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ASD Senior Year > The Stock Market Game Rules > Flashcards

The Stock Market Game Rules Flashcards

1
Q

Initial Cash Balance

A

$100,000

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2
Q

Interest earned on positive Cash Balance

A

0.75%

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3
Q

Interest charged on negative Cash Balance

A

7%

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4
Q

Tradable Stocks

A

NASDAQ and NYSE

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5
Q

Prohibited Stocks

A

OTC or “pink sheets”

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6
Q

Tradable Bonds

A

Investment-Grade (“BBB” or higher)

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7
Q

Prohibited Bonds

A

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

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8
Q

Minimum Market Capitalization

A

$25 million

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9
Q

Minimum Share Price

A

$3 per share

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10
Q

Minimum Stock/Mutual Fund Share Size

A

10 shares

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11
Q

Bond Increments

A

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

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12
Q

Prohibited Transactions

A

bond and mutual fund short sales

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13
Q

Market Hours

A

Monday – Friday, 9:30am – 4pm ET

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14
Q

Commission and Fees

A

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

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15
Q

Each team begins the simulation with

A

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

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16
Q

Teams that buy on margin must maintain the

A

Minimum Maintenance requirement.

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17
Q

What happens if you dip below the minimum maintenance requirement?

A

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

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18
Q

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

A

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

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19
Q

Interest is charged weekly on ____________ at an ______________

A

negative cash balances
annual rate of 7%

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20
Q

Interest is credited weekly on ____________ at an ______________

A

positive cash balances
annual rate of 0.75%.

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21
Q

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

A

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

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22
Q

The daily rate is based on a

A

365-day year

23
Q

Daily Interest =

A

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

24
Q

Bond coupon payments will be posted when

A

Due

25
Q

Bond buyers will also be

A

be charged for accrued
interest since the last coupon payment.

26
Q

Bond sellers will receive

A

accrued interest since the last coupon payment.

27
Q

Teams may trade only

A

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

28
Q

Teams cannot trade

A

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

29
Q

What stocks may be liquidated to protect portfolio stability?

A

Extremely volatile stocks or stocks that trade infrequently are not permitted

30
Q

Some regions may also trade a

A

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

31
Q

Only bonds provided by

A

SMG may be traded

32
Q

Teams cannot trade unrated bonds or those with lower

A

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

33
Q

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

A

daily

34
Q

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

A

one

35
Q

Winners will be determined based on either

A

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

36
Q

The minimum market capitalization for stocks in SMG is

A

$25 million

37
Q

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

A

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

38
Q

What are penny stocks?

A

Low-priced stocks that are risky and volatile investments.

39
Q

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

A

10 shares

40
Q

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

A

will be permitted

41
Q

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

A

$1000 increments

$100 increments

short

42
Q

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

A

market price at the time of entry,

End-of-Day
transactions and are executed at that day’s closing price

43
Q

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

A

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

44
Q

Teams may trade on any day

A

the participating stock markets are open

45
Q

Orders may be entered when?

A

seven days a week during hours the system is available

46
Q

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

A

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

47
Q

Bonds and mutual funds will be priced at the _____________

A

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

48
Q

Transactions entered with a limit price will not be

A

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

49
Q

Trades can only be processed in

A

whole. There are no partial fills.

50
Q

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

A

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

51
Q

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.)

A

daily, Cash balance, Transaction History

52
Q

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.

A

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

53
Q

Stock and cash __________ are automatically computed into portfolios.

A

dividends and stock splits

54
Q

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

A

split’s record, payout

ASD Senior Year (49 decks)

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