Chapter 1
Lesson 1-1 Business Organization
Check Your Understanding (Example 1)
Subtract Kyle’s investment from the total
investment to get the investment of the other
= 87.5%.
Check Your Understanding (Example 2)
100 = 1200
,
Jillian owns 720 shares of the catering corporation.
Check Your Understanding (Example 3)
The first partner contributed 4x.
Extend Your Understanding (Example 3)
If two partners each own 35%, then together they
own 70% of the business.
Applications
1. Edison is stressing that good ideas are not
enough. A strong work ethic is necessary to
achieve. The word perspiration represents that
effort is required.
2. Set up a proportion.
3
x
3. Set up a proportion.
3
x
4. To own a majority means to own more than half
5. 100% – 28% = 72%
Divide by the remaining six shareholders: 72% ÷
6 = 12%. Each of the other shareholders owns
17 = 51000
$,
Kristen invested $51,000 – $15,000 = $36,000.
6b. 36 000
51000
$,
$, = 100
x
$51,000x = $3,600,000
7a. If the ratio is 1:4:7, then Thea owns 41
=
of
Joe would need to pay Thea $533,333.
7b. Joe owned 1
x = 41.7%
8. 72% = 0.72
9. Yes, if that shareholder has more than 50% of
10. To get the number of shares held by the top
shareholders, multiply x by y.
multiply by 100.
x
y
w100
11c. 1800 000
2 351000
,,
,, = 0.7656(100) = 77%
12. Due to limited liability, the shareholders forfeit $0
13. Since this is a partnership, owners are
personally liable so the amount of the lawsuit
14. Since the amount of the lawsuit, y, is greater
15. Since the business was incorporated, each
partner can only lose their equal share of the
$, , or
x
16b. Yes, 20 000 000 2
=
$, ,
16c. 20 000 000 2
30 000 000 3
=
$, ,
17. The business is worth 9 times the original
x
18a. $100,000 + x + 2x
18b. Since the fourth investor invested as much as
the three others combined, multiply the equation
2($100,000 +
x + 2x) = $1,100,000
18c. 2($100,000 + x + 2x) = $1,100,000
$200,000 + 6x = $1,100,000
Investor 1 = $100,000
Investor 2 =
x = $150,000
Investor 3 = 2x = $300,000
Lesson 1-2 Stock Market Data
Check Your Understanding (Example 1)
Check Your Understanding (Example 2)
Sales in 100s indicates volume.
28,000 × 100 = 2,800,000
Check Your Understanding (Example 3)
Write an equation for the May 12 closing price as
Check Your Understanding (Example 4)
Use the following formula:
Open – Close
Percent Increase 100
Close
=×
Check Your Understanding (Example 5)
May 13 close May 12 close 100
May 12 close
−×
Check Your Understanding (Example 6)
Cell E6 contains the change in closing price from
Applications
1. Both the buyer and the seller think that their
trade has been made at a price which is
success of a stock and “take the money and
run.” Both the buyer and the seller think they
have made a smart choice.
4b. 106,077 × 100 = 10,607,700
4c. 288,012 × 100 = 28,801,200
4d. 332.7 × 100 = 33,270
$1.74 = $30.59.
5b. The last price for Freeport-McMoRan Copper &
Gold Inc on April 22 was $118.65 and the
change was 3.51 from April 21. To get the
closing price on April 21, subtract the increase
= –0.0568 × 100
= –5.7%
118 65 115 14
− × 100
PetroChina Company Ltd’s daily high is
approximately half of the 52-week high.
10. Since the price on April 25 is higher than April
24, the April 25 closing price is 105.22% of the
126 875 108 750
− × 100
12a. Converting a number in 1,000’s to a number in
100s can be done 2 ways. One way is to
12b. H9=1000*G9/100, or H9=10*G9
13a. Multiply the value in Column G by 1,000:
14a. Subtract the change from the current days price
15a. Calculating percent change can be done in two
ways. One way is to subtract the current day’s
15b. E4=(C4–F4)/F4*100 or E4=D4/F4*100
16a. Net change is calculated by subtracting the
Lesson 1-3 Stock Market Data
Charts
Check Your Understanding (Example 1)
Check Your Understanding (Example 2)
On April 28, one share of Ford Motor Company
share of Ford Motor Company opened at
approximately $8.12 per share on that date.
Check Your Understanding (Example 4)
The close was higher than the open. Without any
opening price was the low for the day.
The difference between each day’s high price and
low price are about equivalent.
2. Look for a line segment on the right that is
higher than the line segment on the left. May 1
April 29: approx. $679
April 30: approx. $667
May 1: approx. $651
May 2: approx. $660
4. On April 29 the top of the bar is at approximately
6. On May 2 the line segment on the right is at
7. Subtract the closing on April 29 from the closing
on April 30 to get the net change. Divide the net
8. Subtract the closing on May 1 from the closing
on April 30 to get the net change. Divide the net
0.044 × 100 = 4.4%
9. The top of the volume bar aligns with 40. Since
10. Subtract the April 28 volume from May 2:
11. If the volume numbers had been shown in 100’s,
12.
13.
14a. Look for rectangular regions that are red, which
are April 28 and 30.
14c. Since the bar is red, the closing price is the
14d. The high price is the top of the vertical line,
the highest high price on May 1: $33.45 –
14f. The opening price for the day was close to the
14g. White would replace green and black would
14h. On 4/28, the closing price is just lower than 32.5
and on 4/29, the opening price is just greater
15. In the candlestick chart below, the darker
16.
Lesson 1-4 Simple Moving
Averages
Check Your Understanding (Example 1)
Days 1–5: $55 $60 $62 $48 $40 $53
5
++++ =
++++ =
++++ =
Check Your Understanding (Example 2)
++ =
$35.33, and $36.66.
Extend Your Understanding (Example 2)
In order for the next cycle of 4 consecutive days to
have the same SMA as the last cycle, the number
subtracted (the 4th day’s price) and the number
added (the 8th day’s price) need to be the same.
Check Your Understanding (Example 3)
Since it is a 3-day SMA start in the row where the
3rd price is, D4. The formula is the average of three
consecutive days. In this case, =sum(B2:B4)/3.
Check Your Understanding (Example 4)
Sell; the slow moving graph has overtaken the fast
Applications
2. Days 1–3:
$7.78 $8.08 $7.99 $7.95
3
++ =
The eight consecutive 3-day SMA’s are $7.95,
$9.17.
3. Days 1–5:
$274.72
=
$288.79
=
Days 5–9:
$285.04 $290.80 $296.02 $291.01 $293.41
++++
$291.62
=
The six consecutive 5-day SMA’s are $247.72,
$57.50 $56.97 $56.35 $56.83 $56.91
+++ =
Days 6–9:
$56.97 $56.35 $56.83 $57.16 $56.83
+++ =
$56.35 $56.83 $57.16 $57.18 $56.88
+++ =
5. Days 1–6:
$92.01
=
Days 2–7:
Days 3–8:
$92.45 $91.79 $93.07 $89.70 89.61 $89.51
+++++
Days 4–9:
Days 5–10:
Days 6–11:
Days 7–12:
89.61 $89.51 $90.07 $88.82 $89.93 $88.82
++ + + +
6. Days 1–2:
$101.96 $101.80 $101.88
2
+=
Days 2–3:
Days 3–4:
Days 4–5:
Days 5–6:
$104.94 $105.12
Days 6–7:
Days 7–8:
$105.66 $104.76
$105.39 $105.21
−+=
$105.21 $102.66
22
−+=
Days 9–10:
7. Days 1–3:
$66.21 $65.90 $67.05 $66.39
++ =
Days 3–5: $65.90 $66.80
$66.66 $66.96
−+=
Days 5–7: $67.03 $66.65
$66.83 $66.70
33
−+=
Days 8–10: $66.65 $65.21
$66.12 $65.64
33
−+=
The eight consecutive 3-day SMA’s are $66.39,
8. Days 1–4:
$121.69 $122.85 $120.70 $123.61 $122.21
4
+++=
Days 2–5:
Days 3–6:
Days 5–8:
Days 6–9:
Days 7–10:
The seven consecutive 4-day SMA’s are
9. Days 1–6:
$2.65 $2.63 $2.70 $2.63 $2.50 $2.65 $2.63
+++++ =
10. The formula for 7-day SMA’s will start in the 7th
row. The formula is to add the 7 day’s closing
prices leading up to and including the current
row and dividing the sum by 7.
7-Apr 24.60
10-Apr 23.71
15-Apr 22.80 23.47
18-Apr 25.11 23.57
23-Apr 24.63 24.31
28-Apr 26.81 25.58
1-May 25.99 25.91
2-May 26.39 26.16
5-May 25.75 26.16
11. The formula for 10-day SMA’s will start in the
10th row. The formula is to add the 10 day’s
closing prices leading up to and including the
current row and dividing the sum by 10.
10-Day
4-Apr 19.53
7-Apr 19.23
16-Apr 18.72 18.91
17-Apr 19.05 18.80
25-Apr 19.11 18.97
28-Apr 18.87 19.03
7-May 18.90 19.03
8-May 18.84 19.00
12. The formula for 2-, 3-, and 5-day SMA’s will start
in the 2nd, 3rd, and 5th row respectively. The
formula is to add the 2, 3, or 5 day’s closing
prices leading up to and including the current
row and dividing the sum by 2, 3, or 5
2-Apr 465.70 465.71 457.29
3-Apr 455.12 460.41 462.18
14-Apr 451.66 454.56 459.40 462.04
15-Apr 446.84 449.25 451.98 457.84
23-Apr 546.49 550.75 546.43 525.65
24-Apr 543.04 544.77 548.18 544.35
5-May 594.90 588.10 589.76 580.41
6-May 586.36 590.63 587.52 585.98
13. Crossovers occur at days 4 and 19. On Day 4,
the fast moving average rises above the slow
14. Crossover occurs on Day 9 where the 3-Day
SMA dips below the 5-Day SMA indicating a
rises above the 3-day, signaling a possible sell
trend. Finally, on Day 15, the 10-day SMA
crosses above the 5-Day SMA graph again,
indicating a continuing sell trend.
15. The formula for 2- and 5-day SMA’s will start in
the 2nd and 5th row respectively. The formula is
21-Apr 28.55
22-Apr 28.54 28.55
29-Apr 27.36 26.90 27.19
30-Apr 27.41 27.39 27.06
1-May 26.81 27.11 26.96
Lesson 1-5 Stock Market Ticker
Check Your Understanding (Example 1)
Extend Your Understanding (Example 1)
The original ticker indicates that the previous close
was $0.55 cents higher than the price per share:
$73.72 + $0.55 = $74.27.
If the ticker indicated a price per share of $87.35,
Check Your Understanding (Example 2)
Had the ticker included an upward arrow before the
Check Your Understanding (Example 3)
First determine the previous days close. Since the
Check Your Understanding (Example 4)
The M stands for millions. First multiply to get the
Check Your Understanding (Example 5)
The day’s money flow is the average of the high,