E.6.6+Research+and+monitor+financial+investments+such+as+stocks,+bonds+and+mutual+funds



=**//Focus Question: How do stocks, bonds, and mutual funds function as financial investments?//**=


 * //Topics on the Page//**
 * ** Overview **
 * ** Stocks **
 * ** Bonds **
 * ** Mutual Funds **
 * ** Ponzi Schemes **
 * ** Insider Trading **

In the economic world, financial investments are ways to gain money. Stocks, Bonds, and Mutual Funds are three different ways to succeed in a capitalist world.

Click here for the website of the[| New York Stock Exchange]

**For background on the Great Depression, see United States History II.11**

[|Virtual Stock Exchange Games: Resources for Teachers and Professors], from the Wall Street Journal

 Watch this [|video] for an overview on stocks, bonds and mutual funds.

Morgan Stanley has reported that by 2012, 8[|4% of all stock trades are done by high-frequency computers; only 16% by human traders]

[|MarketDash]lets you manage your stocks, plot points, and compare stock tickers.

Stocks, in essence, are small pieces of a company. When one owns a piece of stock, one owns a piece of the company. There are two kinds of stocks:
 * Stocks **
 * **Common Stock** and **Preferred Stock**.
 * **Common Stock** is the most frequent type of stock. Common stock is publicly held and and traded. When stocks are heard going "up" and "down" it is most likely Common Stock.


 * **Preferred Stock** are similar to common stock. However, when one owns preferred stock, the owner receives constant dividends and/or are first in line for dividends. A dividend is a payment made from the company to the stockholders.

See [|Explaining Stocks and the Stock Market]

A bond is a way for a company to secure themselves from debt.
 * Bonds **
 * When a company issues a bond to the holder, they promise to repay the price of the bond, and interest is usually added on. It is also agreed upon that the payment will be paid in full by a certain date.
 * There are many types of bonds. Bonds can vary depending on the value, who issues them, and other factors.

**Mutual Funds** A Mutual fund is a collective action that pools money to invest in bonds, stocks, and other tradeable items. Click here for [|more information on mutual funds] from the U. S. Securities and Exchange Commission.

Here are [|lesson plans] for various economics based classes.

Ponzi Schemes


Click here for an [|FBI video on Pyramid or Ponzi Schemes], a fraudulent business practice that entices investors into bad deals that lead to financial collapse.

Bernie Madoff engineering a $50 billion Ponzi scheme during the first decade of the 21st century. For more, see "The Talented Mr. Madoff," from //The New York Times//, January 24, 2009.

A Brief History of Ponzi Schemes, Time (December 15, 2008)

Inventors Beware: The Ponzi scheme is Thriving. Financial Times (March 30, 2017)

Insider Trading
Escape Artist: How a Legal Opening Let Phil Mickelson Wiggle Out of an Insider-Trading Case That Snared Billy Walters. Jeffrey Toobin. Golf Digest (August 2017)
 * Insider Traders make money in two ways:
 * Buy Stock when they know it is going to increase in value or sell stock when they know it is going to decrease in value

There is no specific law against the practice; it is prosecuted under business fraud laws.

Two people are involved
 * **Tipper**: a person (or insider) with the duty to keep information secret
 * **Tippee**: a person who sells the stock based on a tip from an insider

History of Insider Trading, New York Times (December 6, 2016)

History of Insider Trading, 1611-2012, with an Emphasis on Congressional Insider Trading. ProCon.org

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