Fundamental Analysis

ObjectiveTo teach kids how to choose stocks based on Fundamental Analysis.
Description Stocks

Fundamental Analysis is a way of choosing stocks where you look at a company's earnings per share, price to earnings ratio, projected earnings growth, dividend yield, dividend payout ratio and so on to analyze the value of a stock.

Steps:

1. Look up what "fundamental analysis" is and talk about it with family or friends. Also find definitions to the following terms:

  • earnings per share
  • price to earnings ratio
  • projected earnings growth
  • dividend yield
  • dividend payout ratio

2. Get a financial newspaper or go to a market website like money.cnn.com and look at a couple of different stocks. 

3. Talk to family and friends and find out what fundamental analysis is. Ask an adult how is interested in the stock exchange if he/she uses fundamental analysis to choose stocks. If they do ask them if they will demonstrate how they do it.

4. Choose a couple of stocks and perform a technical analysis on each one. Try to keep tabs on your stocks for about a year.

5. From time to time look and see how your stocks are doing.

 

Complete When

Mark this activity as complete when you have a good understanding of fundamental analysis and you have performed this to evaluate the quality of at least one stock.

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Age Range 14    15    16    17    18   
Activity Type Lesson
Tags Logical-Mathematical Intelligence  Investing  Stocks 
CreatedCindyCindy
Last ModifiedRobRob

References

Reference Reference Note  
About.com: Stocks Here is an article which provideds an introduction to stocks and here is an article on Fundamental Analysis .
Education.com Here is an article about teaching your child to invest .
Wikipedia Here is a Wikipedia post about the Stock Market .

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