Investing Basics: Stocks If you want to grow your wealth, investing in stocks is a great option. Watch thisvideoto learn more about what stocks are, how they work, and what you can do to minimize your risk when investing in stocks. Then, answer the questions. 1. Company A is raising $1 million at its initial public offering (IPO) by issuing 2,000 shares of stock. What is the value of each share? $ 500 2. Julia buys a share of stock through her brokerage firm. What are the two ways that Julia could make money from owning this stock? Dividends or selling it. 3. Julia knows that investing in just one company is risky since there is a chance that the stock's value could decrease. What are some ways she can minimize her risk? Making her portfolio more diverse. How to Read a Stock Quote To understand if a particular stock is a good investment option for you, you'll need to know how to read a stock quote so you can evaluate its performance. Read through thisarticleto learn how to read a stock quote. Then, review thestock quoteand answer the questions.(If you have any issues accessing the stock quote in Google Finance on your Chromebook, you can look it up on Yahoo Finance or use thisscreenshot.) 1. According to the article, why is it more useful to look at the percent change of a stock price, rather than the change in dollar amount? To see the overall picture and get a more accurate feel. 2. Look at the stock performance for Nike. Describe the trend in Nike stock prices over the last year. What about the last 5 years? Growth in past 5 and decrease in last year. 3. Is Nike a small, medium, or large-cap company? How do you know? Large, capitalization of around 200 billion 4. Company B's stock price is $500. You overhear a classmate say, "Based on the stock price, Company B's value is clearly higher than Nike's!" Why might your classmate be wrong? Because the price is just reflecting its growth but it still isn't worth as much as Nike. 5. If you were considering buying a stock, which time frame would you use to analyze its price history (1-day, 5-day, 1-month, etc)? Why? The past year. It gives me a better overall picture of how the company is doing.
