Weekly Online Lesson Online Lesson Archive Grade Level: 7-10 Subject: Math

Stock Market Math

U.S. stock markets soared Monday, April 17, 2000, as investors jumped into the bargain bin to snap up technology stocks, which were cheapened after a major sell-off the previous week. The Nasdaq jumped 217.87 points to 3,539.16. That's up more than 6 percent, but still more than 29 percent below its March 10 highs, sitting deeply in what is known on Wall Street as bear territory.

While investors go to work capitalizing on recovering prices — many trying to recoup big losses — you will be putting your math skills to work as you try to make sense out of all the charts and numbers.

Fractions and Decimals

Stock quotes are dollar amounts for a single share of the stock. If a stock is currently trading for 19, you can buy one share of the stock for $19 plus the commission on the transaction. Simple math tells you that 100 shares equals $1,900. But stock quotes are often expressed in fractions of a dollar — as small as 1/16 (sometimes called one teenie). How much is 1/16 of one dollar? How much is 5/16? To find the decimal value of 1/16, divide $1.00 by 16. Multiply by 5 to find the decimal value of 5/16.

This presents a bit of a problem for securities brokers and investors. Dollar amounts are usually rounded to the nearest hundredth (cents). To accurately figure sixteenths of a dollar, they need to extend the decimal two more places to a quarter of a cent or 0.0025. That's not much of a difference for one share, but it really adds up when you're buying 100,000 shares.

Answers: 1/16 of $1.00 is $0.0625; 5/16 of $1.00 is $0.3125

Browse to Yahoo! Finance and enter INTC (Intel) in the Get Quotes search box. Click Get Quotes to see the most current price for Intel stock. Look in the Last Trade column of the quote. How much would 50 shares of Intel stock cost if you could buy them at the Last Trade price? Now calculate the Last Trade price for 50 shares of each of the following stocks: DELL, COST, AAPL, AMZN, MSFT.

High/Low

How have the recent dramatic price fluctuations affected individual stocks? Where do they stand with regard to their high and low selling price for the year? Tracking the long-term performance of a stock is one of many clues that help investors decide which stocks to buy.

Return to Yahoo! Finance and open the MSFT quote. Now click the Chart link in the More Info column. The chart shows a graphic of the Microsoft's stock performance over the past year. In the left column, third row down, you will see the 52-week Range. This also the range you see charted below.

How far off is the stock now from its 52-week high? To find out the percentage, divide the High by the Last Trade quote. How many points (dollars) higher is the Last Trade quote from the 52-week low? Find out by subtracting the Low from the Last Trade. Repeat these calculations for AAPL, INTC, NOVL, EBAY, and LGTO.

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