Buy Low, Sell High

Grades: High School
Subjects: Math, Economics
Required Software: Microsoft® Word 97, Excel 97, PowerPoint® 97
Optional Software: Internet Explorer, Microsoft Encarta 97 Encyclopedia

What's in this Lesson:

Teaching Guide

Student Activity

Step A: Researching the Market
Step B: Creating a Spreadsheet
Step C: Invest in your Companies
Step D: The Daily Record Section
Step E: Tracking Stocks

Teacher Guide

Summary :

This lesson will teach students how to invest in corporate stocks by creating investment "portfolios." Step-by-step instructions will enable students to develop worksheets that track their portfolio's performance over a specified time period and report the results to the class.

Objectives:

To introduce students to the stock market, design a worksheet that calculates profit (or loss) for any given investment, and generate line graphs representing stock performance

Prerequisite Skills:

Knows Microsoft Excel basics and its many features including creating worksheets and charting, how to create an electronic slide presentation using Microsoft® PowerPoint®, how to access the World Wide Web using Microsoft Internet Explorer (optional)

Time Allotted:

Approximately six weeks to three months

How to Begin:

Introduce students to the Stock Market summarizing its role in U.S. economic history (e.g., the great crash of 1929). Define terms that students are likely to encounter in their research such as portfolio, dividend, and price/earnings ratio (i.e. stock price divided by stock earnings per share.) Have students bring in the business section of newspapers that publish stock market information and explain to them how to read a stock quote. Have each student choose five companies whose stock they want to purchase. Explain that everyone in the class will start with $1,500 as seed money to purchase stocks at the current market value and that they will track their portfolio's performance over a period of time from six weeks to three months. Finally, discuss with students the effectiveness of line charts in presenting their results.

Extension Activities

Have students consider trading their stock (buying or selling shares) during the specified time period.

Have students create a Summary worksheet of their investments. Columns should contain cells that reference initial investments, total shares owned, current price/share, and profit/loss figures for every company in the portfolio.

Top of page

Student Activity

Description :

In this activity, you will invest $1,500 in five different companies and then track the stock market price of those companies over a period of time.

Step A
Researching the Market
Software: Microsoft Encarta, Internet Explorer
What to do : Choose ten companies in which you think you would like to invest. Using Microsoft's Internet Explorer and a search engine such as Lycos or Yahoo, access each company's Web site in order to gather as much background information as possible about each company, including:

TIP! Encarta 97 includes several helpful articles about the stock market. Use the encyclopedia's Find command to search for keywords such as "Stocks and Bonds," "Finance," and "Stock Exchange."

TIP! Using Internet Explorer, visit a Web site called "Investing for Kids" or "StockMaster," the stock market site referenced in the Web Links section of Encarta. Or, you can access a wealth of business news and financial information to track the performance of selected stocks by visiting the Web site of "Microsoft Investor."

"Investing for Kids" web site (from Internet Explorer)

Recommended Web Sites

Step B
Creating a Spreadsheet
Software: Microsoft Excel, Microsoft Word
What to do: Open Microsoft Excel. Add 2 new worksheets to your workbook so you have a worksheet for each of the five companies in your investment portfolio.

TIP! Adding worksheets is easy. Simply click Worksheet from the Insert menu. Use the Office Assistant to learn how to rename a worksheet.

For each company's worksheet, you will input (a) some basic information about the company, such as the company Symbol (the unique symbol assigned to a NASDAQ security) and the name of the particular Stock Exchange that lists the stock; (b) an Initial Investment section; and (c) a Daily Record section.

Stock Portfolio worksheet created in Microsoft Excel 

Here are some step-by-step instructions to get you started with your worksheets:

TIP! To enlarge a cell, point to the column border, the cursor will change to a two-headed arrow. Now, drag the column to the desired width.

TIP! Format all currency for two decimal places by choosing Cells under the Format menu, clicking the Number tab, and then selecting Currency under Categories. In the Decimals places enter the number 2.

Step C
Invest in your Companies 
Software: Microsoft Excel
What to do: To create the Initial Investment section of your worksheets, try these tips:

1.	In cell A6, type "Initial Investment" and change to bold face type.
2.	In cell A7, type "Date of Transaction."
3.	In cell C7, type "$/Share";
4.	in D7, "# of Shares Bought"; in E7, "Total Investment".
5.	Highlight A7:E7
6.	Right click the highlighted cells, then choose Format cells.
7.	Click Alignment, select Center.
8.	In cell A8, type the date of the initial transaction Format Cells dailog box  TIP! At this point you may want make four copies of the worksheet to use as a template for each company's stock that you track. Select Move or Copy Sheet from the Edit menu, click the Create a Copy check box, then repeat this procedure for as many copies as you need.
9.	In cell C8, type the cost per share (e.g., 20 3/4) as listed on the stock exchange. Microsoft Excel will automatically convert this figure to decimals. Be sure to format the number for two decimal places.
10.	In cell D8, type the number of shares bought. In cell E8, type the formula: =C8*D8 and press enter. The total cost of your investment will automatically be calculated. Format to two decimals places.

Step D
The Daily Record Section

Software : Microsoft Excel 
What to do: To create The Daily Record section of the worksheet, follow these steps

Highlighted data to create Microsoft Excel chart

TIP! Look up "cell references" in Office Assistant to learn more about this term. Ask the Office Assistant how to format Column E for currency.

Step E
Tracking Stocks
Software: Microsoft Excel
What to do: At the end of the stock performance period, use the Chart Wizard in Microsoft Excel to create a line chart showing "profit or loss" for each stock you invested in.

Highlight the range of data you've entered on your worksheet, for example, E12:E23 . Click Chart from the Insert menu, then choose Line and step through the procedures for creating a line chart. Be sure to add a chart title. Label the chart's X and Y axes.

Line Chart created in Microsoft Excel showing profit/loss

Why does the line chart do a better job of representing the stock data than a pie chart? For more help, ask the Office Assistant about "charting."

Top of page