The Stock Market Game Rules

Question 1

Initial Cash Balance

Answer 1

$100,000

Question 2

Interest earned on positive Cash Balance

Answer 2

0.75%

Question 3

Interest charged on negative Cash Balance

Answer 3

7%

Question 4

Tradable Stocks

Answer 4

NASDAQ and NYSE

Question 5

Prohibited Stocks

Answer 5

OTC or “pink sheets”

Question 6

Tradable Bonds

Answer 6

Investment-Grade (“BBB” or higher)

Question 7

Prohibited Bonds

Answer 7

High-Yield or “junk” (lower than “BBB”)

Question 8

Minimum Market Capitalization

Answer 8

$25 million

Question 9

Minimum Share Price

Answer 9

$3 per share

Question 10

Minimum Stock/Mutual Fund Share Size

Answer 10

10 shares

Question 11

Bond Increments

Answer 11

$1,000 – municipal and corporate
$100 – Treasury (government)

Question 12

Prohibited Transactions

Answer 12

bond and mutual fund short sales

Question 13

Market Hours

Answer 13

Monday – Friday, 9:30am – 4pm ET

Question 14

Commission and Fees

Answer 14

$5-per-trade on all transactions
SEC fee on sell transactions

Question 15

Each team begins the simulation with

Answer 15

with $100,000 in cash and may borrow additional funds.

Question 16

Teams that buy on margin must maintain the

Answer 16

Minimum Maintenance requirement.

Question 17

What happens if you dip below the minimum maintenance requirement?

Answer 17

you will receive a margin call and must
sell off enough investments to meet Minimum Maintenance.

Question 18

If a team still has not met its Minimum Maintenance requirement within seven days

Answer 18

the SMG system will automatically liquidate enough of the portfolio’s investments to collect the required amount.

Question 19

Interest is charged weekly on ____________ at an ______________

Answer 19

negative cash balances
annual rate of 7%

Question 20

Interest is credited weekly on ____________ at an ______________

Answer 20

positive cash balances
annual rate of 0.75%.

Question 21

Interest is calculated _______, then summed for the week (_______) and posted _____ (______).

Answer 21

Daily, (Saturday-Friday), Saturday (With Friday’s date)

Question 22

The daily rate is based on a

Answer 22

365-day year

Question 23

Daily Interest =

Answer 23

Cash x Appropriate Interest Rate (as a decimal) / 365

Question 24

Bond coupon payments will be posted when

Answer 24

Due

Question 25

Bond buyers will also be

Answer 25

be charged for accrued interest since the last coupon payment.

Question 26

Bond sellers will receive

Answer 26

accrued interest since the last coupon payment.

Question 27

Teams may trade only

Answer 27

only stocks and mutual funds listed on the NASDAQ Stock Market and the New York Stock Exchange.

Question 28

Teams cannot trade

Answer 28

over-the-counter or "pink sheet" stocks since they often price incorrectly

Question 29

What stocks may be liquidated to protect portfolio stability?

Answer 29

Extremely volatile stocks or stocks that trade infrequently are not permitted

Question 30

Some regions may also trade a

Answer 30

pre-determined group of municipal, corporate, and Treasury bonds.

Question 31

Only bonds provided by

Answer 31

SMG may be traded

Question 32

Teams cannot trade unrated bonds or those with lower

Answer 32

lower than "BBB" ratings, also known as high-yield or "junk" bonds, as they often carry higher default risk.

Question 33

A record of a team's portfolio and transactions will be available

Answer 33

daily

Question 34

A student can only be assigned to ____ portfolio per game period.

Answer 34

one

Question 35

Winners will be determined based on either

Answer 35

Total Equity or Percent Return Above/Below S&P 500 Growth. (Some states may use additional criteria to determine winners).

Question 36

The minimum market capitalization for stocks in SMG is

Answer 36

$25 million

Question 37

SMG does not permit buying stocks or mutual funds or short selling stocks that trade below

Answer 37

$3 per share the day before and the day of execution.

Question 38

What are penny stocks?

Answer 38

Low-priced stocks that are risky and volatile investments.

Question 39

All stock and mutual fund buy orders and stock short sell orders must be for a minimum of

Answer 39

10 shares

Question 40

Sell orders on existing inventory and short cover orders for less than 10 shares

Answer 40

will be permitted

Question 41

Municipal and corporate bonds can only be traded in _________, and Treasury bonds can only be traded in ________. Bonds and mutual funds cannot be sold _____.

Answer 41

$1000 increments $100 increments short

Question 42

Stock transactions in Real-Time games are executed at _________ while bond and mutual fund transactions are treated as ___________________.

Answer 42

market price at the time of entry, End-of-Day transactions and are executed at that day's closing price

Question 43

End-of-Day game transactions are priced at _____________. Participants of End-of Day games may delete ________________

Answer 43

market daily closing prices for all asset types pending transactions prior to market close.

Question 44

Teams may trade on any day

Answer 44

the participating stock markets are open

Question 45

Orders may be entered when?

Answer 45

seven days a week during hours the system is available

Question 46

Stock trades entered after close of market (4PM ET) or on weekends and market holidays ____________.

Answer 46

will be priced at the next business day's opening price for Real-Time games and at the next business day's closing price for End-of-Day games

Question 47

Bonds and mutual funds will be priced at the _____________

Answer 47

next business day's closing price for both Real-Time and End-of-Day games.

Question 48

Transactions entered with a limit price will not be

Answer 48

be held past the initial attempt to price the transaction during market hours. This applies to both Real-Time and End-of-Day games.

Question 49

Trades can only be processed in

Answer 49

whole. There are no partial fills.

Question 50

A $5-per-trade commission fee is charged on

Answer 50

all transactions. An SEC fee is also charged on all sell transactions.

Question 51

Short positions held in stocks are marked to the market _______ and the resulting gain or loss is added or subtracted from _____. No mark-to-market transactions are posted in ____________. (Please note: there is no short-selling allowed in non-margin cash accounts.)

Answer 51

daily, Cash balance, Transaction History

Question 52

No back posting of trades will be done for trades of securities not contained within the __________. Once the missing security has been added, the security can be ________. The same rule applies to trades rejected if they are incorrectly pricing below _____. Once the pricing has been corrected, the security can be traded. There is no _______ of trades due to the system being unavailable.

Answer 52

SMG Security Table, traded, $3, post-dating

Question 53

Stock and cash __________ are automatically computed into portfolios.

Answer 53

dividends and stock splits

Question 54

Canadian stocks trading on US exchanges cannot be traded between a _________ date and its ____ date.

Answer 54

split's record, payout