Stock Journal Homework
This is the first of three stock journal homeworks you will complete during this course. Save your homework templates from this homework and update them for the homework.
For this homework, use the two provided templates:
o In one template, enter your chosen companies, the share prices, and the number of shares you will be purchasing, given your budget of $25,000.
o In the other template, write your rationale/summary.
Download both templates. Then, complete, save, and upload both templates at the same time to Blackboard when submitting your work.
Scenario
Capital markets and the ability to raise funds for corporate uses are essential to the U.S. economic system. For this homework, imagine you have $25,000 to invest in U.S. companies. You are buying used stock.
You are investing, or buying, the stock because you believe the three companies you choose will make money and pay you a dividend in cash. Each share of stock you buy entitles you to any dividend declared and a vote at the annual stockholders' meeting.
The stocks you choose also give you the ability to earn your money back by selling the stock. Of course, investing in stocks is risky, and there is the possibility that the stock you buy will be worth less when you want your money back. The company is not obligated to give you any of your money back. You will only get your money back if another investor wants to buy your stock.
Instructions
Using the above scenario and the resources listed below, complete the following directions for your Week 3 Stock Journal entry:
Use your knowledge and experience to select three publicly traded U.S. companies.
o Make sure you are practicing good diversification. Diversification means you are not selecting three companies from the same industry. For example, you would not want to choose Target, Walmart, and Sam's Club because they sell the same types of products. A better choice would be Amazon, Uber, and Kroger, because they sell different products and services.
o Determine how you will divide $25,000 across the three companies (for example, $10,000 in Company 1, $10,000 in Company 2, and $5,000 in Company 3).
- Decide the amount you are investing in each company. You need not provide any analysis to justify your decisions.
o Provide a reason for picking each company.
- For example, you might invest in Ford because that company gets a lot of your money, and you hear that Ford is doing well and will continue to do well.
o Identify the number of shares you are buying and the price of the shares you are buying for each company.
- Once you decide the companies and the amount you will invest in each company, determine how many shares you can buy. For example, if Company 1 is selling for $42.16, then you may buy $10,000/$42.16, or 237.19 shares. But you cannot buy a part of a share, so you decide to buy either 237 or 238. In this example, you buy 237 shares at $42.16 per share, investing $9,991.92. You will not be able to buy exactly $10,000, or $5,000, or $25,000, but it will be relatively close.
Format your homework according to the following formatting requirements:
o The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
o The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.
o Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.