1. Why did Milton think his chocolate candy would sell?
Milton thought his chocolate would sell because he believe that caramels, a popular candy at the time, were too rich to eat everyday, so people would want to eat his milk chocolate instead.


2. Where did he get the money to start making chocolate?
Milton took out a loan as a last resort because his family was going through financial trouble at the time.


3. What type of company did Hershey have before he incorporated?
Hershey owned a caramel company, which he sold to start the Hershey company.


4. What benefits do you think Milton gained from forming a corporation?
Milton incorporated Hershey and sold stock to the public, which probably increased the amount of money Hershey was recieving and the helped the company grow.


5. Why would people today want to invest in the Hershey Company?
Hershey is a very sucessful company and it is not as expensive to buy stock in Hershey as it is to some other companies.



Stock Names:
Continental Airlines CAL
Delta Airlines DAL
US Airlines LCC
Hyatt Hotels Corporation Class H
Leer Corporations LEA
Kirkland Inc. KIRK
Pepsi Inc. PEP
Barnes Group Inc. B

Amount Invested
Interest Rate
Three Year Total Value
Years to Double (Rule of 72)
$1000
3%
$1095.91
24 years
$1000
5%
$1262.63
14.4 years
$1000
8%
$1259.40
9 years
$1000
10%
$1331
7.2 years
Answers are rounded to the nearest thousandths.
Amount Invested
Interest Rate
Length of Investment
Amount Earned
$1000
6%
3 yrs
$1191.016
$1000
6%
5 yrs
$1338.225
$1000
6%
10 yrs
$1790.843
$1000
6%
15 yrs
$2396.553

  • Bonds: An IOU that a company or government sells when it borrows money. Bonds are called fixed-income investments because they pay a fixed amount of interest to the bondholder for the use of his/her money.
  • Closed-end funds: Like open-end mutual funds, these are collections of securities managed by a professional investment advisor. Unlike open-end mutual funds, their shares are traded on a stock exchange like ordinary stock.
  • Diversification: An investment strategy in which you spread your investment dollars among different markets, sectors, industries, and securities. The goal of the strategy is to protect the value of your overall portfolio in case a single security or market sector takes a serious downturn and drops in price.
  • Exchange-Traded Funds: Funds whose shares, like closed-end funds, are traded on a stock exchange. These invest in stocks or bonds that closely follow an index.
  • Index: An index reports changes, usually expressed as a percentage, in a specific financial market, in a number of related markets, or in an economy as a whole. Each index — and there are a large number of them — measures the market or economy it tracks from a specific starting point, which might be as recent as the previous day or many years in the past.
  • Mutual funds: An investment instrument developed and managed by a company that pools members’ money—often millions of dollars—to invest in a variety of stocks and bonds. Investment professionals who research companies and buy or sell stocks actively manage the funds based on what they think is best for the fund’s shareholders.
  • Open-end funds: Funds that usually sell as many shares as investors want to buy. Sometimes open-end funds stop selling shares to new investors when they grow too large to be managed effectively. Investors who want to sell shares of their open-end funds, sell them back to the mutual fund.

Objectives
After this activity you need to be able to…
  • Define and identify the characteristics of a mutual fund
  • Use the Internet to research mutual funds.
  • Use the research on mutual funds to help determine team investments for the Stock Market Game.
  • Create and deliver a 5-min presentation on mutual funds, their risk and performance
Task

Assessment
Be able to discuss in small group discussion the knowledge you individually gained.

Look at the stocks your team has purchased or plans to purchase. Do the stocks cover a broad range of industries? What industries do they represent?
No, most of our stocks are not in the same industries We have a two stocks for the restaurant business. Those stocks are MCD, and we also invested in HNZ. Both of these stocks are not profitable. What we can learn about this is that the food business is very tough these days. These are the only stocks that we have that are in the same industries.






Use the Internet to research different mutual fund companies. You can search using http://finance.yahoo.com or www.google.com/finance. List three mutual fund companies.







Types of Mutual Funds
There are many types of mutual funds (more than 17,000) for investors to choose from: balanced funds, stock funds, bond funds, sector funds, money market funds, etc. Most mutual funds are open-end funds, that is, funds that will usually sell as many shares as investors want to buy. (Sometimes, open-end funds will stop selling shares to new investors when they grow too large to be managed effectively.) If you sell shares of your open-end funds, you sell them back to the mutual fund.


Using the Internet, find the names of three funds that hold shares in industries that interest your team.

  1. CENOVUS ENERGY INC.(CVE.TO)
  2. SUNCOR ENERGY INC.(SU.TO)
  3. CROPENERGIES(CE2.DE)


There are a number of funds that have been put together for particular social reasons; for example, to further the cause of women’s issues, or to encourage investment in companies with environmentally friendly business practices, or companies that are considered to be family friendly. Locate two funds that would fall into this category.


  1. Delaware Healthcar I(