Economics 12604 www'msu'edumilewsk6 - PowerPoint PPT Presentation

1 / 19
About This Presentation
Title:

Economics 12604 www'msu'edumilewsk6

Description:

Wednesday 12/8 Film 'Secret History of the Credit Card' ... questions on 'The Secret History of the Credit Card' III. Homework due tomorrow ... – PowerPoint PPT presentation

Number of Views:28
Avg rating:3.0/5.0
Slides: 20
Provided by: Mile66
Category:

less

Transcript and Presenter's Notes

Title: Economics 12604 www'msu'edumilewsk6


1
Economics 12/6/04 www.msu.edu/milewsk6
  • OBJECTIVE Examine the Risk v. Return
    Relationship, the Bond Market, and the Futures
    Market.
  • I. Journal 51 pt. A
  • -read The Global Economy p.323
  • -answer questions (1-2) p.323
  • II. Journal 51 pt. B
  • -notes on risk v. return, bonds, and futures
  • III. Homework due Friday 12/10/04
  • 1.) Read Chapter 12 section 2 p.318-326
  • -answer questions (1,4-6) p.326
  • 2.) Read Chapter 12 section 3 p.328-333
  • -Answer questions (1,3-5) p.333

2
This week
  • Monday 12/6 Journal 51
  • Tuesday 12/7 Film Is Wal-Mart Good for
    America?
  • Wednesday 12/8 Film Secret History of the
    Credit Card
  • Thursday 12/9 Classwork on Chapter 12
  • Friday 12/10 Homework due Journal 52
  • Wednesday 12/15/2004 -Test over Ch14 sec1,
    Ch15 sec2, Ch12 sec2, and Ch12 sec3

3
Risk
  • Risk a situation in which the outcome is not
    certain, but probabilities for each outcome can
    be estimated.
  • Low risk low return on investment, high degree
    of safety
  • High risk possibility of high return, little
    degree of safety

4
p. 319
5
Bonds
  • Bonds are long term obligations that pay a
    defined interest rate for a specific number of
    years
  • The 3 components of a Bond
  • coupon the interest rate
  • maturity the length of time
  • par value the amount borrowed (MUST be repaid
    when the bond matures)

6
Example of a Bond
  • You have 1000 to invest. The Milewski
    Corporation is offering a ten year bond at a 10
    interest rate paid annually. If you decide to
    invest in the Milewski Corp. today, what is the
    coupon, maturity, and par value on the bond you
    purchase?
  • Coupon
  • -10 or .10
  • Maturity
  • -12/6/2014
  • Par value
  • -1000.00
  • Annual Interest Paid
  • -100.00

7
Was it a good investment?
  • To determine if you made a good investment you
    should
  • 1.) Determine the bond yield
  • annual interest / purchase price current yield
  • 100.00 / 1000.00 .10
  • 2.) Check the Bond Rating
  • 3.) Compare it to other similar bonds

8
Organized Stock Exchanges
  • NYSE oldest, largest, and most prestigious in
    the U.S. Located on Wall Street in NYC
  • AMEX smaller stocks, those who cant quite make
    it to the NYSE are traded here. (the JV team)
    Also located in NYC
  • Regional Stock Exchanges originally listed
    small companies and new companies. Now, they
    trade local stocks and better meets the needs of
    smaller companies. Located in Chicago, Pacific,
    Philadelphia, Boston, and Memphis

9
Over-the-Counter Market
  • OTC most stocks in the U.S. are not traded on
    organized exchanges. They are traded
    electronically using NASDAQ
  • NASDAQ National Association of Securities
    Dealers Automated Quotation
  • Few OTC stocks pay dividends. Most are small and
    new companies

10
Bull v. Bear
  • Bull market when stocks are strong and stock
    prices are rising
  • Bear Market when stock prices are falling

11
Measuring the Market
  • Question How do you know if stock market is a
    bull or a bear?
  • Dow Jones Industrial Average (the Dow) the
    average of 30 stocks traded on the NYSE
  • SP 500 uses the movement of 500 stocks traded
    to determine an index number which shows the
    direction of the market

12
Futures Trading
  • Spot you pay the price something is worth today
  • Futures contract you buy at todays price and
    you sell at a specific date in the future at
    todays price, regardless of the market price at
    the time of sale.
  • Example You buy 1 oz of gold at todays price
    You also agree to sell that gold at todays price
    to your friend six months from today. If gold
    six months from now is lower, you make money. If
    the price of gold is higher, you lose money.

13
Futures Market
  • Where futures contracts are bought and sold.
  • Most are associated with livestock and farm
    products.
  • Futures markets are located in NYC, Chicago,
    Kansas City.

14
Options Markets
  • Call option the right to buy the share of stock
    at a specific date and price in the future.
  • Put option the right to sell a share of stock
    at a specific date and price in the future.

15
Economics 12/7/04 www.msu.edu/milewsk6
  • OBJECTIVE Examine the relationship between
    Wal-mart and China.
  • I. Attendance
  • II. Frontline (film)
  • -notes on risk v. return, bonds, and futures
  • III. Homework due Friday 12/10/04
  • 1.) Read Chapter 12 section 2 p.318-326
  • -answer questions (1,4-6) p.326
  • 2.) Read Chapter 12 section 3 p.328-333
  • -Answer questions (1,3-5) p.333

16
Economics 12/8/04 www.msu.edu/milewsk6
  • OBJECTIVE Examine how credit cards work and how
    they affect Americans.
  • I. Attendance
  • II. Frontline (film)
  • -questions on Is Wal-mart good for America?
  • III. Homework due Friday 12/10/04
  • 1.) Read Chapter 12 section 2 p.318-326
  • -answer questions (1,4-6) p.326
  • 2.) Read Chapter 12 section 3 p.328-333
  • -Answer questions (1,3-5) p.333

17
Economics 12/9/04 www.msu.edu/milewsk6
  • OBJECTIVE Examine how credit cards work and how
    they affect Americans.
  • I. Attendance
  • II. Frontline (film)
  • -questions on The Secret History of the Credit
    Card
  • III. Homework due tomorrow
  • 1.) Read Chapter 12 section 2 p.318-326
  • -answer questions (1,4-6) p.326
  • 2.) Read Chapter 12 section 3 p.328-333
  • -Answer questions (1,3-5) p.333

18
Economics 12/10/04 www.msu.edu/milewsk6
  • OBJECTIVE Examine the income gap in the U.S.A.
  • I. Journal 52
  • -Read the following articles from WSJ Classroom
    Edition
  • 1.) The Two-Track Economy p.8-9
  • 2.) Double Whammy p.12
  • 3.) Any one page article of your choice
  • II. Administrative Stuff
  • -Mr. Petrinis report
  • -plan for next week

19
Questions from the WSJ
  • 1.) What factors have contributed to the widening
    economic gap between the rich and the poor in
    America? How do these factors demonstrate the
    interconnectedness of our economy?
  • 2.) If the economy recovery continues, what
    factors could prevent a wage increase for low
    paying jobs?
  • 3.) How is it possible to spend more than your
    credit-card limit?
  • 4.) Why are some credit-card customers charged
    higher interest rates than other customers?
  • 5.) Write a breif summary of the article you read
    of your choice.
Write a Comment
User Comments (0)
About PowerShow.com