ERIE COMMUNITY COLLEGE
TITLE III
Linear Equations
Interdisciplinary Course Materials
Office Management
Course:
MT006 and MT013
Course Outline Topic:
Linear Equation applications using proportions, ratios, and
formulas (possibly inequalities and graphing)
Project Title:
Stock Purchases and Stock Portfolio Analysis
Project description:
Students will create an online stock portfolio; this will involve
purchasing stocks, determining commissions, monitoring the
performance of stocks, and analyzing earnings ratios. Students
will be given a set dollar amount (in virtual dollars) to spend on at
least three different stocks; students must research possible stock
purchases (using popular Web sites). The online stock portfolio
can be created at sites such as CNN Money or Forbes to purchase
and monitor the performance of stocks.
This project presents several opportunities for students to
mathematically analyze commission, numbers of shares to
purchase for each stock, percentage of total spent, and profit/loss
earnings. The performance of the stocks may be tracked over time
using graphs and/or charts.
Author:
Jan Evert, Susan Ballard
Curriculum Expert:
Susan Ballard
Semester Created:
Fall 2007
A.
Essential Question (What does this project attempt to answer?)
How many shares of a particular stock may one purchase based on the
total amount allocated and the minimum number of different stocks
required by the instructor? What is the amount of commission? What is
the earnings percentage based on the growth (or decline) of individual
stocks.
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B.
Introduction Determine which stocks to purchase, how many shares (given the total
dollar amount, cost of stocks, and number of different stocks required),
and calculate the amount of commission. Following the example shown,
create a portfolio at one of the financial Web sites (which are listed
below).
Monitor the growth or decline of the stock portfolio and complete
calculations such as profit/earnings ratio, percent invested in each stock,
growth index, etc. You may also graph or chart different aspects of the
stock’s performance.
C.
Basic Directions
Use your knowledge of finding proportions, ratios, and formulas to solve this
problem.
D.
Things to Learn Before Starting the Project
1. Know how to do simple research on stocks, values, etc.
2. Learn how to create an online portfolio
3. Know how to calculate the amount of money that can be spent on each stock
given the total amount appropriated for the portfolio and the prices of each stock
4. Determine the profit (or loss) ratio based on the earnings or loss generated by the
stocks after two, four, six, and eight weeks.
5. Graph different aspects of the stock’s performance over a period of time
E. The Project Assignment
You have $2,500 to spend on a minimum of three stocks. You must spend within $5
of this amount.
1. Select three stocks in which to invest. Visit Web sites to get information about
companies. Forbes, the New York Times, and Fortune all offer good advice and
recommendations. Find lists such as Sivy 70 which can be found at this Web site:
money.cnn.com/data/commentary/sivy70/index.html or
moneycentral.msn.com/articles/invest/jubak/fifty.asp. These sites will provide
strong recommendations for stock purchases. Visit sites such as Hoovers.com to
find out more about the companies you’re considering.
2. Once you have selected at least three companies, obtain the ticker symbol and
the current price of the stock. Current stock prices can be checked easily at the
CNN Money site (go to http://money.cnn.com/quote/quote.html?symb=IBM and
enter the company’s ticket symbol such as ‘IBM’ in the box labeled “Get Quotes.”
You could also type in the word “ticker” plus the ticker symbol in the search box.
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3. Determine how much of the $2,500 will be invested in each stock selected.
This can be done either by determining a percentage of the total amount or by
determining a set dollar amount to invest in each. (Ex. a student may decide to
invest 50% in GE stock, 30% in IBM, and 20% in DELL). Remember that you
must also pay a 2% commission on each stock purchased; this must be part of the
$2,500 allowed.
4. Determine how many shares of each stock can be purchased. Take the dollar
amount you plan to spend on that particular stock (Ex. $1,250 representing 50%
of the total amount to be invested) and divide by the price per share. These are
examples of stocks, ticker symbols, and prices on December 6, 2007.
Company
General Electric
Google
Bank of America
Coca-Cola
Disney
Johnson & Johnson
Time Warner
Dell
IBM
Genentech
Ticker
GE
GOOG
BAC
KO
DIS
JNJ
TWX
DELL
IBM
DNA
Price per Share
$37.20
$713.90
$45.88
$62.97
$32.58
$68.29
$17.37
$24.87
$109.86
$66.66
Select at least three stocks (you may pick any stock sold over the New York State
Stock Exchange) and determine how many shares can be purchased of each.
Remember that you must calculate a 2% commission on each purchase and your
total must be no more than $2,500.
Ticker
JNJ
GOOG
DIS
Price/
Share
$68.29
$713.90
$ Amount
# of
Allocated Shares
$500
7
$1,500
2
Total Spent So Far
Amount Remaining
$32.58
$556.06
16
Cash Value (Amount unspent)
$ Amount Comm.
Stocks
2%
$478.03
9.56
$1,427.80 $28.56
$1,905.83 $38.12
$594.17
$521.28 $10.43
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Amt.
Spent
487.59
$1,456.36
$1,943.95
$556.05
$531.71
$24.34
Using the example shown in the previous table, select three different stocks to
figure the amounts spent. The calculations in the table above were calculated in
the following manner:

Determine how much of the $2,500 to spend on each stock – in the
example shown, 20% was spent on Johnson & Johnson, 60% on Google,
and 20% on Disney.

The 20% to be spent on Johnson & Johnson would be calculated by taking
20% of $2,500, which equals $500 :
0.2(2500) = 500

To calculate the true cost of a stock, you must include the 2% commission
with the actual current price of the stock. The price of the stock plus a 2%
commission of the stock price equals $500:
x + .02x = $500
1.02x = $500
x = $490.20
This number represents the maximum amount of money that can be spent
on a stock before the commission is added so that the total amount spent
would not be greater than $500.

If JNJ’s current price is $68.29, you must calculate the number of stocks
(stocks can be purchased only in whole number amounts).
$68.29x=490.20
x = 490.20/68.29
x = 7.18
Therefore, you can purchase 7 shares of JNJ stock. The cost of the 7
shares of JNJ plus the commission totals $487.59 as shown in the table.

If you wanted to spend $1,500 (which is 60% of the $2,500) on Google
(GOOG) stock, you could spend $1,470.59 ($1,500/1.02). We decided to
purchase 2 shares of Google; the total amount spent on Google (including
the commission) is $1,456.36.

The total amount spent thus far on Google and Johnson & Johnson equals
$1,943.95. That leaves $556.05 to spend on another stock purchase. Try
to come as close as possible to spending the full amount without
exceeding the $2,500 allocated.

Now you can represent the price of the stock plus commission as needing
to be no more than the $556.05 remaining:
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x+ 0.02x < $556.05
x < $545.15
For example, BAC stock selling for $45.88 would allow you to purchase
11.88 shares (which would actually be 11). KO selling for $62.97 would
allow you to purchase 8.66 shares. The smaller the decimal amount, the
closer you will come to spending the full amount.

Check different stock prices to see how close you can get to spending the
full amount remaining.

Any difference between the $2,500 and the total amount you spent must
be entered as a cash value in the portfolio.
5. Open a portfolio at http://money.cnn.com. Create a portfolio by clicking on the
“My Portfolio” tab (which is located directly under the CNN Money.com logo).
Select “Create portfolio,” and then fill in the information needed to Register for a
portfolio. Note: You must remember your password. Most sites will not allow
you to create a second portfolio under the same e-mail address.
6. Create a portfolio by purchasing the stocks. Go to the CNN Money Web site,
click on “My Portfolio,” sign in using the e-mail address and password the
student specified. Click on the tab “Create.” You will be asked to name the
portfolio (you may create more than one portfolio within your account). You may
want to name the portfolio with the course title (Ex. MT006).
7. Purchase the stocks and determine commissions. Complete the section marked
“Enter your Holdings.” The ticker symbol must be supplied along with the price
of the stock (use the stock price listed on the day of purchase). Enter the number
of shares and calculate a commission. The commission rate could be as low as 2%
of the total transaction (Ex. 10 shares purchased at $78.25 each would render a
commission of $15.65). Click Add to complete the transaction. Continue adding
stocks to the portfolio until the $2,500 is spent. At any time, students may click
the button at the bottom of the screen entitled “View your Portfolio” to see the
total amount of shares. You may not exceed the $2,500 limit.
8. Establish a cash value in the portfolio for the difference between the amount
spent on stocks and the $2,500 allowance. In the section marked “Other options,”
enter the cash amount in the box provided.
9. Number of shares purchased can be adjusted by clicking the “Edit” button to
the right of the word PORTFOLIO in the Overview screen.
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10. Analyze the pie chart on the Overview screen to determine the percentage of
holdings per stock.
11. Visit the portfolio weekly to determine profits/losses. If the portfolio is accessed
during Stock Exchange hours of operation (trading), the portfolio prices will
fluctuate (green for increases, red for decreases) while being viewed.
12. Determine profit/loss ratios each week. Calculate the profit/loss ratio for
individual stocks each week by dividing the profit or loss by the amount invested.
To show the profit/loss based on the initial purchase, find the increase or decrease
in value between the current value and the purchase price.
Stock
Google
Time Warner
Verizon
Purchase Price
$568.02
$18.12
$44.12
Current Value
$732.94
$17.80
$43.10
If the current value is greater than the purchase price, you will have an increase:
$732.94 - $568.02 = $164.92. To find the percent of profit, divide the increase by
the original purchase price $164.92/568.02 = 0.2903 or 29.0 percent increase
(rounded to the nearest tenth of a whole percent.)
If the current value is less than the purchase price, you will have a decrease:
$18.12 - $17.80 = $0.32. To find the percent of loss, divide the amount of loss by
the original purchase price:
$0.32/$18.12 = .0176600442 or 1.8 percent (rounded to the nearest tenth of a
percent.)
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F.
Student Resources (websites, books, technology, etc.)
The following Web sites might be utilized:
Investing Basics
Investing Basics
Forbes Lists of
companies
Smart Money
Lists of Stocks
Michael Sivy –
Top 70 Stocks
MSN Money –
Jubak’s Top Picks
Business Week
Recommendations
G.
http://money.cnn.com/magazines/moneymag/money101/lesson5/
http://www.investopedia.com
http://www.forbes.com/lists/
http://www.smartmoney.com/stocks/?nav=dropTab
http://money.cnn.com/data/commentary/sivy70/
http://moneycentral.msn.com/articles/invest/jubak/stocks.asp
http://www.businessweek.com/investor/content/jan2007/pi20070122_350
973.htm? chan=search
Faculty Resources (teacher notes, websites, books, technology, etc.)
Faculty can utilize the sites listed above. Alternate portfolio trackers can be found at
Forbes.com, MSN Money.com, finance.yahoo.com, and finance.google.com.
H.
Grading Rubric
Students should be graded on their ability to perform the mathematics necessary to
complete this assignment, not on the performance of the stocks.
Creation of Stock Portfolio
30%
Mathematical Accuracy
50%
Analysis calculations (profit/loss, charts, etc.)
20%
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