Stock market trading game
WHY STUDY THE STOCK MARKET?
The stock market is in the news every day, and even those people who do not personally trade securities or intend to make a fortune by trading stocks, have an interest in knowing something about the market.Most retirement funds are invested in stocks.Individual retirement accounts can be and often are invested in mutual funds.Most large companies offer their employees profit-sharing in the form of stock ownership.The strength of our nations largest companies, and consequently the economic vitality of the nation, is intricately intertwined with what happens in the stock market.to get a clear picture of this, we need only recall the devastating shock wave that went through all areas of the economy when the stock market crashed during the 1930s.
By giving students an understanding of the stock market, then, we are preparing them to deal knowledgeably with an area of our society that has a vast effect on their lives.Whether or not they choose in later life to trade stocks on an individual basis, they will at least have the knowledge that will enable them to understand this aspect of the economy and how their personal economic pictures are affected by the larger economic landscape.
STOCK PRICES
Business owners usually will decide to go public or to sell stock in their business to other people when they need to raise money to expand the business or to fund new endeavors.They divide their business ownership into pieces and offer these for sale to other people.When people buy the stocks, the money from the sale is then available for the company to use to build new plants, install up-to-date machinery, develop new products, or do more advertising.
INITIAL PRICES
When a business first offers its stocks for sale to the public it is called an initial stock offering.The price of the stock is based on the assets of the business divided by the number of stocks.For instance, if a business had one dollar million in assets and offered 500,000 shares for sale, each share would be worth two dollars.This price is called the initial value or par value.
PRICES GO UP AND DOWN
Once stocks are offered for sale on the stock market, their prices can rise or fall depending on what people are willing to pay.There are no rules on what price should be charged.If people think a company has great potential for making money, they will want to own stock in that company.All the people wanting to buy the stock create a demand that drives the price up.If only a few people want to buy the stock of the company, there is little demand for the stock and the companys stock prices may fall.
Many times the price of a companys stock is affected by conditions that have nothing to do with the performance of the business.Things that happen with the national economy or with the stock market in general can cause the companys stocks to rise or fall in price.The stock prices are determined not only by how well the company is doing, but also by how much confidence people have in the companys ability to make a profit and in the national economic picture.
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