Week 9: Stock or Mutual Funds Investing
Week 9: Stock or Mutual Funds Investing
Introduction
For this discussion, you will look at two different ways you can invest $1,000. You will reflect on the risk you are willing to take in your investments.
Instructions
To learn how to calculate returns, please watch the following video:
How to calculate returns
Stock Market:
Pretend that you invested $1,000 in a public company on the New York Stock Exchange one year ago. First, choose a company that you’re familiar with and that seems as if it might be a good investment — that is, a company that you think will have rising stock prices. Think about companies that you use or know are popular. Remember, not all companies are public companies. You’ll need to check the New York Stock Exchange to find out if you can actually buy shares in this company. Once you’ve decided on a company, find its stock price from one year ago and for today.
First, find out how many shares you could have bought one year ago by dividing $1,000 by the price of the stock one year ago today. You can use Yahoo Finance to find out the stock price of the company you have selected (write the company name on the search bar). You may have to estimate the stock price from the graph. Round the number of shares to the nearest whole number. Then, find out the current value of your shares by multiplying the number of shares you bought by the price of the stock today. Compare that to your initial investment of $1,000.
Next, answer the following questions:
What is the company stock that you have selected? Why do you think buying this stock would be a good idea? How much would you have made or lost on the investment? Is this what you would have expected? Why or why not?
Mutual Funds:
Next, pretend that you invested $1,000 in a mutual fund one year ago. First, pick one of the following mutual funds:
Allocation to 15% to 30% Equity
IRCAX
BKCPX
POAAX
Allocation to 30% to 50% Equity
ONCFX
VTMFX
Allocation to 50% to 70% Equity
FBALX
IEIFX
Then use Yahoo Finance to find out the price of one share of the mutual fund you have selected (write the five-letter code of the mutual fund on the search bar). You may have to estimate the price from the graph. Round the number of shares to the nearest whole number. Then, find out the current value of your shares by multiplying the number of shares you bought by the price of the mutual fund today. Compare that to your initial investment of $1,000.
Answer the following questions:
How much would you have made or lost on the investment? Is this what you would have expected? Why or why not? What investment might have a higher yield, but more risk? What could have a lower yield but less risk?
Reflect on how you would manage investment risk at this point in your life? Why?
Next, prepare a 4-slide PowerPoint Presentation with your answers and make a 2-minute voice-over presentation that summarizes your results. Finally, post your video presentation to this assignment.
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