financial markets. describe the key risks and returns associated with investing identify the major...
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FINANCIAL MARKETS
Describe the key risks and returns associated with investing
Identify the major financial marketsExplain the importance of financial markets to our
economyEvaluate the diff erent financial securities and their
purposes
OBJECTIVES
AnnuityBlue Chip StockBondBusiness RiskCapital MarketsCommon StockCorporate BondsDebenture BondsDerivatives
DiversificationEconomic RiskExchange traded
fundFinancial MarketsFuturesGlobal
Investment RiskHedge Funds
KEY VOCABULARY
Inflation riskInterest rate riskJunk BondLiquidity RiskMarket IndexMarket riskMoney MarketMunicipal BondMutual Fund
NASDAQNew York Stock
ExchangeOptionsPreferred stockPrimary marketPrivate EquityReal Estate
Investment Trust
KEY VOCABULARY
Risk ToleranceSecondary MarketSeries EE savings
bondsStockTreasury BillTreasury BondZero-coupon
bond
KEY VOCABULARY
Every student is going to receive a statement of some sort
You may receive a quote while others will get a question or a statistic
Review the statement
RISK TOLERANCE
Copy the topic that was given to you on the top of a piece paper (or computer program) and then to write a two- to three-sentence response under it Response should be appropriate for the type of statement
that they received Question= answer Quote= thoughts and feelings Statistic=
RISK TOLERANCE
“The risk in investment is not knowing what you are doing.” Warren Buff et Thoughts? What does he mean? Examples of knowing and not knowing what your doing
If no idea about the topic, discuss what you don’t understand
EXAMPLE
Pass topics and response to another group member who must silently read the fi rst response to the statement and then counter-respond in writing I agree or disagree is not a counter-response
Share responses
RISK TOLERANCE
Risk is a fundamental issue to consider when planning an investment strategy Risk is all about the amount of assets or money that they
have to spare Age and time may be a factor Basic personality types
RISK TOLERANCE
Download: Reading- Investment Risk Factors Hold off on reading
Download: Worksheet- Investment Risk Factors Used to help understand the reading Individually describe the cause of each risk as well as one
thing that it most affects. For example, economic risk can be caused by war, inflation,
political changes, and recessions and can affect the entire market
COMPONENTS OF RISK
Confer with people at your table to make sure your answers are complete and correct
Drop in classpress drop box
COMPONENTS OF RISK
What are the diff erent ways to earn money?
INTRODUCTION TO FINANCIAL SECURITIES
Active Passive
We will focus on the passive aspect of earning money Why are Financial Institutions a good way to earn passive
income?
INTRODUCTION TO FINANCIAL SECURITIES
Download: Anticipation Guide- Investment Instruments Complete the first two sections now Finish after the presentation.
INVESTMENT INSTRUMENTS
Presentation
INVESTMENT INSTRUMENTS
Imagine you really wanted an item that cost $50, but you only had $25. How would you go about acquiring the funds to purchase the item immediately?
INTRODUCTION TO FINANCIAL MARKETS
Financial markets allow society to consume amounts that are in excess of their income and are relied upon by the nation to help individuals, businesses, and the government raise the capital they need
Financial markets also allow individuals to gain wealth. Chance to go to college, allow families the ability to
purchase homes, and allow businesses the opportunity to raise funds to expand and grow
INTRODUCTION TO FINANCIAL MARKETS
Download: Reading- Understanding Financial Markets Take the SQ3R technique to read this
UNDERSTANDING FINANCIAL MARKETS
Survey: Read the title and key words and speculate about the content.
Question: Pairs generate questions about the text before reading it. Each pair should create two questions.
Read: Student Resource 10.5, Reading: Understanding Financial Markets, and answer their questions.
Recite: Talk about, reread, and/or take notes about the key ideas highlighted in the text.
Review: Review the text and summarize their understandings.
SQ3R
Financial markets play a crucial role in the financial health of: Individuals The community The government The global economy
Financial markets help to effi ciently connect those that have funds with those that have a need for funds
From short-term financing to long-term investments, financial markets provide opportunities for people to gain wealth.
UNDERSTANDING FINANCIAL MARKETS
You have been given an overview of some of the diff erent types of financial instruments and markets
You will continue with an in-depth study on your own by choosing one investment instrument to research
INVESTMENT POSTER
Being knowledgeable about financial markets and specific investment instruments is very important, especially during unstable economic times
You are going to become experts on one investment approach, its purpose, and any positive and negative aspects that it has
INVESTMENT POSTER
Download: Assignment- Investment Poster Review requirements and directions
Download: Rubric- Investment Poster This is how I will grade your assignments, become familiar
with itExample
INVESTMENT POSTER
How does the example meet the requirements for this assignment?
How would you improve the poster based on the criteria in the rubric?
INVESTMENT POSTER
The fi rst step of the project is to decide upon a particular investment instrument to research
CHOOSING AN INVESTMENT INSTRUMENT
• Common stock• Preferred stock• Blue chip stock• Corporate bonds• Municipal bonds• US treasury issues• US savings bonds• Exchange-traded
funds• Mutual funds,
• Closed-end funds• International funds• Options• Futures• Commodities• Hedge funds• Private equity• Annuities• Real estate
investment trusts (REITs
TOPICS
Take a few minutes and familiarize yourself with these instruments and any other that you are interested in that does not appear on this list
Create a list of your top 3 topic choices I will put you into groups based on complete
ununderstandable randomness
CHOOSING AN INVESTMENT INSTRUMENT
Download: Worksheet- Research Guide Use this as a frame for your research Limited time for research, so tasks have to be delegated
INVESTMENT POSTER
Create your rough draft of your poster for peer review First, groups must look back at their research as well as the
assignment directions and outline where the specific required information will be placed on their posters.
Second, groups must assign each group member a specific section of the poster to complete You will be required to write rough drafts and then share their
written work with their group members during the following class period
INVESTMENT POSTER
Divide labor into sections on the poster Complete each section so your classmates can review your
work
INVESTMENT POSTER
When doing peer reviews, fi rst look over the poster requirements as well as the grading rubric so you can frame your review
You can also answer the following prompts I noticed that the information is… The information could be improved by…
SHARING DRAFTS
Create your final draft for posters Use poster board and supplies, not just the computer
INVESTMENT INSTRUMENT
Download: Feedback Form- Investment PostersFor each of the diff erent investment options that are
highlighted: You must list two of the most distinguishing features about
each instrument Answer: What is the most important thing you would want
to remember about this investment instrument for when you have money to invest?
INVESTMENT POSTERS
Think about their project topic and of the diff erent ways they will be communicating information about the topic to the audience at the financial literacy fair
What have you learned in this lesson that can help you improve your culminating project products?
Identify and describe three ways in which the information you’ve learned in this lesson could improve your culminating project products.
List the places you’d like to make the edits. That is, identify which product or products should include the new information
FINANCIAL MARKETS
Create a biography presentation on John Bogle (pioneer of index investing), Charles Dow (one of the founders of the Dow Jones &
Company and The Wall Street Journal), William O’Neil (one of the world’s most successful
investors) Sir John Templeton Peter Lynch Philip Fisher George Soros Benjamin Graham David Dreman John Neff Ralph Wagner
ENRICHMENT
In terms of the risk involved when investing, instruct students to investigate the Bernard Madoff scandal. Have students write a response to the investment scandal. Students should explain what a Ponzi scheme is and how it could have been avoided.
ENRICHMENT
View the political cartoon that can be viewed online http://www.pritchettcartoons.com/broker.htm.
Research the impact that technology is having on financial markets.
Write an opinion paper on which type of market you think is best for the consumer, virtual (NASDAQ) or full service brokerage (NYSE).
ENRICHMENT
There are many negative stories surrounding financial markets. Have students research the Enron scandal, the Barings Bank scandal, and/or Black Wednesday and present their findings to the class.
ENRICHMENT
Research the company Long-Term Capital Management (one of the world’s largest hedge funds at the time) and its failure.
Discuss it as an example of the risks involved in the hedge fund market.
Describe its eff ect on the US economy
ENRICHMENT
Analyze the statement, “The riskiest thing you can do is not invest your money at all.”
Write a position paper stating whether they agree or disagree with the statement. (Research inflation’s impact on investments when considering your views.)
ENRICHMENT
Research futures and options and create a Venn diagram comparing and contrasting the two investment options
Look at the future and option prices of 2 companies. What is the bid-ask spread? At what prices can you buy a contract? How long are the contracts for? Is there a difference between the price of future contract
and the price of option contract? Why or why not?
ENRICHMENT
Social Studies: Research the 2008–09 Russian financial crisis.
Discuss the course of events that led to the crisis as well as its eff ects on other countries.
CROSS-CURRICULAR INTEGRATION