Please note that this journal assignment is based on a pretend scenario
and fictitious money. However, the assignment is based on actual stock pricing
in real time situations. Do not invest your personal money for this
The capital markets and the ability to raise funds for corporate uses are
essential to the US economic systems. For this assignment, imagine that you
have $25,000 to invest in US companies. You are buying used stock. The company
got the money when it issued the stock originally. You will be buying it from an
You are investing, or buying the stock, because you believe the company will
make money and pay you a dividend in cash. Each share of stock that you buy
entitles you to any dividend declared and a vote at the annual stockholders’
The stock also allows you the ability to earn your money back by selling the
stock. Of course, investing in stocks is risky and there is the possibility that
the stock you buy will be worth less when you want your money back. The company
is not obligated to give you any of your money back. You will only get your
money back if another investor wants to buy your stock.
For your first journal entry complete the following:
- Indicate the companies you are investing in: Select three
(3) US companies that are publicly traded. There are many ways to find such
companies and the stock prices, including the New York Stock Exchange at http://www.nyse.com, NASDAQ at http://www.nasdaq.com, and http://finance.yahoo.com.
- Indicate the amount you are investing in each company:
Decide how you will divide the $25,000 across the three (3) companies; e.g.
$10,000 in Company 1, $10,000 in Company 2, and $5,000 in Company 3. You decide
the amount you are investing in each company. You do not have to provide any
analysis to justify your decisions. You must only provide some reason for
picking that company. For example, you might invest in WalMart because that
company gets a lot of your money and you hear that WalMart is doing well, and
will continue to do well.
- Indicate the number of shares you are buying, and the price of the
shares you are buying for each company: Once you decide the companies
and the amount for each company, determine how many shares you can buy. If
Company 1 is selling for $42.16, then you may buy $10,000/ $42.16, or 237.19
shares. But you cannot buy a part of a share, so you decide to buy either 237 or
238. In this example you buy 237 shares, at $42.16 per share, investing
$9,991.92. You won’t be able to buy exactly $10,000, or $5,000, or $25,000, but
it will be relatively close.
When you look up a stock price, the price
listed is the price as of that exact moment. There is an opening price, highs
and lows during the day, and a closing price. Use the “opening price for the
day” when you make your pretend investment. Using the example above, you are
investing $9,991.92, 237 shares, and $42.16 per share.