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Biblioteka

3.10 Smart Investing: Regulations & Returns

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Posljednje ažuriranje 9 months ago
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Napomena autora:
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Learning Objectives

Students will be able to:

  • Explain the role of financial regulations and regulatory bodies, such as the SEC and FINRA

  • Understand what insider trading is, why it is illegal, and how it can harm investment markets

  • Identify why it’s important to have access to full and accurate information about potential investments

  • Explain how short and long-term capital gains tax may impact an investor’s decisions and rate of returns

  • Understand the difference between nominal and real rate of return on investments

National Standards for Personal Financial Education

 Investing

  • 8a: Compare tax rates paid on interest income versus short term and long-term capital gains

  • 4b: Explain the relationship between nominal and real returns

  • 12a: Explain the role of federal regulators in financial markets

  • 12b: Discuss why insider trading is illegal and harmful to investment markets

  • 12c: Explain the importance of having access to full and accurate information about potential investments

Learning Objectives

Students will be able to:

  • Explain the role of financial regulations and regulatory bodies, such as the SEC and FINRA

  • Understand what insider trading is, why it is illegal, and how it can harm investment markets

  • Identify why it’s important to have access to full and accurate information about potential investments

  • Explain how short and long-term capital gains tax may impact an investor’s decisions and rate of returns

  • Understand the difference between nominal and real rate of return on investments

National Standards for Personal Financial Education

 Investing

  • 8a: Compare tax rates paid on interest income versus short term and long-term capital gains

  • 4b: Explain the relationship between nominal and real returns

  • 12a: Explain the role of federal regulators in financial markets

  • 12b: Discuss why insider trading is illegal and harmful to investment markets

  • 12c: Explain the importance of having access to full and accurate information about potential investments

QUESTION OF THE DAY: What major event caused the federal government to start regulating the stock market? 📷5 min

Answer the question on the first slide in the space below. Then, compare your answer to the answer on the second slide. Finally, follow your teacher’s directions on how to answer the follow-up questions on the last slide.

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What major event caused the federal government to start regulating the stock market?

INFOGRAPHIC: A Brief History of Regulation

VIDEO: The Securities and Exchange Commission (SEC) vs. Financial Industry Regulatory Authority (FINRA) 📷6 min

The role of federal regulation in the financial markets has a history that dates back to almost 100 years. Read through this infographic that summarizes this history. Then, watch the video to learn more about the role of two important regulatory agencies. Finally, answer the questions.

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What is the purpose of the SEC and FINRA?

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One of the things the Securities Exchange Act of 1934 did was to create reporting and financial disclosure requirements for companies listed on the stock exchange. Why do you think this was an important piece of the legislation?

VIDEO: What is Insider Trading?

ARTICLE: What is Insider Trading and When Is It Legal? 📷8 min

Another thing the Securities Exchange Act of 1934 did was prohibit insider trading. Let’s explore what this is in more detail. Watch this YouTube short and then read the article until you reach the section Legal vs. Illegal Insider Trading. Then, answer the questions.

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In your own words, explain how illegal insider trading can give someone an unfair advantage.

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Most famous examples of insider trading involve CEOs, Directors, and other senior-level roles of corporations. Why do you think it’s still important for the average investor to be aware of insider trading practices?

ACTIVITY: PLAY: Insider Trading Shenanigans

Put your knowledge of insider trading to the test in this activity where you’ll have to decide whether the actions taken are legal or if they’re examples of illegal insider trading. Follow your teacher’s directions to complete this activity.

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What did you learn from this activity?

EDPUZZLE: Capital Gains Taxes Explained 📷10 min

Now that we've covered the essential rules that keep the stock market fair and transparent, let's consider another way that the government plays a role in the stock market: collecting taxes on investment profits. It's the government's way of getting a share when our investments do well. Watch this video and follow your teacher's directions to answer the questions either in your student activity packet or within the EdPuzzle itself.

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True or False: The price of a stock you invested in has gone up. You haven't sold the stock, but you should expect to be taxed on the money you have gained.

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How might short and long-term capital gains taxes impact an investor’s decisions?

ARTICLE: Real vs. Nominal Interest Rates 📷7 min

Another factor that can impact your investment returns is inflation. Let’s take a look at the difference between nominal and real interest rates in this article. First, read the section titled Real vs. Nominal Interest Rates. In the second section (What Real & Nominal Interest Rates Mean for You) read only the For Investors section. Finally, answer the questions below.

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Which of the following is an example of insider trading?

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What is one difference between short and long-term capital gains tax?

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The real rate of return on an investment would allow an investor to…

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What types of investments might capital gains tax apply to? (Select all that apply)

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Which of the following are true about short-term capital gains tax? (Select 2 right answers)

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Long-term capital gains tax is... (Select 2 right answers)