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The Stock Market Game Student Activity PacketWelcome to the SIFMA Foundation’s Stock Market Game! You’re joininga community of students across the nation that utilize our programs toadvance their knowledge of saving and investing. Each year over600,000 students take part and we count ourselves lucky to aid indeveloping the next generation of industry leaders.Whether brand new to saving and investing or looking to deepen your understanding of the capitalmarkets, the SMG Student Activity Packet is equipped with tools to support your financial educationjourney.Among them you’ll find: Getting StartedVideo ResourcesKey Financial TermsStocks 101Reading a Stock QuoteStock Quote WorksheetStarting Your Company ResearchHow to Enter a Stock TradeDiversification 101Mutual Funds 101Reading a Mutual Fund QuoteMutual Fund NAV WorksheetHow to Enter a Mutual Fund TradeBonds 101Corporate, Municipal, Agency & US Treasury BondsBond PromptsHow to Enter a Corporate & Government Bond TradeHow to Enter a Municipal Bond TradeDiversifying Your Portfolio1

Getting StartedYou may have received a Stock Market Game username and password from your teacher. If you did notreceive one, you can have a parent or other adult register at www.stockmarketgame.org to have onecreated for you.Your Stock Market Game username and password puts you in an investor’s shoes; allowing you theopportunity to manage a virtual 100,000 stock portfolio and invest in stocks, bonds and mutual funds.You can log-in to make trades online at www.stockmarketgame.org or through the Stock Market Gameapp, available on both the apple and google play stores.Sample Username: USA 20 ZZ123Sample Password: SMGABC123HOT TIP: Usernames and passwords are case sensitive and must include all characters, evenunderscores. Usernames cannot be changed, but feel free to change your password to whatever youlike. After logging in, click the “resources” tab at the top of the portfolio, click “change password” andfollow the prompts.Keep an eye out for these bars! They’ll let you know when it’s time to log into your SMG portfolio.Read thoroughly and pay attention while completing activities, they could be anywhere.What’s learning without a little social media? Follow us to get answers to your market questions, tips onnavigating the portfolio, watch videos on investing concepts and get insight directly from financialprofessionals!@SIFMAFoundation on Twitter, Instagram and Facebook and The Stock Market Game onYouTube!2

Video ResourcesCheck out our YouTube page (www.youtube.com/c/thestockmarketgameprogram) to view our 10 CoreMini-Lessons and other educational and tutorial videos. Make sure to subscribe to our channel forupdates!10 Core Mini-Lesson VideosLaunched this past Fall, our 10 mini-lessons are 3-6 mins each, cover a core investing topic, and wrap upwith a formative assessment. Chapter 1- Why is investing important? (4 mins)Chapter 2- What is a company? (3 mins)Chapter 3- What is a stock and ticker symbol? (4:30 mins)Chapter 4- Trading Portfolio Overview (6 mins)Chapter 5- How to Read a Stock Quote (6 mins)Chapter 6- Stock Research and Trading (5:30 mins)Chapter 7- The Rules (6 mins)Chapter 8- Diversification and Risk (5 mins)Chapter 9- What causes stock prices to change? (4 mins)Chapter 10- Buy, Sell or Hold? (4:30 mins)Click here to start watching the playlist!3

Key Financial TermsPortfolio: The group of assets—such as stock, bonds and mutual—held by and investor.Stock: A share of ownership in a business. A share of a company's profit (or loss) belongs to eachowner.Risk: The likelihood of losing money. Higher risk means a greater opportunity for high return and ahigher potential for loss.Diversification: A risk management technique that mixes a wide variety of investments within aportfolio. It is designed to minimize risk by combining different investments whose prices are not likelyto move in step with one another.Mutual Fund: A company owned by investors who pool their savings to invest in a variety of stocks orbonds managed by a professional.Dividend: A cash payment from profits announced by a company’s board of director’s and distributedamong stockholders. In the Stock Market Game, and dividends received are listed in Transaction Historyand are included in the portfolio’s total equity.NASDAQ: An electronic exchange where stocks are traded through an automated network ofcomputers instead of a trading floor. It stands for the National Association of Securities DealersAutomated Quotations System and is the largest electronic stock market in the U.S. and second largestin the world. The Nasdaq Composite index measures the change in more than 3,000 stocks.New York Stock Exchange (NYSE): The oldest and largest stock exchange in the United States. The NewYork Stock Exchange is located on Wall Street in New York City and is the largest equities-basedexchange in the world based on the total market capitalization of its listed securities. The total marketvalue of the roughly 2,300 companies whose shares are listed on the NYSE is about 5 trillion. It wasfounded in 1792.Public Company: A company with publicly traded shares that anyone can buy in the stock market.Private Company: A company that doesn't sell shares to the public. You can't buy shares of a privatecompany in the stock market.Dow Jones Industrial Average (DOW): The best-known measure of stock prices consisting of 30 large,well-known companies in major sectors of the U.S. economy.S&P 500 (Standard & Poor's 500): A popular measure of stock prices consisting of 500 large companiesthat represent the major sectors of the U.S. economy. One of the most commonly used benchmarks ofthe overall stock market.Market Capitalization (or Market Cap): The total current market value of all outstanding shares ofa company. Market capitalization is calculated by multiplying a stock's current price by the totalnumber of outstanding shares.4

Small capitalization stocks (Small Cap): A stock of a company whose market capitalization is small,usually under 500 million. Small-cap stocks tend to grow faster than larger cap companies, but theyalso tend to be more volatile (inconsistent, fickle, changeable).Mid Cap: Short for “middle cap,” mid cap refers to stocks with a market capitalization of between 2billion to 10 billon.Large Cap: refers to a company with a market capitalization value of more than 10 billion. Large cap is ashortened version of the term "large market capitalization.Beta: measure of the volatility of a security (stock) or a portfolio in comparison to the market as awhole. Break down – a beta of 1 indicates than the security’s price will move with the market. A beta ofless than 1 means that the security will be less volatile than the market. A beta greater than 1 indicatesthat the security’s price will be more volatile than the market. For example, if a stock’s beta is 1.2, it’stheoretically 20% more volatile than the market.P/E: the ratio for valuing a company that measures its current share price relative to its per shareearnings. Break down – the P/E ratio indicates the dollar amount an investor can expect to invest in acompany in order to receive 1.00 of that company’s earnings. If a company were currently trading at aP/e of 20 the interpretation is that an investor is willing to pay 20 for 1 of current earnings5

Stocks 101 1Stocks represent a share of ownership in a publicly held company. The stockholder has a claim on theassets of a company in exchange for the money paid to purchase the stock. As an owner, thestockholder is sharing the wealth AND the risk of ownership with other owners of the company. Nomatter how few shares of stock you own, you are part owner of the business.Typically, a company issues stock in order to raise money to expand and build their operations. Thecompany goes to a financial services firm that specializes in underwriting an initial public offering (IPO)of stock to help them with this process. The financial firm gives the company the money it needs toexpand, and issues stock. This stock is sold to the public in what is known as the secondary market.Stockholders, also called shareholders, are people who buy the stock.People buy stock to earn dividends and with hope of selling the stock at a higher price than theyoriginally paid. Stockholders may receive part of the company’s profits through dividends. Publiccompanies are not obligated to pay dividends, but most do. Stockholders have limited liability; that is,while they can lose the money they invested to buy the stock, they are not responsible for thecompany’s financial debts should the company fail.A stockholder should make investment decisions based on his/her “risk tolerance.” All investments havesome risk. A somewhat risky investment with great growth potential might be a good for someone whois 28 and financially stable, but not for someone who is 60 and plans on retiring in five years. A 28-yearold has time to regain losses before retirement; the 60-year old may not.Stocks are traded on stock exchanges. The two major U.S. exchanges are the New York Stock Exchangeand the NASDAQ. Both are located in New York City. Stocks usually trade in lots of 100; anything lessthan 100 called an “odd lot.” Stocks can range in price from a few dollars to hundreds of dollars pershare.A publicly traded company pays increased taxes in the form of corporate income tax. Each state has itsown rules regulating public companies. Public companies must also comply with rules and regulationsimposed by the securities industry as well as the federal Securities and Exchange Commission (SEC).They must also submit an annual report to the SEC outlining all their financial information.There are two types of stock, common and preferred. When you own common stock, your sharesrepresent ownership in the corporation. They give you the right to vote for the company's board ofdirectors, and benefit from its financial success. Some corporations issue preferred stock in addition tocommon stock. Preferred stocks often pay a fixed dividend on a regular schedule. The price of preferredstock tends to be less volatile than that of common stock. Preferred stocks tend to move with changinginterest rates. Unlike owners of common stock, owners of preferred stocks are not entitled to vote oncorporate matters.1SMG Source: 00AF1.pdf6