Investing 101

Lesson 1: Stocks and Their Value

Answers to Exercise 1

These answers are based on the stock market close of January 28, 2002. Your numbers will be different.

Which would you buy?

While that is a personal choice, usually once you’ve gotten the numbers, you would then pick two or three companies at which to take a closer look. Usually it does not make sense to buy a company near its high, but if it is one you like do careful research to be sure there is solid reason to believe its stock price still has room to move upward. We’ll be looking at research techniques in future lessons.

I won’t be giving an answer regarding which to buy, because I don’t want to risk giving stock advice. I’m not a broker. I do hope you’ll add your comments for discussion in the classroom.

One interesting to think to remember when you are considering Internet stocks is there history before the bubble burst. In 1999, all three of these stocks were high flyers.

iVillage came onto the market, hit its high almost immediately at $109.6875 and its stock price has been dropping ever since.

AOL hit its high at $177 and split twice. After the second split in December 1999, it hit it’s high at $75.87 and has been dropping ever since.

Yahoo hit its high in December 1999. It split in February 2000 and then hit its high of $171.28 and has been dropping ever since.

  1  2  3  4  5  6  7  8  9