Dow Jones
More Than A
Number
Webquest by Eric Peters
Question: What is the “Dow Jones Industrial Average” and why do we hear about it on the news every day?
Answer: Everyday on the news you hear about the Dow Jones Industrial Average and other
averages like the S&P 500 or The Russel 2000. These are “market averages” designed to tell
us how companies traded on the stock market are doing in general. The Dow Jones Industrial Average is simply
the value of 30 large, industrial stocks that represent a cross-section of the
United States Economy. Big companies
like General Motors, IBM, and ExxonMobil are companies that make up this
index. The S&P 500 is the average
value of 500 different large companies and the Russell 2000 tracks the average
of 2000 smaller companies. The Dow Jones
Industrial Average is nothing magic. A committee at Dow Jones company
has chosen the 30 companies that make up the average and their values are
averaged together by a specific formula. What the average tells us is the
general health of stock prices in the Economy.
If the economy is “doing well”, then the prices of stocks as a group
tend to rise. If it is “doing poorly”,
prices as a group tend to fall. The 30
Dow companies are actively traded on the NYSE (New York Stock Exchange) as
individual companies and as a mutual fund.
Dow Jones the company: Charles Dow and Edward Jones formed Dow Jones
& Company in 1882 at
Calculation of the Dow Jones
Industrial Average: The Dow Jones Industrial
Average, along with the Dow Jones Transportation Average and the Dow Jones
Utilities Average are price weighted rather that market capitalization
weighted. Market Capitalization will be
addressed later in the webquest. Their
component weightings are therefore affected only by the stocks’ prices, in
contrast with other indexes’ weightings that are affected by both price changes
and changes in the number of shares outstanding. When the Dow Jones Averages were initially
created, their values were calculated by simply adding up the component stock’s
prices and dividing by the number of components. Later, the practice of adjusting the divisor
was initiated to smooth out the effects of stock splits and other actions. As
of
The
Dow Jones Industrial Average Index serves as a measure of the entire
What
is the Big Deal?
As an element of Microeconomics, Study of the
various stock markets and how they operate is an important life-time skill that
all students should take part in. One of
the most widely established markets in the NYSE (New York Stock Exchange). Many of the well established companies are
traded on this market, including those companies that make up the Dow Jones
Industrials Index. These “Blue Chip”
companies are household names to many students and investors, but why? What do they do?
Just
about every student enrolled in Senior Economics will have money either
directly or indirectly invested in their future into companies that make up the
DJIA.
Project
1. Through a “pre-drawn” order,
students will select a company from the DJIA that they will research through
the webquest. With 30 companies to
choose from, there should be one for every student and they will be the Resident Expert on that company.
2. The companies
web address and stock ticker symbol (letters that represent the company on the
NYSE Ex. Eastman Kodak is EK) will be provided below. The web pages for these companies are very
impressive and informative.
3. Web Links will also be provided for additional
financial information to the students.
4. The graded portion of the
project will be a Powerpoint Presentation providing answers to questions about
their company that I have previously assembled.
Grading will be up to each individual teacher.
Internet
Information:
The following provides the Dow
Companies Name, Web Address, and Stock Ticker Symbol and companies main logo
Alcoa |
AA |
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AT&T
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T
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American Express |
AXP |
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Boeing |
BA |
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Caterpillar |
CAT |
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Citigroup |
C |
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Coca-Cola |
COKE |
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Du pont |
DD |
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Eastman Kodak |
EK |
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Exxon Mobil |
XOM |
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General Electric |
GE |
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General Motors |
GM |
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Hewlett-Packard |
MWE |
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Home Depot |
HD |
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Honeywell International |
HON |
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Intel |
INTC |
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IBM |
IBM |
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International Paper |
IP |
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J.P. Morgan |
JPM |
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Johnson & Johnson |
JNJ |
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McDonalds |
MCD |
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Merck |
MRK |
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Microsoft |
MSFT |
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3M |
MMM |
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Philip Morris |
MO |
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Procter & Gamble |
PG |
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SBC Communications |
SBC |
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United Technologies |
UTX |
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Wal-Mart Stores |
WMT |
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Walt Disney |
DIS |
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Information that will be provided by the “Company Expert” in their Powerpoint Presentations
1. What is the History of your
company? Provide dates and examples of
important events in their history including how your company was founded.
2. What companies are under the
direction of your company, if any?
3. What does your company
produce, sell, or service?
4. Based on current
information, what is the average daily volume of shares traded for your
company, dividend rate, PE Ratio, Yearly High and Low Price of shares traded.
5. If you purchased 1000 shares
of your company at the past 52 weeks lowest price and sold those shares on any
specific day during this project, what would your capital gains be?
6. What is your companies
“mission, credo, or mission statement?”
7. What is the most recent news
about your company and why is it important to the investor in your company?
8. What are the competitors of
your company or a specific part of your company?
9. What is the industry market
structure that your company competes and what criteria do they meet to be in
that industry market structure?
10. What is the structure of the
companies management?
Ex. Who is the CEO, CFO, and board of directors.
11. Where is the company
head-quartered and do they operate in
12. Does your company have a
business plan for future growth, and if so what do they plan to do?
13. What is your companies record on Philanthropy?
14. Social Responsibility: Is
your company trying to protect the environment and if so, how?
15. Has your company won any
recent awards or had any recent accomplishments?
16. What Career opportunities
exist for people in your company?
Hints: Use as many charts, graphs, pictures as
necessary to support any text in your Powerpoint Presentation. You are the
“Classroom Expert” for your Dow Jones company.
You are basically a spokesperson for your company and your job is to
come across as that in your presentation. The Presentation will take probably
15 minutes and more if thoroughly done. Use
Powerpoint’s features for your advantage.
Grading: Rubric based on Presentation and Peer
Grading will be weighed in as well.