Directions for the Teacher
• Make copies for each student of the worksheet,
“Stock Market Simulation”.
• Review the “Introduction to the Stock Market”
on the power point. (30 min.)
• Review the “Stock Market Game” directions on
the PPT.
• There are 6 different years that your students
will calculate. Complete one or two years a
day. I usually display the year at the
beginning of the period as their warm-up
activity.
• Be sure to model the first year. If students
are absent have them complete only the years
they are present for. Since they cannot buy or
sell stock, the profit for the year 1929 will
determine the winner.
Pair-Share
•What is stock?
•Why would someone want to
buy stock?
•Do you think you will
speculate in the stock
market some day?
Objective:
•Students will be
describe the causes of
the stock market crash
by completing a stock
market simulation
game.
Stock Market
Vocabulary
Stock
• An instrument that signifies an
ownership position in a corporation.
• Most stock also provides voting
rights, which give shareholders a
proportional vote in certain
corporate decisions.
• Ownership in the company is
determined by the number of shares a
person owns divided by the total
number of shares outstanding.
– For example, if a company has 1000
shares of stock outstanding and a person
owns 50 of them, then he/she owns 5% of
the company.
Film Clip: What is Stock?
Share Certificate
• A legal document issued as
proof of ownership in a firm.
In the modern stock markets,
the 'paper' share is now being
replaced by the 'electronic'
share.
Stock
Stockholder
• A person who owns
stock in a
corporation
• Along with the
ownership comes a
right to declare
dividends and the
right to vote on
certain company
matters, including
the board of
directors.
Broker
• The person
who works on
behalf of a
investor in
the stock
market to buy
and sell
stock
Film Clip: How Stock Works
Dividends
• Dividends are
payments made by
a corporation to
its shareholder
members.
• It is the portion
of corporate
profits paid out
to stockholders.
Prospectus
• a printed statement that
describes a business and that
is distributed to prospective
buyers, investors, or
participants
Line of Credit
• A loan of money.
• Interest (a percentage of the
loan) must be paid on the
amount of the loan.
• If you are given a 1000 dollar
loan at 10% interest, you pay
100 dollars.
Buying on Margin
• A risky technique involving the
purchase of securities with
borrowed money, using the
shares themselves as
collateral.
Current Day New York Stock Exchange
Directions:
The Stock Market Game
• You have a list of companies in
front of you.
• Most of the stock companies
existed in the 1920’s.
• Some became successful, others
failed.
Directions:
The Stock Market Game
• Read each prospectus and decide
which stocks you want to
purchase.
Directions:
The Stock Market Game
• Each student will get a
worksheet:
– “The Stock Market Simulation Game”
Directions:
The Stock Market Game
• In the game there will be 7
price changes between 1920 and
1929, when the game ends.
• There will be no buying and
selling of stock during the
game.
• You will sell your stock only
at the end of the game and then
calculate your total profit or
loss.
Directions:
The Stock Market Game
• Each student is given $300 to
invest and a pre-approved
credit line of $200.
Directions:
The Stock Market Game
• All company stock prices start
at $10 per share in 10-share
certificates (beginning price
of $100 per certificate)
Directions:
The Stock Market Game
• After the 1929 announcement the
market closes and each student
will calculate the total for
all of their stock certificates
at the current market value
(less any outstanding debt).
• The student with the most money
at the end of the simulation is
the WINNER!
Complete your worksheet
Now!
• Remember all company stock prices
start at $10 per share in 10-share
certificates (beginning price of
$100 per certificate)
• This means you can buy stock in up
to 5 different companies.
• You can choose to use your line of
credit ($200) or not! If you don’t
use it, you lose it.
• You must use all your cash ($300) to
purchase stock.
Announcement!
•The Stock Market
it now open!!!
•You have 5
minutes to buy
stock!!!
Announcement!
•The Stock Market
it now closed!!!
1920
Stock
Important Company Information
Price Per
Share
Kroger
Purchases a West Coast food chain.
$12
Radio Corp.
New model released with built in antenna
$13
Mammoth Oil
9 wells begin producing in Wyoming Field
$14
Gotham Bank
Bank declares a 6% dividend
$11
Durant Motors
Fails to make payment on notes to the Gotham Bank
$7
Midland Power
–Midland extends services into Michigan and Wisconsin
$13
Kansas Pacific
K & P will pay no dividends this year because of the
expansion into the Southwest
$9
Tele-Tone
Dial telephones will be installed in parts of the New
York City
$15
Add the current stock prices on your worksheet under the year 1920
Calculating Profit or Loss
• Write down the current stock prices of the
stock you OWN. Remember, you cannot buy or
sell your stock.
• Calculate your profit or loss.
– A x B = D (price per share x # of shares
owned)
• Calculate new total at bottom of column “D”
• Subtract “NEW” total from “OLD” total. If the
number is less than in 1918 then at a
negative sign in front of the number. Put
this number on the bottom of the last column.
• Double-check your calculations by calculating
the profit and loss for each stock you own.
1923
Special News Bulletin!


President Harding is suffering from a coronary seizure and may
have pneumonia. He is reported to be dying. The stock market
will close for new postings.
Harding Dies--------------------------------------------------------------
Stock Prices Per Share
Kroger
$13
Radio Corporation
$13
Mammoth Oil
$16
Gotham Bank
$10
Durant Motors
$4
Midland Power
$19
Kansas Pacific
$9
Tele-Tone
$19
Calculating Profit or Loss
• Please watch as the teacher
shows you how to calculate your
profit or loss.
• Check your partner’s
calculations.
• Raise your hand if you would
sell your stock at this point.
• Raise your hand if you think
you are making the most profit?
1925
Stock
Important Company Information
Price Per
Share
Kroger
Corn blight on Kroger farms causes 90% loss of crop
$12
Radio Corp.
Speculation on new patent causes rise in stock prices
$15
Mammoth Oil
Japanese offer to buy the total production of Elk Hills
$21
Gotham Bank
French Government announces that they will begin to pay
their World War I war debts to the U.S. banks
$12
Durant Motors
The DuPont family begins to buy large blocks of the Durant
Motor stocks
$7
Midland Power
Cyrus Eaton of Cleveland may be trying to
take over Midland by purchasing large quantities of Stock
$22
Kansas Pacific
Speculation on increased profits from holdings in Mexico
cause stock price to rise
$11
Tele-Tone
Announces completion of successful merger. Speculation on
the market continues.
$24
1927
Stock
Important Company Information
Price Per
Share
Kroger
Rumored merger with the Edison Company causes
stock to rise
$14
Radio Corp.
Speculation on new patent causes rise in stock prices
$15
Mammoth Oil
Congressional committee begins an investigation of the
Mammoth Oil leases. Possible Fraud.
$13
Gotham Bank
Bank stocks remain unchanged
$12
Durant Motors
Louis Chevrolet is hired to deign an inexpensive automobile
$10
Midland Power
Cyrus Eaton begins dumping large blocks of Midland stock
on a depressed market
$18
Kansas Pacific
Drought in the Southwest depressed farm prices cause
profits of K&P to fall.
$10
Tele-Tone
Drop of two points caused by J.P. Morgan selling 200,000
shares Brokers see only temporary setback
$22
1928
Stock
Important Company Information
Price Per
Share
Kroger
Food prices are depressed because of agricultural surpluses
$13
Radio Corp.
Merger with the Edison Company falls through when Radio
Corp. pays no dividends
$14
Mammoth Oil
Harry Sinclair is called before Congressional committee
Secretary of the Interior Fall is indicted for fraudulent oil
leases
$7
Gotham Bank
Announces profits have increased by 5% over the last
quarter
$16
Durant Motors
Durant Motors and Fisher Body have announced a merger.
New Corporation will be called General Motors.
$13
Midland Power
Reports in the Chicago Tribune disclose Insull’s Company
is a “House of Cards” ready to crumble
$18
Kansas Pacific
New oil fields in Oklahoma cause a new boom along Kansas
Pacific track..
$102
Tele-Tone
Fails to rise as predicted. Brokers are unable to explain the
downward trend.
$22
1929
Special Announcement
• Wednesday, October 23, 1929
• The Market slipped today as the government
announced that home construction, an
indicator of prosperity, was at an all time
low.
• The Federal Reserve Board also announced that
a change in the prime interest rate would
take place in the near future; speculation on
the stock market is getting out of hand.
• It is rumored that the House of Morgan
intends to sell 12 million shares of common
stock at a loss, before interest rates
change.
• The Gotham Bank announced that margin buyers
of stock are being notified that they must
put up more money to cover today’s losses.
Tuesday,October 29, 1929
(Black Tuesday)
Panic hits Wall Street. 12 million shares are traded in one day on the
New York Exchange. $700 is lost by stock holders in one day as
the market takes the greatest dive in history
Stock Prices Per Share
Kroger
$8
Radio Corporation
$4
Mammoth Oil
$2
Gotham Bank
$12
Durant Motors
$12
Midland Power
$3
Kansas Pacific
$8
Tele-Tone
$6
The End of the GAME!
• Calculate the total for all of
your stock certificates at the
current market value (less any
outstanding debt).
• The student with the most money
at the end of the simulation
will be the WINNER!
Review Questions:
• Why do you think you were successful
(made a profit) or not (lost money)?
• What will happen to the bank if
thousands of people are unable to pay
their loans back?
• What do you think would happen if the
banks went out of business?
• What do you think would happen to the
companies used in this simulation
after the stock market crashed?
• What would happen to the people who
worked for those companies?
• If you were living during the Great
Depression and lost your job and all
your money in the stock market and/or
because of bank closures what could
you do to survive?