# Tools to learn

Our program teaches middle school students the value of
worksheets, games and handouts below and your students
will be on their way to financial literacy.

## Bonus Lesson 2: How Things Are Lining Up

In this lesson, students will participate in a discussion about stocks and certificates of deposit and apply what they've learned in their efforts to track an actual stock.

### Objective

Students will learn about stocks and certificates of deposit in this lesson, using line graphs to examine the changing price of a stock as it fluctuates over a fixed time period.

### Directions

1. Begin this lesson by explaining stocks. Tell your students that businesses rely on money in order to grow and expand. To make some of this money, businesses will sell shares, which are pieces of ownership in their company. When a person buys one of these shares, he or she has paid for stock, and is now a stockholder in that business.
2. Explain to students that businesses, depending on their size, will have a number of stockholders who hold shares in the company. A business's stock value will fluctuate over time, increasing or decreasing in value. When a share increases in value, a stockholder can sell his or her stock for more than what he or she paid for it and make a profit. But note the risk to your students: When a stock drops in value or a company fails, a shareholder can lose considerable money on his or her investment.
3. Tell your students that at the more “constant” end of the investment spectrum are certificates of deposit or CDs. CDs represent money deposited in a bank for a specific length of time. The bank pays a rate of interest on this deposited money that's higher than the interest that would be paid on an ordinary savings account. Explain to students that when they purchase a CD, they invest a fixed sum of money for a certain time period. For example, a person can purchase a six-month CD, and the issuing bank pays interest on that fixed amount of money at regular intervals. When a CD is redeemed (cashed in) at maturity, a person receives the money originally invested plus any accrued interest. Make sure to note that before a person considers purchasing a CD from a bank, he or she should understand all of its terms, such as the possibility of monetary penalties being imposed for early withdrawal. It's important for students to understand this point!
4. In order to illustrate this discussion of stocks and CDs, it will be helpful for students to see a line graph on the board. Explain to students that line graphs use points and lines to examine changes over time. Like the bar graph, a line graph includes an x-axis and a y-axis, with each axis representing two different variables. The dependent variable, on the y-axis, is usually a designated measure of quantity (e.g., dollars, liters, etc.), while the independent variable, on the x-axis, is typically used to measure time.
5. Draw a line graph on the board using the following data: On the x-axis, set up a five-day business week. On the y-axis, create a scale from 0 to 40 using intervals of five. Then title the graph “Stock Analysis: Brooklyn Chocolate Factory,” and illustrate a stock's trajectory using the following points. Have students say where the points will go on the chart:
1. Day 1: 30.5
2. Day 2: 27.5
3. Day 3: 29.0
4. Day 4: 30.5
5. Day 5: 30.0

When you're done, connect the dots with a line. Distribute How Things Are Lining Up to your students, and review the directions with them, as the assignment will call for some research. Answers to the questions will vary.