibles

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Name: ______________________ 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

Class: _______

Date: _______

Clients Table
Name Age Personal goals High Risk Low Risk $1,800,000 Funds available to invest $4,500 Comments made by clients “Roll the dice with my money!” “I am concerned about providing for my family.” “I want to make sure my money will grow long term.” “I am considering purchasing a new house in the next two years.” “I don’t really know much about investments.” Moderate Risk High Risk $500,000 $200,000 Low Risk $90,000

Phyllis Jones Amare Williamson Reggie Creed 44 72

25

Hong Chao

40

Amanda Vasquez

30

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

2. Low Risk Stocks Company Falcon Industries Greater Office Operation Processing Prudential Unlimited $24 6% 4% 6% 5% $15 $110 $28 Foods Home Products Energy Office Products Practer and Gimble Fig Bars Unlimited Defense Stock price $58 Industry Estimated return 3% Dividend (per year) $2.60 $1.25 $2.50 none $3.00

3. Medium Risk Stocks Company Nickel Defense, Inc. Petal to the Medal Online learning, Inc. ABM Rocketworks Stock price $32 $66 $89 $41 $12 Industry Defense Flowers Education Technology Aerospace Estimated return 3% 6% 4% 6% 5% Dividend (per year) $2.00 $1.00 $3.50 $0.50 $1.50

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Which Option is Best Activity Continued 4. High Risk Stocks Company Icecream.com Best Games EPod, Inc. Termpapers.com Preventasick $28 29% Pharmaceutical $0.15 $99 50% none $167 15% none Consumer electronics Internet $38 19% Video games none Internet Stock price $115 Industry Estimated return 28% Dividend (per year) none

5. Bonds Company General Meters Tastee Cones The Steak Mart, Inc. Frank’s Used Autos Energy Dynamics 2.0% Foods 8.5% Home Products 5.0% Energy 2.4% Office Products 3.3% Defense Interest Industry Face Value of Bond $1,000 $5,000 $10,000 $100,000 $2,000 Price of Bond $900 $4,500 $10,500 $120,000 $1,700

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

7. Real Estate Estimated appreciation (per year) 3% Reason Personal Home Rental Rental Rental Speculation 4% 6% 3% 8% Estimated net Income (per year) N/A $5,000 $100,000 $5,000 N/A

Types Residential Residential Commercial Commercial Vacant Land $250,000 $100,000 $1,600,000 $500,000 $200,000

Price

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Which Option is Best Activity Continued 8. Commodities Futures Price Risk level moderate moderate low high high $23 $10 $14 $21 $49 $70 $17 $45 $44 Estimated cost in future $25

Commodity Corn Wheat Gold Timber Oil

9. Collectibles Type 1909 Honus Wagner baseball card 1978 Luke Skywalker action figure 1860 Letter from Abe Lincoln 1965 Ford Mustang convertible $164,000 $525 $1,100,000 $35,000 ? $3,500 ? 1982 Entire set of original Transformers action figures ? ? ? Cost Estimated return Risk level High High High High high

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Team members _______________________________ 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

Date ________________

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

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