P1246990953GRhaA

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What is the Stock Market Game?
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• The Stock Market Game (SMG) is an on-line
  simulation of Wall Street trading that provides a
  framework for teaching students about the
  American economic system.
• The SMG is designed specifically for classroom
  use to help students understand the stock market,
  the costs and benefits of investing, the sources
  and uses of capital, profit and loss, and many
  other related economic concepts.

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What Teachers like about SMG

• generates enthusiasm in hard-to-motivate students
• helps meet educational standards across many
  required disciplines
• combines the spirit of competition with learning
• promotes cooperation and group autonomy among
  students

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What Teachers like about SMG

• creates interest in current events
• teaches economic concepts
• sharpens skills in mathematics
• incorporates easily into most classes
• Is FUN!

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History of the Game

• Started in the late 1970s by a University of
  Buffalo professor
• Over 750,000 students compete nationally each
  year and over 40,000 students in Pennsylvania
  compete each year
• Nationally sponsored by the Foundation for
  Investor Education

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EconomicsPennsylvania is the licensed distributor
of the Stock Market Game Program in PA.
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Stock Market Game Basics
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• Available games
• 3 ten week periods
• Fall - October December
• Spring February - April
• Late Spring Mid March - May
• one year long game
• Each team begins with a hypothetical 100,000.
• Teams may buy, sell, short sell, or short cover
  their stocks.

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• Teams should have three to five players.
• Common stocks listed on the American, New York,
  and NASDAQ Stock Exchanges may be traded.
• Mutual Funds and Bonds may also be traded.

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• Mutual Funds
• Closed-ended funds may be traded just like the
  stocks traded on the NYSE, NASDAQ and American
  Stock Exchanges.
• Open-ended mutual funds can also be traded but
  cannot be short sold or short covered.

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• Bonds
• 8,000 available
• Corporate
• Municipal (state only)
• Treasury

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• A 2 brokers fee is charged for each transaction
• 5 interest is earned on cash balance.
• Stocks and mutual funds valued at less than 5.00
  per share may not be bought.
• Teams may borrow up to 100,000 to purchase
  stocks on margin 7 interest is charged

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SMG Basics

• The team with the highest portfolio equity at the
  end of the game wins.
• Portfolios are not liquidated at the end of the
  game.
• Portfolio equity in the tenth week is used for
  final rankings.

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How Does the Competition Work?
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• Fall, Spring and Late Spring 10 week games teams
  compete within a geographic region and on six
  levels
• Year long game teams statewide compete on six
  levels

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SMG Levels

• Grades 4-6
• Grades 7-8
• Grades 9-12
• Post-Secondary
• Youth Groups
• Adult

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Trading in the Stock Market Game
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• Advisors need a working Email address and
  Internet access to play
• Transactions are made at the SMG WorldWide site
  at www.smgww.org or http//stockmarketgame.org/
  login.html
• SMG of PA operates on real time trading
• Trades are processed within 15 20 minutes

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• Stock and mutual fund dividends, stock splits,
  and bond interest payments are automatically
  computed into team portfolios
• Portfolios are updated overnight and available on
  a daily basis
• Rankings are updated every weekend
• Stock and mutual fund ticker symbols are used and
  can be looked up on the game pages

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• Bond numbers assigned by the game are looked up
  on the game pages
• Trades entered after 400 p.m. will be processed
  at 935 a.m. the following day.
• ROGUE STOCK RULE If a stock has not been traded
  for seven days it will not be accepted and will
  not be permitted to be traded even though it is
  on the three major stock exchanges.

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Sample Bond Number
AXXXX.YYNN.N
Treasury Municipal Corporate
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• Buying stocks and mutual funds
• must be for a minimum of 100 shares
• must have a price of at least 5.00 per share
• may set a maximum purchase price limit for stocks

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Buying Bonds

• Maturity dates no shorter than 5 years
• Trade in Real Time
• May not be short sold
• Daily feed of pricing from SP using previous
  days prices
• Bonds are priced per 100 of bond principal.

A 4,000 bond with a price of 99.50/100 will
cost you (40 x 99.50 3,980) accrued
interest commission)
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• Selling assets
• Must already own the asset (stock, mutual fund or
  bond)
• Stock and mutual fund sell orders for less than
  100 are permitted.
• May set a minimum selling price limit for stocks
• For all Bond Sell Transactions the SEC Fee of 5.6
  cents per 10,000 trading amount is always added.

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Please Note For real time trading price limits
are generally not needed except for trades
entered after the market close.
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General Information

• Short Selling
• Short selling starts with borrowing a stock from
  your broker
• You sell the borrowed stock hoping to buy it back
  at a lower price and return (short cover) it to
  your broker for a profit
• All rules for buying still apply

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General Information

• Short Covering
• Must have already short sold the stock
• May set a maximum price limit
• All other rules for selling apply

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Example Short Selling and Covering
I feel that IBM stock is going to go down and
want to short sell the stock.

• I am borrowing the stock from the broker (2
  brokerage fee) and selling it. Now Ive got cash.

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Example Short Selling and Covering

• When stock price is at its lowest, I short cover
  by buying the stock back in the stock exchange at
  the low price and returning it to the broker (2
  brokerage fee). I keep what I didnt spend.
• I get the difference between the high price and
  the low price minus the brokerage fees.

Note its important to remember that you borrow
the stock from a broker and return the stock. You
do not give the broker any money.
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Long Positions A Long Position is an asset you
own.
Stocks
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Mutual Funds
Uses the previous day's closing price. Note
Nearly all funds compute their NAVs (Net Asset
Value or price per share) once a day at the end
of the day based on the value of the securities
in their portfolios.
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Bonds
Per 100 of bond principal
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Short Positions A Short Position is a stock you
borrowed from the broker and sold
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Equity

• Total Value of Long Position
• Stocks
• Mutual Funds
• Treasury/Municipal/Corporate Bonds
• Cash Balance

Equity
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• Buying on Margin
• You may borrow funds using the stock in your
  portfolio as collateral for the loan
• Interest charged at 7
• Initial margin requirement is subtracted from
  equity
• Remainder is matched dollar for dollar for total
  buying power

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Formula for Initial Margin Requirement

• 50 of Stocks (long short position) mutual
  funds
• 40 of Treasury Bonds
• 10 of Municipal Bonds
• 25 of Corporate bonds

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Whats the cost to play the game?
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SMG Costs
Team Fees 10 Week Games Grades 4-12
15 College 15 Youth Groups
18 Adult 25 Team Fees Year
Long Game All groups 25
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• Teacher Resource Packet available for purchase
  (40)
• Beyond the Market
• Your Guide to Understanding Investing
• Market Mechanics CD Rom
• Classroom materials
• Send check to SMGofPA
• 123 Market Street
• Selinsgrove PA 17870
• (Note SMG Teacher Packet on check)

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1-800-722-6708 smgofpa_at_economicspa.org
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