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Stock “Up”

We all hope for our stocks to “go up,” or increase in value. Help your child learn to read the stock-market quotations in the newspaper. He or she just might pick a winner!

What You Need:

Help with Opening PDF Files

What You and Your Child Will Do:

  1. Have your child find the New York Stock Exchange financial listings in the newspaper. Although each column lists a lot of information about each stock, the most important headings for your child to scan on a daily basis are the following.
    Stock—name of the company that issued the stock (sometimes given as an abbreviation, or symbol)
    High—the highest price at which the stock sold that day
    Low— the lowest price at which the stock sold that day
    Last—the price at which the stock was selling when the stock market closed that day
    Chg—the change from the closing price that day as compared to the closing price the day before, or the difference between the two closing prices
    52-Week   Yld Sales  
    High Low Stock Div % P/E 100s High Low Last Chg
    39.76 14.95 LeapFrog ... ... 40 1660 37.05 36.15 36.40 -0.01
    57.065 32.15 LearCorp ... ... 10 6442 53.99 53.32 53.86 +0.26
  2. Have your child pretend to have $1,000 to invest in the stock market. Then let him or her pick one stock and “buy” as much of it as possible. Record the number of shares “purchased” and the price for the first day.
  3. Each day throughout the week (or longer, if your child is interested), record the price for that day. Calculate the total value of the investment at that price, the gain or loss from the previous day, and the gain or loss from the purchase date.

More to Do:

Many Internet resources are available through which your child can read more about the stock. Go to a search engine, such as Google (http://www.google.com) or Altavista (http://www.altavista.com), for useful links. Helpful sites include American Stock Exchange (http://www.amex.com) and Yahoo! (http://finance.yahoo.com). If necessary, offer to help input the name of the stock or the stock symbol.

For more practice, have your child try another investing strategy, using the data already collected in the table. Ask the following questions:

  • Suppose that, instead of buying all the shares on the first day, you buy the same shares over 5 days. For example, if you bought 50 shares on Day 1, buy 10 shares each day for 5 days instead. (Alternatively, you can spend $200 each day and see how many shares you can buy at each day's price,)

Date Number of shares purchased Price per share Cost
       
       
       
       
       
Total cost  

What is the total cost of your investment? Is it more or less than the $1,000 you spent by buying all the shares on the first day?

What is the current value of this investment (price per share on the last day times total shares owned)?

What is the gain or loss from this investment?

How does this strategy compare to buying all the shares at once?