Tuesday, June 4, 2013

Stock Trading in Class: A Multimedia Game

Stock Trading in Class: A Multimedia GameStock Trading in Class: A Multimedia Game Nancy J. Burnett * Department of Economics 800 Algoma Blvd. University of Wisconsin-Oshkosh Oshkosh, WI 54901 (920) 424-1471 (920) 424-1734 [fax] burnett@uwosh.edu Abstract The opportunity to teach High School students about the intricacies of the stock market provided the motivation to prepare a one hour, interactive, multimedia lesson that excited students and dramatically increased student understanding of market trading and how new information is incorporated into stock prices. Student handouts and a teacher instruction set are attached and a Microsoft Excel worksheet for classroom presentations is available from the author. * I would like to thank several instructors at the local high schools and Professor L.VanScyoc for allowing me to present this material

to their classes. All errors and opinions, however, are the sole responsibility of the author. Introduction Stock markets, as an academic topic, seem to either elicit excitement or yawns from students. Those who are excited tend to have had long term interest in stocks and have a pretty firm idea, at least, of how money is made by market participants. Those who exhibit yawns tend to be difficult to reach and motivate to understand this most fundamental of markets. Over the course of the past year, this stock market experiment has been used successfully several times for groups of students at both junior high and high school levels. Furthermore, students become so involved with the interactive nature of this presentation that boredom is no longer a problem. Groups of approximately 20 students had the opportunity to participate in this multi- round, interactive game to enhance their understanding of how the stock market works and how money can be made (and lost) by participants in this market. The original presentation of this material occurred during the course of our local high schools’ interdisciplinary celebration of the 1920's. Therefore, the game was designed to show quick run-ups of price with the use of margin buying and at least the possibility of a stock crash. The remainder of this paper contains a discussion of the game, a description of the mechanics of running the game, and a brief mention of the results obtained by the author from several exercises of the game. Appendices contain a copy of the participant handout and a set of teacher instructions for running the game. A copy of the Microsoft excel worksheet for overhead presentation will be cheerfully provided by the author upon request. The Game The game itself consists of sequential rounds of stock trading with brief presentations by the teacher before and after each round. The market is represented by an overhead projection of a Microsoft Excel worksheet that shows the outstanding price for the single stock that students are allowed to buy. Each buy (regardless of the number of shares of stock in the transaction) causes the price to rise by 1 and each sell causes the stock price to fall by 1. Students may trade as many times as they wish each round in order to take advantage of the fluctuating prices. Depending upon trading activity, the teacher may need to close each round...

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