Econ Lowdown

15 minutes

Middle School - High School

15 classes this week

Subject: Personal Finance

Topics: Financial Investing Incentives

Students learn some investing basics in the, “Get Into Stocks” video from the Federal Reserve Bank of St. Louis series, No-Frills Money Skills. Through the story of a local ice cream cart owner trying to expand her business, students learn about the process by which companies become publicly owned and traded by issuing stock. Students learn key terms, such as capital gains and dividends, and discover how the prices of stocks are affected by how successful a company is in its respective industry.

View National Standards for Financial Literacy

Standard 5: Financial Investing

Grade 8 Benchmarks

3. When people buy corporate stock, they are purchasing ownership shares in business. If the business is profitable, they will expect to receive income in the form of dividends and/or from the increase in the stock’s value. The increase in the value of an asset (like a stock) is called a capital gain. If the business is not profitable, investors could lose the money they have invested.

6. Financial risk means that a financial investment has a range of possible returns, including possibilities of actual losses. Higher-risk investments have a wider range of possible returns.

Grade 12 Benchmarks

5. An investment with greater risk than another investment will commonly have a lower market price, and therefore a higher rate of return, than the other investment.

7. Diversification by investing in different types of financial assets can lower investment risk.

View Additional Resources