taking stock in your future: senior · taking stock in your future – senior introduction and...

A PROFESSIONAL DEVELOPMENT PROGRAMFOR HIGH-SCHOOL TEACHERS

seniorTAKING STOCK IN YOUR FUTURE:

Taking Stock in Your Future – Senior

Introduction and AcknowledgmentsTaking Stock in Your Future Senior Guide is a professional development program

to help teachers of senior level high-school courses in business, economics, and

mathematics implement the portions of the new curriculum that deal with money

management and capital markets.

This program was developed by the Toronto Stock Exchange and the Investor Education

Fund in collaboration with Continuing Education at Ontario Institute for Studies in

Education of the University of Toronto (OISE/UT). Two resources were developed to

accomplish this goal: a three-day summer institute and a resource guide. This is the

final version of the resource guide. Incorporating input from participants of the institute

and from educators, this document has been tailored to meet the needs identified by

educators across the country. The field-testing has enhanced this document, providing

wonderful samples of students’ work in the “What You Might Expect to See” sections.

For these samples, and for recommendations on improvements to the document,

we are deeply indebted to the following teachers and their students:

Judy David-Wilson and Johan VerhaegeIroquois Ridge High School, Oakville

John PownallMarkham District High School, Markham

Linda Martin and Rachelle SinticLisgar Collegiate Institute, Ottawa

We would also like to thank the staff at both the Toronto Stock Exchange and the

Ontario Securities Commission for providing input on key sections of the guide.

Special thanks to Reg Cartmale for his assistance in editing the publication.

For additional copies of the Taking Stock in Your Future Senior Guide e-mail us at

[email protected] or visit our web site www.investorED.ca

Copyright 2006

No portion of the Taking Stock in Your Future Senior Guide may be reproduced in any form without the express

written permission of the Investor Education Fund. Professional elementary, secondary, and post-secondary

school educators may, however use and copy portions of this publication for the limited purpose of instruction

and study, provided that such copies include this copyright notice.

Project Team:Eleanor AdamProgram Development, Continuing Education, OISE/UT

Lennox BorelProfessor, OISE/UT

Lara CartmaleProject Coordinator, OISE/UT

Brendan KellyProfessor, OISE/UT

Richard LanderEducational Consultant

Doug McDougallProfessor, OISE/UT

Joanne QuinnDirector, Continuing Education, OISE/UT

Authors:Brendan Kelly (senior author)

Richard Lander

Lara Cartmale

Lennox Borel

Doug McDougall

Judy David-Wilson (adapted works)

Advisory TeamChristine AllumProject Manager, Investor Education, Toronto Stock Exchange

Caroline CakebreadManager, Investor Education,Toronto Stock Exchange

Shonna FroebelManager, Knowledge Centre, Toronto Stock Exchange

Shauna GrayMarketing Manager, Marketingand Communications,Toronto Stock Exchange

Elissa KaiserCoordinator,Investor Education,Toronto Stock Exchange

Darrell PintoResearch Manager,Research Services,Toronto Stock Exchange

Nancy StowManager, Investor Education, Ontario Securities Commission

Marion SpinoWestdale Secondary School, Hamilton

Awadh Jaggernath and Sheila LitmanEast York Collegiate Institute, Toronto

i

CONTENTS iii

Contents

From the Authors

Financial Literacy – A Survival Skill in the 21st Century 7

Curriculum Connections I Benefits to Students 8

How to Use This Guide 9

Part 1 Building Personal Wealth as a Component of the Curriculum

The Conceptual Foundations of Financial Literacy

Compound Growth 10

Present Value and Accumulated Value I Annuities 11

Inflation, Deflation and Purchasing Power I The Law of Supply and Demand IReading Market Information I Researching Investments 12

Investment Portfolio I Risk vs. Reward 13

Instructional Strategies

Pedagogical Perspectives I Alternative Sequences to the Instruction 14

Building the Investment PortfolioGroup Work and Team Building 15

Creating an Investor Portfolio – Overhead 18

The Role of Technology in Teaching & Learning about Wealth Building 19

How to Use This Guide to Assess Learning 21

Student Pre-tests to Determine Student Knowledge & Skills Levels

Pre-test A: Financial Terms 23

Pre-test A: Marking Template 24

Pre-test B1: Mathematical Skills 25

Pre-test B1: Marking Template 26

Pre-test B2: Mathematical Skills 27

Pre-test B2: Marking Template 28

Part 2 The Mathematics of Wealth Building

Prerequisite Skills 29

Expectations Addressed in This Unit 30

iv CONTENTS

Activity 1.0 – Compound Interest and Accumulated Value 31

Activity 1.1 – Compound Interest and Accumulated Value 33

Activity 1.2 – Using Diagrams to Show How Money Grows 34

Activity 1.3 – How Money Grows at Different Interest Rates 35

Activity 1.4 – Compounding Periods Less Than One Year 36

Activity 1.5 – Exploratory Activity A: How Long Does It Take to Double Your Money? 37

Activity 1.6 – Exploratory Activity B: And If You Have a Graphing Calculator 38

Activity 1.7 – Exercises 39

Exercise Solutions 40

Activity 2.0 – Present Value 43

Activity 2.1 – Present Value: You Can Be a Millionaire … If You Start Soon Enough! 44

Activity 2.2 – Strip Bonds 45

Activity 2.3 – How Much at Age 30 Becomes $1 000 000 at Age 60? 46

Activity 2.4 – Exploratory Activity – Did They Really Win a Million Dollars? 48



Activity 3.0 – Annuities & Installment Payments 55

Activity 3.1 – Annuities & Installment Payments: A Tale of Twins 56

Activity 3.2 – Buying on the Installment Plan 58

Activity 3.3 – Calculating the Outstanding Balance on a Spreadsheet 59

Activity 3.4 – Exploratory Activity: Buy or Lease a Car –Which Is the Cheaper Option? 60

Exploratory Activity: Solutions 62



What You Might Expect to See 66

Part 3 Investing in the Stock Market

Prerequisite Skills 71

Expectations Addressed in This Unit 72

Activity 4.0 – How a Stock Market Works 73

Activity 4.1 – How a Stock Market Works: Bringing Buyers & Sellers Together 75

Activity 4.2 – Initial Public Offering 76

Activity 4.3 – The Secondary Market 77

Activity 4.4 – The Trading Process 78

Activity 4.5 – Making the Trade 79

Activity 4.6 – How to Read Trading Information 80

Activity 4.7 – Exploratory Activity A: Using Stock Indexes to Read Market Trends 83

Activity 4.8 – Exploratory Activity B: Using Data to Analyse a Particular Stock 85

Activity 4.9 – Worksheet 88



CONTENTS v

Part 3 Investing in the Stock Market continued

Activity 5.0 – The Risks & Safeguards in Stock Trading 93

Activity 5.1 – The Risks & Safeguards in Stock Trading 94

Activity 5.2 – Economic Factors That Affect Stock Prices 95

Activity 5.3 – Using Data & Statistics to Assess Economic Trends:Measuring Inflation 97

Activity 5.4 – Using Data & Statistics to Assess Economic Trends: Measuring the Economy 98

Using Data & Statistics to Assess Economic Trends: Measuring the Economy: Solutions 99

Activity 5.5 – Exploratory Activity A: Researching the Economic Indicators 100

Activity 5.6 – Exploratory Activity B: Promoting a Fair & Equitable Market 102

Exploratory Activity B: Promoting a Fair & Equitable Market: Solutions 104

Activity 6.0 – Analysing Stocks as Investments 105

Activity 6.1 – Analysing Stocks as Investments: When Should You Buy Stocks? 106

Activity 6.2 – What Stocks Should You Buy? 107

Activity 6.3 – The Annual Report: A Snapshot of a Company’s Economic Health 108

Activity 6.4 – How to Read an Annual Report: The Balance Sheet 109

Activity 6.5 – How to Read an Annual Report: The Income Statement 110

Activity 6.6 – Summary of Criteria for a Financial Analysis 111



Activity 6.8 – Exploratory Activity: How to Evaluate Internet Sites 116

Activity 7.0 – Creating an Investment Portfolio 119

Project Management Checklist 122

The Five Dimensions of an Investment Portfolio 124

Investment Portfolio Report Rubric 129

Investment Portfolio Presentation Rubric 130

Student Assignment: Creating an Investment Portfolio 131

Exploratory Activity 133

Investment Portfolio – How Well Did We Work Together Survey 136

What You Might Expect to See 137

Investment Portfolio Team – OVERHEAD A 151

Creating an Investment Portfolio Task – OVERHEAD B 152

Creating an Investment Portfolio Presentation – OVERHEAD C 153

Creating an Investment Portfolio Report – OVERHEAD D 154

Step 1: Investor Personality – OVERHEAD E 155

List of Print Resources 157

List of Web sites 159

Glossary of Financial Terms 160

Appendix – Worksheets 1-5 162

TEACHER

FROM THE AUTHORS 7

From the Authors

Financial Literacy – A Survival Skill in the 21st CenturyIn the past decade, there has been a growing awareness that financial literacy, an

understanding of the basic principles of money management and investment, is

quickly becoming a survival skill in the 21st century. The new technologies have

brought a surge of investors into capital markets. Internet access to annual reports

of companies, and a host of investment products, such as index-linked GICs, index

stock options, derivatives, segregated funds, royalty trusts, and REITs, are demanding

a more sophisticated investor who understands the risks and rewards of investment.

TEACHER

8 FROM THE AUTHORS

Curriculum ConnectionsThe study of wealth building, financial management, and capital markets in Canadian

schools has been scattered across subject areas, including mathematics, business,

and economics. Traditionally, the academic courses in the mathematics curricula

have focussed on the mathematics of finance, including the study of sequences

and series as the basis for studying compound interest and annuities. The applied

mathematics courses have dealt with personal money management, including

budgeting, credit, and the arithmetic associated with simple personal accounting.

Business courses have tended to explore accounting practises, annual reports,

balance sheets and income statements for corporations and other business

enterprises. Courses in economics have investigated economic trends, inflation, deflation,

monetary policy, capital markets and the law of supply and demand. Consequently,

few students have enjoyed the opportunity to study financial matters from all three

perspectives or to receive a comprehensive program of personal wealth building.

We recognize that some business or economics teachers may not be comfortable with

the mathematics in Activities 1 to 3 in this document and that math teachers may

not be confident with Activities 4 to 7. We suggest that team teaching, or pairing up

with a teacher from another subject area, would be a fulfilling undertaking that will

enhance the learning experience for the students, and can facilitate completing this

resource document in its entirety. The subject matter from any course in business,

math or economics could be combined with subject matter from one or more courses

to create an interdisciplinary course. The policies and procedures regarding the

development of interdisciplinary courses are outlined in interdisciplinary studies

curriculum policy documents for each province.

Benefits to StudentsThis guide is dedicated to helping you, the teacher, lead your students through an

exciting and highly interactive set of learning activities that will motivate and educate

them in the rudiments of personal wealth building that is so vital to their futures. The

activities are designed to balance the instruction between highly interactive individual

and small-group exploration with traditional didactic presentations that include large-

group discussion. In the explorations, often involving the Internet or other technologies

such as spreadsheets, students are charged with a particular task involving information

gathering, analysis, problem solving, and reporting.

TEACHER

FROM THE AUTHORS 9

How to Use This GuideThrough these investigations and reporting activities, students actually live in the

investment world, gathering information from real web sites about real companies,

accessing annual reports and choosing stocks that look like good potential investments.

From these experiences, students acquire in step-by-step fashion the knowledge and

skills needed to compose a personal investment portfolio. All the learning gleaned from

these activities ultimately comes to fruition in a final assignment in which students,

working in teams of four, write a report recommending, with reasons, a selection of

particular investments for a personal portfolio.

To make the Internet activities as easy to use as possible, all URLs referred to in

activities in this document are accessible at the Investor Education Fund’s web site.

Please have students visit the Teacher Resources page on www.investorED.ca

The guide is presented in three parts: Part 1 is designed for you, the teacher, and is intended to provide a rationale for the

activities in the following sections.

Part 2 develops the basic mathematics of finance, including the computation of

accumulated value, present value, and annuity payments with and without technology.

Part 3 provides a general overview of principles in economics and business that apply

to investment.

Parts 2 and 3 are relatively independent to allow maximum flexibility. Both Parts 2

and 3 include teaching strategies for using the activities in these sections. To facilitate

the use of this guide, the upper corners of the pages directed only to you have been

inscribed with the word Teacher. The other pages, marked Student, are student activities

that can be photocopied and distributed to your students.

Taking Stock in Your Future Senior Guide is dedicated to helping students become

financially literate while they are still young enough to benefit from the power of

compound growth. We have created these materials to facilitate your task and perhaps

impart some information that may be new to you. We hope you find this resource a

valuable aid in your teaching and a joy to use with your students. We applaud your

commitment in leading the next generation in so important a quest – the quest for

individual financial independence.

You will find that most of the

activities follow a similar

scheme, and we offer this “Road

Map” to help you divide the

activities into manageable units:

Road Map of Activities

OVERVIEW

TERMS STUDENTS WILL LEARN

INTRODUCTION: PRELIMINARY POINTS

INSTRUCTIONAL STEPS

WORKED EXAMPLES

EXPLORATORY ACTIVITIES

INTERNET EXPLORATION

EXERCISES

SOLUTIONS

gggggggg

TEACHER

10 PART 1: THE CONCEPTUAL FOUNDATIONS OF FINANCIAL LITERACY

Teacher NotesThis unit contains teacher

notes with the following

components:

• A discussion of the major concepts that underpin financial literacy.

• A discussion of the role oftechnology in the studentactivities.

• A discussion of the differentinstructional strategies thatmay be used in implementingthe activities.

• A discussion of how toassess what students learnas they work through themodule.

Before you beginYou will find a diagnostic

pre-test to assess student

knowledge of financial terms

and two pre-tests to assess

prerequisite mathematical

skills (complete with marking

templates).

Part 1Building Personal Wealth as aComponent of the Curriculum

The Conceptual Foundations of Financial Literacy

Compound GrowthExponential growth is a concept that may be familiar to many students in the contexts

of bacterial epidemics, chain letters, communication networks, and sales of popular

CDs. Less familiar to many students is an understanding of exponential growth as

it applies to wealth building. $10 000 invested at 9% = $20 000 in 8 years. This

means it doubles about 5 times in 40 years, so it increases by a factor of 25, or 32, in

40 years to $320 000. In the next 8 years, it doubles to $640 000. That is, it takes

40 years, growing at 9% per annum, for $10 000 to grow into $320 000, yet in only

8 more years it doubles to $640 000! The last 8 years of growth yield as much as

the previous 40 years. The power of compounding is most dramatically manifest in

the later years of growth. For this reason, it is critical to start personal wealth building

as early as possible. This principle is illustrated in the Broom Hilda cartoon of

Activity 1.1 on page 33 and again in Activity 3.1, A Tale of Twins, on page 56. The

importance of a clear understanding of this concept cannot be overemphasized.

TEACHER

PART 1: THE CONCEPTUAL FOUNDATIONS OF FINANCIAL LITERACY 11

A graphing calculator, such as the Texas Instruments TI-83 or TI-83 Plus, can be used

to help students understand the exponential growth of money through compounding

and the vital role of the growth rate in determining the ultimate accumulated value of

an investment. By graphing the equations y = (1 + i )x for i = 0.06, 0.08, 0.10 and

0.12, students will obtain graphs such as those shown at right.

The intersection of each graph with the line y = 2, yields the doubling time for each of

the annual growth rates i = 0.06, 0.08, 0.10 and 0.12. In the Exploratory Activity of

Activity 1, students discover the Rule of 72, i.e., that the product of the annual

growth rate (as a percent) and the doubling time (in years) is approximately 72. An

understanding of this rule helps them estimate mentally the doubling time corresponding

to any given annual growth rate. An appreciation for the power of compound growth is

the cornerstone of personal wealth building that students must acquire before they

proceed into the world of finance.

Present Value and Accumulated ValueOnce students understand the nature of wealth generation, they are well-positioned to

grasp the concept of time-growth-of-money. That is, if money accumulates interest at

an annual rate i, then any amount $P now will grow to $P (1 + i ) a year from now. So

$P now is equivalent to $P (1 + i ) a year from now. Conversely, $P a year from now

is equivalent to $P (1 + i ), or $P (1 + i )–1 now. Students should understand the ter-

minology and concepts of accumulated and present value. That is, P (1 + i ) dollars is

the accumulated value at the end of one year of $P growing at the rate of i per

annum, and P (1 + i )n is the accumulated value of $P at the end of n years. Furthermore,

$P (1 + i ) –1 is the present value of $P a year from now and $P (1 + i )–n is the present

value of $P exactly n years from now. The concepts of accumulated value and present

value are developed in Activities 1 and 2 respectively, to lay the groundwork for the

computation of the accumulated and present values of an annuity as developed in

Activity 3.

AnnuitiesAn annuity is any series of equal payments or deposits designed to repay a loan

(installment loan or mortgage) or accumulate to a particular sum. The ability to

calculate the payment value of an annuity, the remaining balance, and the interest

portion of a particular payment involves the computation of present and accumulated

values. These constitute the complete set of mathematical skills underpinning financial

literacy. Once students have mastered the skills and processes developed in Activities 1,

2, and 3, as modelled in the worked examples, they will have all the mathematical

machinery needed to perform the computations in wealth building. However, not all

students will develop facility in summing a geometric series to calculate the payments

in an annuity as in Worked Example 1 of Activity 3.2. For this reason, we have pro-

vided in the exercises an Internet exploration that provides a mortgage calculator.

Similarly, we have developed the computation of the remaining balance of an annuity

using both spreadsheets and graphing calculators so that students without a strong

mathematical background may use technology to solve the problems they encounter.

Exponential Growth of Money

IntersectionX = 11.895661_Y=2

I

This display shows that the

intersection of the graph of

y = 1.06x intersects the line

y = 2 at the point (11.9, 2).

That is, the doubling time for

a growth rate of 6% is about

11.9 years.

IntersectionX = 6.1162554_Y=2

This display shows that the

intersection of the graph of

y = 1.12x intersects the line

y = 2 at the point (6.1, 2).

That is, the doubling time for

a growth rate of 12% is about

6.1 years.

TEACHER

12 PART 1: THE CONCEPTUAL FOUNDATIONS OF FINANCIAL LITERACY

Inflation, Deflation and Purchasing PowerPrior to a discussion of equities and the stock market, students must understand the

economic environment that can affect the investment market as a whole. The gradual

inflation of the currency and its inverse relationship to future purchasing power should

be explored through the concept of present value. Using the concept of present value,

students can create a table, such as the one on the top left, that shows how the

purchasing power of a dollar drops over a period of 5, 10, and 15 years for inflation

rates of 4%, 8%, and 12%. Alternatively, students can discover how many dollars

would be needed in future to have the same purchasing power as $1 has now, using a

table such as the one below left. In Activity 5, students explore some of the indicators

such as CPI, GDP, unemployment rates, interest rates and money supply. These

investigations take them to the Statistics Canada web site where they access the latest

Canadian economic indicators. Using these data, students assert whether there is an

inflationary or deflationary trend in our economy and support their assertions with

qualitative and quantitative information.

The Law of Supply and DemandAn important antecedent to a discussion of economic indicators is the fundamental

principle of economics, the Law of Supply and Demand. Students should discuss how

the price of a commodity rises when it is in high demand and short supply. This law can

be seen in the context of oil prices, real estate values, stocks or even clothes as new

fashions emerge and old fashions expire. It can also be related to the prices of artifacts

such as baseball cards, fine art or precious jewels.

An understanding of the supply-demand relationship is prerequisite to a discussion of

the concepts of bid and ask in the prices of stocks and bonds. These ideas are devel-

oped in Activity 4 where students learn how buyers and sellers of equities are

brought together in a stock trade. The law of supply and demand also underpins the

discussion in Activity 5 explaining why interest rates rise in an inflationary climate.

Reading Market InformationThe effects of the interaction of supply and demand are found in various real-time and

end-of-day market summaries. In Activity 4, students learn how to read the ticker, the

stock pages found in the daily newspaper, and Internet sources of stock information.

Students also learn to interpret trends in the whole market from indexes and other

measures of market activity such as newspaper listings of the most actively traded

stocks for that particular day.

Researching InvestmentsWith an understanding of the power of compound growth, students will recognize the

importance of starting early with a program of wealth building and maximizing their

annual rate of return. The quest for maximum growth rate leads naturally to a consid-

eration of the investment options available. Over recent history, equities have yielded

the highest rates of return and so it is important to help students learn how to choose

stocks for their portfolios.

PURCHASING POWER OF $1 AS AFUNCTION OF INFLATION RATE

After 4% 8% 12%

5 years $0.82 $0.68 $0.57

10 years $0.68 $0.46 $0.32

15 years $0.56 $0.32 $0.18

FUTURE AMOUNT HAVING THEPURCHASING POWER OF $1 TODAY

Years from now 4% 8% 12%

5 years $1.22 $1.47 $1.76

10 years $1.48 $2.16 $3.12

15 years $1.80 $3.17 $5.47

TEACHER

PART 1: THE CONCEPTUAL FOUNDATIONS OF FINANCIAL LITERACY 13

The key to making prudent investment decisions is the gathering of pertinent information.

In Activity 6, students discover how to find, interpret, and evaluate financial and

non-financial information about companies to determine whether or not they might make

good stock investments. Students learn the difference between raw numbers, percent-

age changes and ratios as ways to analyse company performance. Furthermore, worked

examples model techniques for using balance sheets and income statements to evaluate

key ratios found in most financial publications and annual reports. In Activity 6,

students learn some criteria for evaluating web sites.

Investment PortfolioIn Activity 7, Creating an Investment Portfolio, students have an opportunity to apply

all the preceding skills in the creation of their own portfolio. Starting with an exami-

nation of their investment goals and money management skills, they use web sites to

determine how much money will be needed to meet these goals. Those numbers are

then translated into monthly or weekly savings targets. Students next learn how

to create an asset allocation model that suits their objectives. Factors such as risk

tolerance, the age of the investor and diversification are also addressed in the portfolio

assignment as students attempt to compose a balanced array of investments that

reflect their individual goals. Specific equities are chosen to complete their asset

allocation model. Finally, students learn how to record and monitor these investments

using an online investment portfolio program.

Risk vs. RewardThroughout this guide, students are reminded that there are no guarantees that

investments will yield profits or that stocks will not fall in price. Any type of investing

incurs a certain amount of risk. Students should consider how comfortable they feel

about risk and its attendant rewards. Investments go up and down; past performance is no

guarantee of future results. In general, those investments with higher return potential

tend to be riskier, while low-risk investments tend to provide lower returns. Staying

invested is often suggested as a way to reduce risk. Individuals who regularly sell

securities when the market goes down may lock-in losses that might otherwise have

been eradicated in a market upturn.

In Activity 5, students are introduced to the potential risks in investments, and the

regulations that are in place to monitor and promote fair trading practices are discussed.

It is important that students understand that the careful, analytical approach to invest-

ment merely increases the possibility that they will make good decisions about investing.

While 100% certainty is highly unlikely, students should realize that techniques,

such as the diversification of investment instruments, can reduce risk. Most people

want low risk and high returns. Very often considerations such as age, income, wealth

and philosophy will dictate the type of investment that is appropriate. For example, a

young person might wish to take greater risks in structuring an investment portfolio

than an older person because the former has more time to reap the benefits of a

stock that pays no dividends but has strong long-term growth potential. The creation

of an investment portfolio involves a variety of considerations that are described in

some depth in Activity 7 on pages 119–121.

TEACHER

14 PART 1: INSTRUCTIONAL STRATEGIES

Instructional Strategies

Pedagogical PerspectivesEducational research has shown that guided instruction and interactive learning are

cornerstones of efficient teaching practise. Concepts and ideas that students discover

for themselves are usually internalized more deeply and retained with greater meaning

than ideas that are passively received in didactic fashion. Furthermore, when students

report and discuss their discoveries with fellow students and the teacher, the learning

is enhanced and consolidated. It is also recognized, however, that not all knowledge

can be achieved through these forms of instruction. Some skills and concepts must

be demonstrated and taught in traditional ways. In this module, we have created a

set of learning activities that exploits a variety of different instructional strategies

deemed most appropriate to the topic under investigation. There has been a conscious

quest for a balance of traditional modelling of skills and knowledge together with a

blend of small group and individual exploration. The following paragraphs highlight

two alternative approaches to teaching the material in this guide. The pages that follow

present some suggested instructional strategies for each activity. Pre-tests with answer

templates are provided on pages 23 – 28 to help you determine students’ prior

knowledge of wealth building before you plan your instruction.

Alternative Sequences to the InstructionThe instruction in this guide is designed to build toward an ultimate culminating

activity in which students create a personal investment portfolio for a fictitious client

with very real financial obligations and goals. A series of six activities helps students

acquire the basic mathematical skills and the knowledge of capital markets necessary

to create and customize a portfolio of investments to meet specific goals. The investment

portfolio assignment in Activity 7, in which students analyse and select equities to

be included in an investment portfolio, helps them internalize and consolidate the

concepts and the “big ideas” about the mathematics of finance and the fundamentals

of prudent investment in capital markets.

The flexible structure of these activities permits at least three different approaches

to the sequencing of the activities. To provide students with an insight into where the

instruction is leading, and to present an academic goal, you may wish to begin with

an overview of Activity 7, Creating an Investment Portfolio on the overheads, or using

the Activity on page 131. In this way, students can place the other activities in a

context of the individual investor and begin to understand the reasons why financial

literacy, including an understanding of compound interest, accumulated value, present

value, annuities, stock market processes, risks and safeguards, and stock analysis are

important for the investor. This “flashback” approach to the sequence of instruction

presents the goal and the assignment at the outset, and all subsequent learning is

focussed on its successful completion.

Flashback Approach

Building Block Approach

g

g

g

g

g

g

g

g

g

g

g

g

g

ACTIVITY 7 CREATING AN INVESTMENT PORTFOLIO

ACTIVITY 1 COMPOUND INTEREST & ACCUMULATED VALUE

ACTIVITY 2 PRESENT VALUE

ACTIVITY 3 ANNUITIES AND INSTALLMENT PAYMENTS

ACTIVITY 4 HOW A STOCK MARKET WORKS

ACTIVITY 5 THE RISKS & SAFEGUARDSIN STOCK TRADING

ACTIVITY 6 ANALYSING STOCKS AS INVESTMENTS

ACTIVITY 1 COMPOUND INTEREST & ACCUMULATED VALUE

ACTIVITY 2 PRESENT VALUE

ACTIVITY 3 ANNUITIES AND INSTALLMENT PAYMENTS

ACTIVITY 4 HOW A STOCK MARKET WORKS

ACTIVITY 5 THE RISKS & SAFEGUARDSIN STOCK TRADING

ACTIVITY 6 ANALYSING STOCKS AS INVESTMENTS

ACTIVITY 7 CREATING AN INVESTMENT PORTFOLIO

TEACHER

PART 1: INSTRUCTIONAL STRATEGIES 15

Teachers may wish to follow a “building block” approach, mastering the mathematics

that constitutes the mathematics of investment (Activities 1, 2, and 3) and then

moving on to a study of the capital markets and the economic factors that influence

them (Activities 4, 5, and 6). Ultimately, this approach leads to Activity 7 and an

analysis of income statements and balance sheets of various companies.

Alternatively, it is possible for mathematics instructors to teach only Activities 1 to 3,

which focus on the mathematics components, and for business and economics

instructors to begin with Activity 4, leaving the more challenging mathematics aside.

This “space ship” or modular approach permits instructors to introduce some of the

topics if team teaching, if an interdisciplinary approach is not possible or if instructors

are not familiar with or confident about the material. It is possible to teach portions

of the Activities, and select only those you wish to highlight.

Building the Investment Portfolio, Activity 7

Group Work and Team BuildingIn Activity 7, the section titled The Five Dimensions of an Investment Portfolio

(see page 124) provides students with a guideline on how to create a portfolio. While

students may eventually seek the assistance of a financial planner in the actual

creation of a portfolio, they still need to make decisions about their own comfort with

the risks involved. This guide has been designed to assist students in making such

decisions based on information about the financial and economic factors affecting

capital markets in general and stocks in particular.

Whether you use the “Flashback”, “Building Block” or “Space Ship” approach, you

will need to use page 131 on an overhead transparency to describe what information

the students might collect as they create this portfolio. You should form groups of four

for this activity. Your selection of these groups should consider student mathematical

ability as well as understanding of economic and business concepts. Appropriate

selection of group members to include a variety of skills will enhance the productivity

of the group. Detailed worksheets that outline steps for the groups to keep students

on task are included as an appendix (pages 162 – 168).

Activity 7 provides students with the opportunity to do research and gain presentation

practice. The components of teaching each other what they have learned, and using

and applying the information with their group, have been proven as the most effective

types of instruction to ensure long-term retention. The final exercise in the Investment

Portfolio is to have students complete a survey of how effectively their group worked

as a team. After forming the groups, provide them with time to build into a team.

Use a team-building activity, such as the creation of a name, as well as within-team

interviews to share investment knowledge, and exchange stories about personal

investments or investments of others.

ACTIVITY 1

COMPOUND INTEREST, ANDACCUMULATED

VALUE

Space Ship Approach

ACTIVITY 2

PRESENT VALUE

ACTIVITY 3

ANNUITIES ANDINSTALLMENT

PAYMENTS

TEACHER

16 PART 1: INSTRUCTIONAL STRATEGIES

Client ProfilesAlthough it is possible to develop client profiles for the students, we have found that

the student learning experience is much richer when they develop their own client

profiles. Not only can the exercise of developing a client profile be used as a team-

building exercise, it is also the essential first step to a cooperative learning experience

and will solidify the success of the teams. Cooperative learning incorporates five basic

elements into small-group experiences that ultimately become tools for solving problems

associated with group work. These elements are:

• Positive InterdependenceWhen all members of a group feel connected to each other in the accomplishmentof a common goal. All individuals must succeed for the group to succeed.

• Individual AccountabilityHolding every member of the group responsible to demonstrate accomplishment ofthe learning.

• Face-to-Face InteractionWhen group members are in close proximity to each other and dialogue with eachother in ways that promote continued progress.

• Social SkillsHuman interaction skills that enable groups to function effectively (e.g., takingturns, encouraging, listening, giving help, clarifying, checking understanding, probing).Such skills enhance communication, trust, leadership, decision-making, and conflictmanagement.

• ProcessingWhen group members assess their collaborative efforts and target improvements.1

1 B. Bennett, C. Rolheiser-Bennett, L. Stevahn (1991) Cooperative Learning: Where Hearts Meet Mind.

TEACHER

PART 1: INSTRUCTIONAL STRATEGIES 17

You can introduce the activity with an overhead of a personal investment summary

(with the name removed). This will allow the students to see that investment companies

provide detailed information on portfolios. Each group will understand that it must

create a portfolio that can be summarized for others to read and comprehend.

There are a number of main components to this assignment that need to be explained

in greater detail. You could provide each group with the five components: investor

personality profile, investment goals, asset allocation, investment decisions, and portfolio

records and monitoring. Using a jigsaw method, you might form new expert groups

with one person from each of the home groups (the original groups that you formed).

Assign one of the components to each expert group (with one group having the last

two factors). After 20 minutes, return the students to their home groups so that each

student can teach their home group the component in which they are expert. Check

with the entire group to see if there are any remaining questions on these components.

The student assignment should be outlined for the groups (page 131). Describe the

components of the assignment using pages 119–121 and the overheads. Provide

ample opportunities for students to ask questions. Develop a timeline for this assignment

based on the number of periods you have available for this activity. This is an activity

that can be continued over a longer period of time and integrated with other curriculum

activities. For example, you may wish to focus on this assignment one day per week

over a longer period of time, rather than for a concentrated period of time, day after

day. There are a variety of approaches you may choose. You should experiment with

different instructional sequences and methods to determine which approach is most

effective for your students. We hope that you and your students enjoy the process!

OVERHEAD

Taking Stock in Your Future

Creating an Investor PortfolioSteps for Portfolio Development Instructional Sequence

1 Develop Investor Profile

2 Setting Investment Goals Activity 1 – Compound Interest and

Accumulated Value

Activity 2 – Present Value

Activity 3 – Annuities & Installment Payments

3 Determine Asset Allocation Activity 4 – How a Stock Market Works

Activity 5 – The Risks & Safeguards in

Stock Trading

4 Investment Decisions Activity 6 – Analysing Stocks as Investments

5 Portfolio Records & Monitoring Evaluation: Assessment Criteria

18

TEACHER

PART 1: THE ROLE OF TECHNOLOGY IN TEACHING & LEARNING ABOUT WEALTH BUILDING 19

The Role of Technology in Teaching &Learning about Wealth Building“What technology should the students use in their study of personal wealth building?”

The answer depends upon the context in which this study is undertaken. For

mathematics students, this subject content falls under “mathematics of investment.”

Curriculum guidelines for senior mathematics across Canada require that students

use graphing calculators to explore exponential growth through graphs. Mathematics

students are also required to formulate symbolic expressions for accumulated and

present values of arbitrary amounts and to sum geometric series to evaluate annu-

ities. Some mathematics teachers may also have students use the TVM (Time-

Value-of-Money) application on their graphing calculators to compute interest rates

implicit in an annuity or to calculate the remaining balance after an annuity pay-

ment. Other mathematics teachers may have students create programs on their

graphing calculators to perform such tasks. Exercises and investigations involving the

graphing calculator have been included throughout Part 2 where students develop the

mathematics of wealth building.

However, students taking courses in business or economics usually do not have access

to graphing calculators and the spreadsheet is more likely the tool of choice. For this

reason, we have also included spreadsheet applications as alternatives to graphing

calculator activities where appropriate. Students are also referred to web sites that

have calculators which are specialized to accept various inputs on a template and then

return values of missing variables. For example, in Activity 3, students are referred to a

web site with a future worth calculator to verify their calculation of an annuity.

It is expected that students will work through this book using calculators, computer

spreadsheets, pen-and-paper computation, and much interaction with the Internet. It is

also expected that discussions among the students will be lively and the entire learning

experience will be highly interactive. By the end of their work in the activities of this

guide, the students should have developed comfort and confidence in using various

technological tools to solve the problems that arise in their study of the capital markets.

TEACHER

PART 1: HOW TO USE THIS GUIDE TO ASSESS LEARNING 21

How to Use This Guide toAssess Learning

This guide offers a diverse selection of assessment instruments appropriate to the

learning activities that you find in the student activities. The assessment and evaluation

component of this module is designed to measure the student’s ability to think, work

cooperatively, communicate, observe, acquire, and apply knowledge. All the expectations

delineated at the beginning of each unit are assessed in one or more of the evaluation

components. This provides students with a variety of opportunities to demonstrate

their mastery of the content and skills.

The assessment instruments that constitute the assessment and evaluation component are:

• a pre-test (called Pre-test A) to assess student knowledge of financial terms.

• a pre-test (called Pre-test B1) to assess student mathematical skills involving numbers.

• a pre-test (called Pre-test B2 ) to assess student mathematical skills involving variables.

• pencil-and-paper as well as calculator-based exercises to assess student ability toapply key concepts to the solution of problems associated with investment analysis.

• student reports on answers to problems obtained from Internet investigations of theToronto Stock Exchange (TSX) and Statistics Canada web sites.

• a culminating project in which students create a well-researched investment portfoliofor a fictitious client with a particular investment personality and specific personal goals.

taking stock in your future: senior · taking stock in your future – senior introduction and...

Documents