Getting a Piece of the Pie

Providing students with the tools to interpret quantitative data and information they encounter on the Internet or through news sources is an important component to promoting mathematical literacy. I have recently been teaching my students how to read the information found in Google Finance while implementing important concepts in fractions and ratios, as well as scientific notation.

A typical lesson might look like this:

(1) Ask the students about companies they know about, especially related to things they are interested in. Some of my students have picked sporting goods companies (Nike, Reebok, etc.), entertainment companies like Disney, or clothing companies like the Gap. Also ask them about what companies they think might be doing well or not so well in the current financial crisis, and why. Use this information to bring up a few Google Finance summaries of some of these companies.

(2) Given their imaginary bankroll of $10,000, I ask students to decide how much they want to invest in their first company. Using that amount, students can use the share price to determine how many shares they can buy. I then ask them to determine what percentage of the company they now own, given how many shares they have by directing them to the Outstanding Shares entry of the Finance summary. Because that number is very large, I have them compute this percentage without a calculator using scientific notation.

(3) Many students don't realize that the price of a share isn't that important, since different companies are broken up into a different number of shares. This point is well expressed by using Google's stock price vs. a company like Microsoft. Google's price is currently in the high 300's, while Microsoft is just below 20, making it seem like they can buy MORE of Microsoft with the same amount of money. By having them compute the percentage of the company they own for the same amount of money, this fallacy can be debunked, and the idea of market capitalization (i.e. the total value of a company) can be introduced.

(4) In continuing to analyze a particular stock, the idea of positive and negative slope can be introduced in the context of linear regression -- i.e. approximating a trend in a stock price using a line. The slope of that line corresponds to the gain or loss of value of the stock, and can thus help them to understand why we spend so much time discussing the slope. If a stock changes directions many times, this is also an opportunity to introduce how when using polynomials to approximate graphs, the degree of the polynomial determines how many slope changes our approximation can accomodate.