Podcast

SCRIPT for SKIT- DUE April 4th

Joseph: Ello Govna, my name is Sir Donald Winehouse. I'm looking for a bank.

Amanda: Well, you've come to the right place.

Joseph: Oh. How spiffy.

Amanda: How may I help you?

Joseph: Well, I just got to America from across the pond and I don't know how the bank system works here.

Amanda: Alright. So, in the U.S., banking is all about trust. You are trusting your bank to hold on to your money to keep it safe. The banks pay interest on some of our accounts. It's better to have money in a bank than in our house. The banks keep your money safe because they have security, the bank has people that make sure the bank is abiding by the bank laws and you are also protected by insurance. Writing checks and using credit cards are so simple and hassle free. You have to choose a bank wisely because---

Joseph: But how does it work?

Amanda: The banks makes most of their money from interest and from using the money you put into the bank to give away to other people. Its a lending process. A lot of give and take. People borrow money. This is called a loan. If they want to buy something, like a house, a car, or to pay for college, they tell the bank what they want to buy, and the bank gives them the sum of money they need. But, it's not yours to keep when you borrow money from the bank. In one way or another, you have to pay the bank back with interest. the interest rate will be a bit higher if you borrow money than when you deposit money. So, if your interest is 6% when you deposit, it'll be 10% when you borrow. This 4% difference is how the bank makes money.

Joseph: Uh cronkers, this is very interesting.

Amanda: Oh and The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation.The FDIC provides deposit insurance which currently guarantees checking and savings deposits in member banks up to $100,000 per depositor.

Joseph: What if I don't like any banks in the United States? Can't I start my own bank. How do I go about doing so?

Amanda: Listen, I don't have time to be your business partner. Telling you how to start your own bank. You can't just rent a building, put Winehouse Bank on the top, take peoples money and start giving out toasters. It's more complicated than that.

Joseph: Please help me. These yankees doodles don't know how to run a decent banking system.

Amanda: Look mister. Do you have 20 million dollars just laying around? That about how much it costs to start a bank.

Joseph: Actually, I have one billion. I bathe in money. Rather my toothbrush is made out of gold.

Amanda: Okay. Just come up with, oh, say $1 million or so from previous bank to cover start-up costs. Then find some experienced bankers who can survive an FBI background check and take them away from their comfortable jobs for a risky new adventure in a fresh bank.

Joseph: I have friends in London. I can bring them over to help me start. What's next?

Amanda: So, then of course, you’ll need to round up another $10 million to $20 million from investors in start-up capital. Simple, huh? Well, actually, yes.

Joseph: Umm, What's start up-capital?

Amanda: Ughhh... Okay, start-up capital is when you begin a new business and you need money to get started. You need money to buy or rent the space for your business, furniture, equipment, employees, and such.

Joseph: Ahh. So, when I start my bank, will you come work for me?

Amanda: You're missing the point. Forget it. Next, you'll need to do is have a bank regulation that sets the minimum reserves each bank must hold to customer deposits and notes called "Reserve Requirement". Also, what will your bank offer?

Joseph: I think I will offer drinks to minors when they deposit money in my bank. [smile]

Amanda: No no no. You cannot do that Mr. Winehouse.

Joseph: Sir Winehouse.

Amanda: Ok. SIR Winehouse. Banks are more than just a safe place to keep your money. They give benefits to their customers, both personal and commercial. Keeping customers satisfied means they are less likely to move their money to another bank. Banks have many techniques and services to reach this goal. Most banks offer free cash withdrawals and checks for life. Others offer multiple ways for customers to access and manage their accounts. Many banks and their branch locations have lobby hours where people can go inside the bank and talk to tellers and other bank representatives in person. This personal approach is very effective as people like to have a face on their banks. In addition, many bank locations have drive up services. People can perform almost all banking transactions from their automobile, saving time and effort. Telephone call centers have been set up where you can access most information over the telephone anytime you wish using their computer system.

Joseph: Interesting. You know for being a little feisty firecracker you sure have a lot stored in the noggin.

Amanda: Mhmm You'd be flabbergasted at all the knowledge stored in my "noggin." Anything else I can help you with Mr.--- Sir Winehouse?

Joseph: Well I keep hearing this thing about a Federal Reserve Bank. Please explain pretty lad.

Amanda: ANOTHER ONE? I was just kidding. Okay, The Federal Reserve Bank is the central bank in the USA and it has the responsibility to foster a sound banking system and a healthy economy. This bank is a bank for other banks. In addition it is a bank for the government. It was created to provide out nation with a safer and more stable financial system.

Joseph: Well this was a fun learning experience. Tea & Biscuits tonight?

Amanda: I have a boyfriend.

Joseph: By the name of?

Amanda: Ray Ray.

Joseph: Well Ray Ray is a lucky man. I will give you a call when my banking system is open and you will be more than a bank teller.

Amanda: HAYYYYYYYYYYYYYYYYYYYYYYYYYYY

Joseph: Until Then, Bon Jour.

Amanda: Dueces.

Fed helps market go up

The DOW went up over 400 points on Tuesday. Why? What did The Federal Reserve do to encourage the market to go up?

Compound Interest and the Rule of 72

Explain, in your own words the concept of 'compound interest' and 'the rule of 72'. Use examples.
Also using the Compound Interest Calculator - find out how much money you would have if you saved $1 per day ($365 per year) from age 18 to 65 (retirement age). Use 8% interest in your calculation; which is about how much the overall US stock market goes up each year.

US Trade Deficit

Explain what the US Trade Deficit is.
- The U.S. Trade Deficit is basically a calculation of the difference between the good and services we purchase and sell from foreigners.

Why did it go down in December 2007?
-The US Trade Deficit went down in December 2007 because the import exceeded the export by $58.76 billion.

What does the value of the US dollar have to do with the trade deficit falling?
- Every time America's economy is less than what was spent, the value of the American dollar drops.

Why do you think that a large trade deficit is bad for the economy? In other words: why is it bad to import more goods than you export?
- A large deficit is bad for the economy because we are not making money if the number of imports exceeds the number of exports.

Opportunity Costs

In your own words, explain what economists mean when they talk about opportunity costs. What are opportunity costs? Give some examples. And give some examples from your own life.

Opportunity costs is the outcome we end up with when giving up something to gain something bigger. Economists talk about opportunity costs because they invest their money hoping to make a profit out of it. Many teenagers start exercising and eating healthy when they want that perfect body. They give up fast food and junk food hoping to gain the ideal body. I also experience opportunity costs in my own life. I would drink a bottle of water every night before I went to bed, therefore causing my bladder to be attended to and disturbing my sleep. I stopped drinking water before I went to bed and with that I gained a good sleep. With my good sleep I am able to become a jolly person and spread holiday cheer.

My Investment Strategy

Students will have two class periods to research their initial 5 stock picks and write a blog entry explaining their initial investment strategy. Why did you pick the stocks that you did?

I bought the five following companies:
American Eagle: I bought this stock because I've seen their clothes being bought a lot by young America. So I figured it would be good to invest on this company.

The Hershey Company: This stock was purchased because Valentine's Day is this week and everyone knows getting chocolate for your other half is what you do. So i figured the stock would go up as many whipped men went to get their women chocolate.

Home Depot Inc: America loves building stuff and Home Depot is the place they turn to when doing so.

Sonic Company: This is middle America's McDonald. They love the Sonic and as long as they make money, I love 'em too.

Best Buy: Although the music industry is going down, technological gadgets are at an all time high. And it doesn't hurt that I love this store.

America State's Water Co: People love water. Water loves People. People + Water = Moneyyy.

Intoduction to the Stock Market

• What exactly is a stock and why do companies sell stock in the first place?

- A stock is a part ownership of a company. They sell stocks to make more money.

• What is the difference between a public and a private company?

- A private company approaches you or invites you to buy a stock. A public company allows anyone in the public to purchase a stock.

• What is the Dow Jones Industrial Average?

- The Dow Jones Industrial Average simple average value of thirty large industrial stocks.

• What is a blue chip stock?

- A blue chip stock is stock of a well established and financially sound company that has demonstrated its ability to pay dividends in good and bad times.

• What is the New York Stock Exchange and the NASDAQ?

- The New York Stock Exchange is the largest stock exchange in the world. NASDAQ is the largest electronic screen-based equity securities trading market.

• What is a mutual fund?

- A mutual fund is a financial intermediary which allows a group of investors to pool their money together with a predetermined investment objective.

• What are some of the biggest companies on the stock market, how much is their stock?

- Microsoft ($28.12), Google (504.14), Apple ($122.14) , etc...

• What is the PE ratio of a stock?

-It's the ratio of a company's share price to its pre-sharing earnings.

• What is a stock dividend?

-It's a dividend paid as additional shares of stock rather than money.