Buying a Car

Explain what kind of car you would buy and why. Would you buy new or used, or would you lease? What would your payment be?

Fed helps market go up

The DOW went up over 400 points on Tuesday. Why? What did The Federal Reserve do to encourage the market to go up?

Compound Interest and the Rule of 72

Explain, in your own words the concept of 'compound interest' and 'the rule of 72'. Use examples. Also using the Compound Interest Calculator - find out how much money you would have if you saved $1 per day ($365 per year) from age 18 to 65 (retirement age). Use 8% interest in your calculation; which is about how much the overall US stock market goes up each year.

US Trade Deficit

Explain what the US Trade Deficit is. Why did it go down in December 2007? What does the value of the US dollar have to do with the trade deficit falling? Why do you think that a large trade deficit is bad for the economy? In other words: why is it bad to import more goods than you export?

A trade deficit is a calculation of the difference between the goods and services Americans sell to foreigners and the goods and services that Americans purchase from foreigners. This deficit is calculated on an annual basis so every 1st January of the year it is $0.00. When the country imports, we have to pay, but we get paid when exporting. When importing surpasses exporting it is known as a deficit. In December 2007 in the U.S., imports exceeded exports by about $58 billion. The value of the US dollar has to do with the trade deficit falling because the lower the value is, the cheaper it is for other countries to buy goods from us. It is bad for the economy to import more goods than to export because when exporting, the US makes money from the buyers in other countries and it means that it is helping our economy. When importing goods, we lose money and are dependent of the goods that another country can provide for us.

Opportunity Costs

In your own words, explain what economists mean when they talk about opportunity costs. What are opportunity costs? Give some examples. And give some examples from your own life.

Opportunity cost is the cost of pursuing one choice instead of another. Usually the choice made is more beneficial than the one sacrificed. Sometimes in life you cannot do everything you want and what you really want to do is not what is best for you.

Some examples of opportunity costs will be not working. You can decide not to work and stay home and sleep late, but you will not have money. Also, you can decide to go to college instead of working. You will have debts from college but you will get an education.

Some examples in my life: going to high school instead of staying home, planning to go to college instead of working, postponing that trip for a later date to save money to move out.

My Investment Strategy

Students will have two class periods to research their initial 5 stock picks and write a blog entry explaining their initial investment strategy. Why did you pick the stocks that you did?

The initial 5 stocks I picked were Google, Yahoo, Intel, JetBlue and Home Depot.
I picked Google because it is such a big company and it is for the most part succesful. I chose to buy some stock but only 20 shares since it is so costy. Yahoo is another big company that does very well and is very known as well as Google on the internet. Intel also has to do with technology and I decided to invest in technology since it's so used and important in this world we live in. JetBlue is an airline and since people are always traveling it is important to invest in them especially with spring and summer breaks on their way. Home Depot is such a big company with so many home goods and people tend to fix up their houses especially with the summer coming soon. Well, for now this is all I have and I hope everything goes well because I do not want to lose a lot of money.

Intro. to the Stock Market

• What exactly is a stock and why do companies sell stock in the first place?

A stock is a share of ownership in a company. Owners of stock receive part of the company's profits, or losses up to the amount of money they put into the stock. Companies sell stock because by selling shares they can sell part or all of the company to many part-owners and share responsibilities and expenses.

• What is the difference between a public and a private company?

In a privately held company, the shares of stock are owned by a small number of people. They buy and sell their shares amongst themselves. A publicly held company is owned by thousands of people who trade their shares on a public stock exchange.

• What is the Dow Jones Industrial Average?

The Dow Jones Industrial Average is simply the average value of 30 large, industrial stocks created by nineteenth century Wall Street editor and Dow Jones & Company co-founder Charles Dow. Big companies like General Motors, Goodyear, IBM and Exxon are the kinds of companies that make up this index.

• What is a blue chip stock?

A blue chip is the nickname for a stock that is thought to be safe, in excellent financial shape and known as a leader in its field. Most blue chip stocks pay regular dividends, even when business is worse than usual. The term derives from casino, where blue chips stand for counters of the highest value.

• What is the New York Stock Exchange and the NASDAQ?

The New York Stock Exchange (NYSE), nicknamed the "Big Board," is a New York City-based stock exchange. It is the largest stock exchange in the world. The NYSE is responsible for setting policy, supervising member activities, listing securities, overseeing the transfer of member seats, and evaluating applicants. NASDAQ is an acronym standing for National Association of Securities Dealers Automated Quotations and is a major world stock market. NASDAQ is the world's first electronic stock market.

• What is a mutual fund?

A mutual fund is nothing more than a collection of stocks or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund.

• What is the PE ratio of a stock?

The PE ratio (price-to-earnings ratio) of a stock is a measure of the price paid for a share relative to the income or profit earned by the firm per share. A higher P/E ratio means that investors are paying more for each unit of income.

• What is a stock dividend?

A dividend paid to stockholders in shares of stock, often used in place of or in addition to a dividend paid in cash.