FINA 250 Module 11: Stocks

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  • Understand advantages, disadvantages and risk associated with investing in stocks
  • Be able to read stock quotes online or in the newspaper
  • Classify common stock according to basic market terminology
  • Employ different investment strategies
  • Understand the risks associated with investing in common stock
  • Investing on the stock market is all about risk and return

Reading For This Module:

Chapter 13 – Keown, Arthur, “Personal Finance: Turning Money into Wealth, Prentice Hall Publishing. 6thedition

Textbook PowerPoint (.pptx 489KB, 25SL)

Opening Vignettes:

Investing should be thought of as a long term strategy. Placing the majority of your savings into risky investments can be akin to gambling. Unawareness of potential impacts and not monitoring your portfolio can significantly reduce returns. Being a good shepherd of your nest egg will far more often produce highly favorable outcomes.


You don’t have to have big money to accumulate wealth

How The Stock Market Works (video) (9:12)

Introduction: Investing in Stocks

This section considers common stock investing as a component of the investment planning process and explains why common stocks are a solid investment, and, over time, why stocks outperform all other investments.

This section also details how stocks can be used to reduce risk through diversification, and how stocks offer a high degree of marketability and liquidity without relying wholly on interest rates as a determinant of value. Market indexes and measures such as the Dow Jones Industrial Average and the S&P 500 are discussed. Common stock classifications are defined, and a discussion of stock valuation methods is presented, including examples of the price-to-earnings approach, the discounted dividend model, buy-and-hold strategies, and dividend reinvestment plans.

Dr. Waller Lecture: Stocks (video) (34:18)

This video covers Stocks (or equities). Stocks represent a part-ownership of a piece of a business. Stocks are one way companies can raise money. Stocks can rise or lower in value and may pay an extra return periodically called dividends. Watch for why a company may or may not want to sell stock, may or may not want to pay dividends. Watch also for stock concepts such as liquidity, liability, claim of income, splits, repurchase, bear market, bull market, taxation, “blue chips”, stock indexes, and especially to formulas shown such as Earnings Per Share (EPS) and Payout (PO).

Stocks Lecture PowerPoint (PPTX 52SL 1MB)


  • Common stocks over time outperform all other investments
  • Stock indexes such as the Dow and S&P 500 show health of stock market
  • Common stocks can be blue-chip, growth, income, speculative, defensive, large- to small-cap stocks
  • A number of methods can be used to determine the value of stock—but interest rates, risk, and expected future growth determine the value of common stock
  • Stocks are riskier but diversification and watching beta values can help

The Stocks Trivia PowerPoint is a fun way to practice and review “Stocks” and the stock market.

250_Module11StocksStocks Trivia (.pptx 55sl, 640KB)

Play this Jeopardy!-like trivia in the presentation mode to practice your stock knowledge.

Consider looking online to join a virtual stocks game to practice before investing your own money as you are getting started.


Practice Quiz (does not count toward grade)

Open practice quiz



Take the quiz for this module on Canvas.


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