Semester Course

7.2 What is a Stock?

Student Activity Packet
UNIT: INVESTING

Name: caroline quirk

In this lesson, you will learn to:

● Explain what it means to own stock and how you can make money from it
● Identify the risk of investing your money in the stock market
● Analyze the performance of individual stocks over time

Write your responses in the space provided, highlight or bold the correct answer choice for multiple choice
questions

RESOURCES QUESTIONS

1. What comes to mind when you hear the term “stock market”?
1 Exploration Question

A bunch of squiggly lines that my dad looks at every morning.

1.
2 How The Stock Exchange
Works
What is the stock exchange
and how does it work?
Watch this German video to
find out (the facts are true in
the U.S., too!) and answer
the questions in this
student activity packet.
If the price of the share grows as the company grows, how does buying
shares in a company benefit an investor?
a. An investor will be able to sell these shares for a lower price and
make a profit.
b. An investor will be able to sell these shares for a higher price and
make a profit.
c. An investor will be able to enjoy free services from the company
they bought shares from.
d. An investor will be able to put the company on their resume.

2. How does selling shares on the stock exchange benefit companies?

a. They rely on a low return when selling shares.
b. They are immune to any volatility in the stock exchange when
they sell their shares.
c. They receive funds to further expand their company.
d. They get more customers than when they did not sell shares.

3. As an investor, what is the risk involved when investing in companies on

the stock exchange?
a. Investors can lose their existing shares if the value of the stock
does not increase within 90 days of purchase
b. Once they purchase a share, investors cannot sell them at a
higher price
c. The price of stocks can decrease; for example, when the company
receives bad press
d. Investors are only at risk if the purchase a share when the stock
price has fallen

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READ: 25 Investing Basics
Part I: Read & Categorize

This Business Insider article describes 25 Things to Know About Investing by Age 25. You’ll notice
we’ve numbered the Things to Know. As you read the article, write the corresponding number
in one of the boxes below, based on your current knowledge level of the topic. There is NO
expectation that you should already know all of this info!

CATEGORY 1: I already know CATEGORY 2: I’ve heard of CATEGORY 3: I don’t know

all about this. this, but I’m no expert. anything about this.

3 1
4 8 2
6 13 5
7 17 10
9 19 11
15 20 12
16 21 14
22 24 18
23
25

Part II: Learn with a Partner (you can do this on your own, but then you need to write two
responses as if you were two people)

A. First, find one item that you’ve put in Category 1 that your partner did not. Explain your
understanding of that fact to your partner, to the best of your ability. Now, switch roles.
Your partner should find one item in their Category 1 that you didn’t include there and
explain it to you. **If you didn’t put anything in Category 1, pick the item in Category 2
you feel you know best.
Write your and their explanations here:

I put number 9 and my partner did not. Number 9 was, “Diversification means spreading your

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money out among different kinds of investments.” This means that it is best to invest in multiple
different type of assets, not just stocks, and not just bonds. Just like the phrase “Don’t put all
your eggs in one basket” this is quite similar. My partner put number 11 in Category 1 and I did
not. Number 11 was, “You'll probably be charged fees.” My partner says that you don’t just invest
without being charged something. You pay either a percentage of your diversified portfolio or a
flat rate of a fee.

B. Find one item that you know nothing about in Category 3 that your partner understands
and have him or her explain it to you. Now, switch roles.
Write your and their explanations here:

I know nothing about number 1, the fact that your savings account isn’t invested in anything. My
partner put this in Category 1 and told me that the amount in your account won’t really
decrease unless you withdraw funds. She knows nothing about number 7 which says the stock
market lets you track stock performance. While I don’t know a whale lot about how to read it, I
know that you can monitor the stock market through places like NYSE.

C. Finally, find one investing concept that you BOTH put into category 3 and do some quick
online research to find a resource that explains the topic better. Both of you should be
looking for resources, and then, based on what you find, write a brief explanation of
your new understanding here:

We both put number 5 in Category 3. From our online resources, it told us that securites are
defined as financial instruments that hold certain value and can be traded between parties.
Security is a term for stocks, bonds, mutual funds, other types of investments you can
buy/sell.

4 Stock Performance -
Chipotle 1. Each company has an abbreviated name called a ticker symbol. What is
the ticker for each of these companies?
Stock Performance - Nike

Stock Performance - CMG, NKE, AMZN, SNAP

Amazon
2. Which of these stocks has seen a significant rise in stock price in the past
Stock Performance - Snap year? Which ones have stayed about the same? Have any decreased in
Inc. price?
Now that you know what it
means to own individual Chipotle has seen a significant rise in stock price in the past year. Amazon, Nike

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 stocks, let’s see how some and Snap went down.
popular stocks are doing in
the market! Compare the
performances of these four
stocks to answer the 3. Look at the performance from 2019-now of Chipotle by clicking “Annual”
questions. next to “Financial Performance”. What impact does the pandemic seem
to have on Chipotle’s revenue and net income(profit)? Why do you think
Note: If links don’t work, you this is?
can use these PDF printouts
During the pandemic, people probably ordered more Chipotle and ate more food
Chipotle from there?
Nike
Amazon
Snap

4. Now look at the 5-year performance of Amazon by clicking “Annual” next

to “Financial Performance”. What do you think explains the general
upward trend of the stock price?

Because people were buying more things onlne

5 Exit Ticket
Complete the Exit Ticket. 1. Explain what it means to own an individual stock.

You are purchasing an ownership in a company

2. What are the two ways you can make money from investing in the stock
Market?

Selling stock at a higher price than the purhcase price (capital gains) and
dividends

3. What risk are you taking when you invest your money in the stock market?

If your stock does bad