G. Mick Smith, PhD: Honors Business Economics: 7 April 2011

Thursday, April 07, 2011

Honors Business Economics: 7 April 2011

Prayer
Beyond the Sound Bites:

Parag Khanna, author of How to Run the World: Charting a Course to the Next Renaissance, moderates a panel of international economists Daniel Altman, author of Outrageous Fortunes: The Twelve Surprising Trends That Will Reshape the Global Economy, Dambisa Moyo, author of How The West Was Lost: Fifty Years of Economic Folly--and the Stark Choices Ahead and Anand Giridharadas, author of India Calling.

http://bigthink.com/series/66?utm_source=Big+Think+Weekly+Newsletter+Subscribers&utm_campaign=ef1418c309-Wednesday_Newsletter_Shakespeare_4_6_2011&utm_medium=email

Chapter 9 Section 3 Quiz on Friday.

The Chapter 9 Section 1 and Section 2 Quiz Make-ups are today; all Chapter 9 Quizzes and Test will be recorded for the 4th Quarter, not this Quarter.

Standard feature:

The electronic edition of the Philadelphia Inquirer is available. We have the Sunday edition, available on Mondays, in addition to the Tuesday through Friday editions on the other days.

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Preview

Chapter 11 Resources

Cf. http://glencoe.mcgraw-hill.com/sites/0078747643/student_view0/unit3/chapter11/chapter_overviews.html

Chapter 11: Financial Markets

Chapter Overviews

Section 1: Savings and the Financial System

People who save their money make it easier for businesses to spend, which in turn, produces economic growth. The role of saving in a financial system is the process that makes dollars available for others to invest. Financial assets—such as savings accounts, bonds, certificates of deposit (CDs), and many other types are issued by individuals, businesses, and governments. Another important group of financial intermediaries is called non-bank financial institutions—or non-depository institutions that also channel savings to borrowers. Finance companies, life insurance companies, and pension funds are examples of non-bank financial institutions. Finally, investors need to consider the following factors before investing their money: consistency, simplicity, risk-return relationship, and investment objectives.

Section 2: Financial Assets and Their Markets

When people decide to invest their money, they have many options. Some main investments include CDs, bonds, bills, and IRAs, all of which vary in cost, maturity, and risk. Financial assets are grouped into different markets depending on their maturity and liquidity. Financial assets are grouped into four different markets: capital market, money market, primary market, and secondary market.

Section 3: Investing in Equities and Options

Purchasing stocks is another form of investment. Equities, or stocks, are shares of common stocks that represent ownership of corporations. Many stocks are traded on organized exchanges like the New York Stock Exchange, the American Stock Exchange, and the many regional exchanges around the country. Although, the great majority are traded on a computerized marketplace of organized dealers called the Over-the-Counter Market. Investors follow the Dow-Jones Industrial Average (DJIA) or the Standard & Poor's 500 (S&P 500) to track the performance of stocks. Bull markets are strong markets with prices going up; bear markets are bad markets with prices going down. Investors who are not afraid of risk can also invest in futures and options if these suit their investment needs.

Chapter 11: Financial Markets
Student Web Activity

"The New York Stock Exchange"

Introduction
You have already learned that the New York Stock Exchange (NYSE) is the oldest, largest, and most prestigious of the organized stock exchanges in the United States. It is located on Wall Street in New York City and like most other organized exchanges, has certain rules for both its members and the corporations listed on the Exchange. The NYSE lists stocks from over 3,000 companies who must meet stringent requirements related to profitability and size. These requirements virtually guarantee that the companies will be among the largest, most profitable, publicly held companies. In this activity, you will learn more about the NYSE as well as your role as an investor.

Destination Title: The New York Stock Exchange

Note: Clicking on the link above will launch a new browser window.
Need help using your browser for this activity? Click here for tips.

Directions
Start at the New York Stock Exchange's Education Web site.

Cf. http://www.nyse.com/pdfs/nyse_bluebook.pdf

Scroll down and click on the pdf called A Guide to the NYSE Marketplace.
From here, you will read several chapters from a guide to the Exchange and your role as an investor. Read the articles and answer the following questions.

p. 4

1. Read Chapter 1, "The NYSE: At the Heart of Global Financial Markets." Why did Wall Street brokers form the Buttonwood Agreement?

2. Continue reading Chapter 1. Describe the role of the New York Stock Exchange as a world leader.

p. 23

3. Next, scroll down and read Chapter 6, "Putting Your Money to Work." What are reasons that people invest in stocks and bonds?

4. Continue reading Chapter 6. What are examples of types of investments? If you had $500, what type of investment would you select? Why?

Chapter 11 Section 1 Savings and the Financial System

Guide to Reading

Section Preview

Content Vocabulary

saving

In-class assignment, with a partner, answer the following.

Economics: Avg, Marg Propensities to Consume, Save, 4:34

What three things can consumers do with their money?
What is the relation between spending and saving?
What is the relation between the spending function and the saving function?
What are the formulas that express these relations?

savings

certificate of deposit

In-class assignment, with a partner, answer the following.

Personal Finance & Money Management: About Certificate of Deposit Rates, 2:03

What is a certificate of deposit?
How does it work and what is it based on??
What are the tricks and drawbacks of CDs?

Interest rates on certificates of deposit will range between 1 percent and 3 percent depending on the length of time of the deposit and the stock market. Understand the terms of CD early withdraw with advice from an investment consultant in this video on investments.

financial asset

In-class assignment, with a partner, answer the following.

Personal Finance Tips : Examples of Financial Assets, 1:12

What are financial assets?
What are your primary assets?
What are the range of financial assets?
What are financial assets for the wealthy?

Examples of financial assets include cash, savings and checking accounts, 401ks and IRAs. Understand the difference between life assets and financial assets through tips from an experienced businessman in this free video.

Expert: Patrick Munro
Contact: www.northstarnavigator.com
Bio: Patrick Munro is a registered financial consultant (RFC).

financial system

Figure 11.1 Overview of the Financial System

In-class assignment, with a partner, answer the following.

What do financial intermediaries do?
What do Households, businesses do?
What are the largest borrowers?
What can households borrow and invest in?

Cf. http://glencoe.com/sites/common_assets/socialstudies/in_motion_08/epp/EPP_p291.swf

How are people in the U.S. effected by the global financial system?

U.S. Economy and Financial System Bankrupt--What's next?, 6:38

In-class assignment, with a partner, answer the following.

What negative fundamentals have upset the U.S. financial system?
What is the first negative fundamental?
The second?
Third?
Fourth?
Five?
Six?
Seven?
What is it called when these markets collapse?
Eight?
Nine?

financial intermediary, p. 290-291

In-class assignment, with a partner, list examples of financial intermediaries.

List at least five financial intermediaries.

Define what financial intermediaries do.

nonbank financial institution

finance company

premium

pension

pension fund

In-class assignment, with a partner, answer the questions.

How are the socialist states of Europe bridging Europe's Pension Gap? 6:38

What can be done to forestall a pension gap in Europe (or any country adopting the socialist model of pensions)?
At what age do people expect to retire in Sweden?
What incentives are there to work longer?
What is different for blue-collar workers?
How can blue-collar workers continue to work?
What advantages are there for workers and society?

With life expectancy in Europe rising and birth rates falling, how much longer can states provide proper pensions for their senior citizens? With fewer people working to support retirees, governments are encouraging their citizens to postpone taking their pensions.

risk

In-class assignment, with a partner, answer the questions.

INVEST 101 - Risk versus Reward, 2:53

What should investors take into account?
What is the difference between an aggressive vs. a conservative investor?
What happens over time?
What happens if you take bigger risks?

In-class assignment, with a partner, answer the questions.

11.2 The Power of Compound Interest

What does the table show?
How can money grow with compound interest?
How much interest is earned after the first 10 years at 6 per cent? (p. 293)

Cf. http://glencoe.com/sites/common_assets/socialstudies/in_motion_08/epp/EPP_p293.swf