This product is a zip folder containing a 14 slide PowerPoint presentation and a three page printable with thorough key.
Lesson: Stock Crash Math
Unit: The Great Depression
This is a lesson that focuses on the actual practice of buying stock on margin. Buying on margin is considered to be one of the biggest reasons for the Crash of 1929. The premise is that people could buy stock with very little money down because they could borrow the rest from a bank or a broker. This form of credit was readily available during the Roaring 20s.
The lesson consists of a role-play where the student is given some word-problems with some fairly easy math. For example, it starts with a simple stock purchase the regular way without buying on margin.
You have $1,000 and you would like to buy shares of stock in Radio Corporation of America (RCA), which is selling for $250 per share. How many shares could you buy?
Then as the price of the stock moves to $500, how much money would you make? The right column then begins a separate math problem where a neighbor buys the same stock on margin and ends with the person making ten times as much money.
Eventually, the handout allows the students to role-play the actual Crash and how horrible the situation became for those who had to try to sell everything simultaneously. After the math problems the packet ends with a Dow Jones Industrial chart and some cause and effect questions leading towards the banking crisis.
This lesson really helps students understand the dangers and repercussions of what could happen if you buy stock on margin. Moreover, the end of the lesson sets the stage as a perfect bridge into the other causes of the Great Depression. This is one typical secondary class day with a homework assignment or two class periods. It’s a great lesson!