## Dr. Sarah's Lab 3 - Stock Market and Homer Tax

NAME_________________________________ Circle Class   9:30 or 11:00
Purpose: To learn about the stock market and taxes, learn about advance searches on the web, and transition from Financial Mathematics to Statistics, our next segment.
HOMEWORK DUE AT THE BEGINNING OF LAB: Open up a web browser and go to the main class web page
http://www.mathsci.appstate.edu/~sjg/class/1010
and then click on this stock market link.

### Finding Stocks with Appalachian in the Name

There is a lot of information available on the web, and we will learn effective web searching techniques in order to satisfy part of the computer designator on the course. These effective web searching techniques will be extremely important and useful in and outside this course, so be sure that you understand them.

Type in or click on http://finance.yahoo.com/l (that last letter is the letter "l" not the number 1) Type Appalachian and then hit Search so that yahoo can return stocks which have Appalachian in the name. Click on AJA (Appalachian Power Company). Scroll down. While there is some information listed, there is no profile which describes the company.
To find out more info, type in or click on http://www.google.com Under Search for: Type in the following exactly as you see it:
Appalachian
• How many web pages of links does this search find? (Look at the part that says something similar to Results 1-10 of about ___ and copy down the number to the right of "about".)

This is too many pages, many not relevant, and so scroll down to the bottom to the Next Search.
Now search with:
+"Appalachian Power Company"     +AJA
Quotes tell the search engine to find pages with that phrase in it, while + is used to tell it to find that word in it. The + goes just before the work and there is a space between one word or phrase and the next + Hit the Search Button.
• How many documents did we find matching our query?

Notice that changing the words made a big difference in our searches. This is too few pages, which contain very little actual info in them.
Next search with:
+"Appalachian Power"     +AJA
(notice that I took off the word "company")
• How many web pages does this search bring up now?

• Click on the link that says
Gateway to Investor Info Online - Quantum Investment Service
... NYSE. AJA, Appalachian Power Co. 8.00% Jr Debs, NYSE.
APJ, Appalachian Power Co. 8.25% Jr Debs, NYSE. AKK, ...
• Click on the Search "square" on the left
• Type in AJA and search for it from the middle of the page
• Click on the Company's Online Profile link at the top of the page.
• Write down the description of "about AEP". Notice that this abbreviation is different than the stock market abbreviation. This happens sometimes, which makes searching more challenging.

The point of this exercise is to show that a small difference in wording can make a big difference in searching, to show that sometimes creative searching is needed to find reasonable info on the web, and to give you the tools needed to do advanced searches on your own. You are responsible for learning the advanced searching techniques.

### Finding a Stock to "Buy" and Track

Search for 5 stocks that you are interested in "buying" and tracking. You must pick stocks that are actively traded day-to-day, something other than NITE (which I will track) and it must be a stock with a name containing 1,2, 3 or 4 letters only (ie A, AB, ABC, or ABCD). Something.blah is NOT ALLOWED, and neither are longer names nor names containing symbols other than letters. Here are a couple of other places to look for stocks
finance.yahoo.com/l to search for stocks with certain names (note that the search features are not very user friendly)    (that last letter is the letter "l" not the number 1)
www.google.com You could search for +"stock symbol" +"COMPANY NAME", where COMPANY NAME is the name of the company that you are interested in.
www.stockmaster.com
finance.yahoo.com
• What are your 5 stock symbols names - the 4 or less letters - AND the names of the companies?

• Skim pages 121-128 in the How Do You Know? book to gain some familiarity with personal investments and stock information.

• We have a lot to accomplish in lab on Monday. Especially if you work slowly in lab, you may want to begin or even finish the web reading - intro to the market (see the link below) - for homework.
END OF THE HOMEWORK
BEGINNING OF LAB WORK
• In lab, From INTERNET EXPLORER, click on this lab from the main class web page. Recall that underlined links can be accessed by clicking on them on the web, and that "Back" will take you back to this web page.
• Skim through this web reading - intro to the market

### Total "Purchase" Price

On a SEPARATE PIECE OF PAPER, choose your favorite stock symbol from your homework. Then answer the following questions on that other piece of paper.
• What is your stock symbols name?

• What does this symbol stand for?

Go to finance.yahoo.com, and enter your symbol in and then hit the "Get Quotes" key. Then click on "Chart", which is found under More Info. In the larger table of the stock below the picture, you may see Bid and Ask. Bid is the selling price, and Ask is the asking price that you must purchase at. The Ask price (purchase price) is higher than the Bid price (selling price). This makes sense since, for example, farmers sell their products for much less money than we pay for the products because distributors earn the difference. The stock market works the same way.
• What is your Ask price? If you don't see an Ask price then follow these directions: (If you have your Ask price listed then go to the next bolded "dot".) Note that if the market is closed, or if your stock does not have 4 letters, then you may see n/a next to bid and ask. Each stock does have bid/ask prices, but only the Nasdaq stocks are publicly available (you could get the others by having an account at e-trade, or by asking a stock broker, but that is too complicated for now.)
So, ONLY if you don't already have an Ask price, then take the Last Trade price and write that down here.
• Note that the Ask price is a price per share. We will "buy" 100 shares. But this isn't the total cost, since we must also pay a commission fee. The following is from e-trade.
Nasdaq (4 letter name): 19.95                    Other: 1, 2 or 3 letter name: 14.95
You pay these fees each time you buy or sell. They may seem high, but standard commission fees were a couple of hundred dollars before the (relatively recent) advent of internet trading sites.
• What is the total cost of purchasing your stock ( Ask price x 100 + commission fee)? SHOW WORK!

• Show me your correct work. First come-first served. Ie - the first person who correctly does this and gets approved by me gets to track that stock. Everyone in the class must have a different stock to track. Once Dr. Sarah has approved your choice and math, transfer the information from your piece of paper to this sheet and then continue.

### Getting Historical Data from Yahoo and Converting it to an Excel Chart Follow Carefully!

Finding the Data Open up a new browser (under File release on New Window)in Internet Explorer and type in
http://chart.yahoo.com/d?s=nite
BUT replace nite with your stock symbol (the 1,2 3, or 4 letters).
• What is the Start Date?                           What is the End Date?

Scroll down to the bottom and click on the link Download Spreadsheet Format Notice that commas separate the different data points. Excel only recognizes tabs as separators, so we are going (see below) to replace each comma with a tab before we put it in Excel.
Under Edit, release on Select All, then under Edit release on Copy.

Changing the Data In Word so that Excel Can Read It
Open up Word, and under Edit, release on Paste.
In Word, under Edit, release on Replace
Next to Find what, type    ,           (We type a comma since we want to replace that with tabs.)
Next to Replace with, type    ^t           (^t is Word's symbol for a tab.)
Hit Replace All, then Ok. Close the Replace box.
Under Edit, release on Select All. You will see that all of the data is now highlighted.
Then go back under edit and release on copy.
Under File, release on quit to quit Word (do not save the Word file).

Working With the Data in Excel to Create a Chart
Open up Excel and under Edit, release on paste.
Notice that the Date will be in the first column, Open price in the 2nd, High price in the 3rd, Low price in the fourth, Close price in the fifth, and Volume in the sixth.
If you see ##### or something like 7E+05 anywhere, that just means that Excel does not have enough room to display the entry. Make the column wider by going to the top right of the column, clicking when you see a small letter t with the horizontal part of the t actually as arrowheads, and holding down as you make the column bigger by pulling it to the right. You will probably need to make columns B and F wider.

If row 1 is a blank row, and the words "date, volume,..." don't begin until row 2, then click on the gray 1 at the left of the row and then under edit release on delete.

Whenever we are working with data, we first want to put it in increasing order.
Notice that our data is in decreasing order, as the date goes from the most recent to the least recent.
Click on A1. Click on the Sort Ascending icon in Word
Notice that now the date is in increasing order.
We want to change one more thing before we create an Excel graph.
Click on B1
Under Insert, release on Columns.
Now there is an empty column between date and open.
Click on G (which is now where the Volume is located)
Under Edit release on Cut
Click on B (the empty column)
Under Edit release on Paste
Notice that now our columns look like Date-Volume-Open - High -Low - Close

Saving Your File Save your excel document into the public folder/save files here folder as
yourfirstnameyourstocksymbol.xls
for example drsarahnite.xls

To create our Excel graph
Click on B
Click on the key on the keyboard that has an apple with a bite taken out of it and hold this key down.
Continue to hold the apple key down as you click on C then D then E then F.
Then columns B thru F will all be selected.
Under Insert, release on Chart
Scroll down to stock and click on it
Under Chart sub-type, the bottom right picture should be highlighted (Volume-Open-high-low-close)
Press and hold to view a sample to ensure that you see something like this NITE Excel graph link
Click on Next
Click on Next a second time
For example NITE - Dr. Sarah
Then click on Finish.

Your excel document with the picture should look something like this link, although the dates, data and picture itself will be for your stock.
Have Dr. Sarah check that it is correct before you print and send it to yourself on campus pipeline.
Click on the graph (it will have little black boxes spaced around the edges when you do this) and then print a copy.

Send yourself and Dr. Sarah a copy on campus pipeline
Go to campus pipeline
Click on e-mail
Click on Compose Message
In the To: field, type in your e-mail address (example sg23014). If you also use the vax e-mail system you will need to add @cp.appstate.edu to your e-mail
In the Cc: field, type in my e-mail address greenwaldsj@cp.appstate.edu
In the subject field type in your first name and your stock symbol (example Dr. Sarah - NITE)
Scroll down and click on attach
Click on browse, and look in the public folder on the desktop for your file (example drsarahnite.xls) and click on open
Click on Attach
Once the file has been added, click on OK
Click on Send. Click on Ok.
Click on Get Mail.
You will know if you have been successful if you see a red paperclip next to the message.
You will use this again in a future lab, so do not delete it from your e-mail.

### 2 Web Graphs that show that different representations of similar data can be used to illustrate conflicting viewpoints.

• Skim through Dr. Sarah's NITE graphs web page again - be sure to read the conclusion at the bottom of the second graph too!
• Look for 2 graphs from finance.yahoo.com which chart your stocks progress that show that different representations of similar data can be used to illustrate conflicting viewpoints. From finance.yahoo.com, enter in your symbol, scroll down and click on chart, and then change the range to look at different views (1d means 1 day, 5y means 5 years,...). Once you have chosen these two graphs with conflicting viewpoints, sketch the general shape and discuss them below.
• What is the time frame of your 1st graph, the general sketch, and what does it show?

• WORTH MORE What is the time frame of your second graph, the general sketch, and what conflicting viewpoint does it show?

## Dr. Sarah's Homer Tax Lab

 Homer realizing that he has a "to-do" pile with tax info on top. Homer frantically trying to do his taxes Homer throwing his tax return into the closing post office doors. Homer being hauled off by the IRS for a severe audit.
Goals of this lab: Fill out a tax return, learn about tax consequences and do advanced searches on the web. There is a ton of information available on the web - one of the most useful things you will learn in lab (in order to satisfy the computer designator) will be how to effectively search for information.
While the Simpsons are humorous, we only use them in class when they can help us learn mathematics or serve some other important course goal. In this case, we use the Simpsons to learn about advanced searching techniques on the web, and to lighten up the tax return process! You will be responsible for advanced web searching techniques. Also, be careful to answer all questions beginning with a bold dot and to follow directions very carefully. We'll begin by watching Homer get into trouble when filling out a false tax return in the Trouble with Trillions 5F14 (4/5/98). If you are waiting for us to do this together, continue on ahead.

To fill out a real tax return for him, we need a copy of one of his paychecks that includes his gross pay and his net pay.
• From www.google.com, use effective searching techniques learned in the stock market intro hw to try and find a web page containing Homer's full paycheck info. Recall that an effective search for the homework was
+"Appalachian Power"   +AJA
where quotes tell the search engine to find pages with that phrase in it, while +word is used to tell it to find that word in it. Some additional suggestions:
1. Note that you may want
+Simpson*
as one of your searching words. I recommend the * after Simpson so that it will return pages with Simpson, Simpsons, or Simpson's in them. I.e. Simpson* in a search directs the engine to find pages with anything after Simpson.
2. Note that if you search with
+Homer   +Simpson*
then you come up with way too many web page links to click on, so you need more effective searching. The point of you searching yourself instead of having me just tell you is for you to improve your web searching skills (which will only happen with lots of practice for different searches).
3. Once you have found promising website links, then you can click on a link to go to that page. It would take a long time if we had to read through entire web pages to find info we want. There is a better way:
Searching within a web page Under EDIT, go to FIND..., type in one word you want to find in a web page.
Searching within an adobe acrobat .pdf file Just above the page itself, look for the BINOCULARS, and click on them. Then type in the word you want to find in the page (for example, paycheck or gross pay) and then click on FIND.
• Write down Homer's complete paycheck information (this must include gross and net pay, and withholding/tax information).

• Write down the web address of the web page that contained Homer's paycheck.

• Write down the exact searching words (+blah +"something else"...) that enabled you to find the web page by searching in www.google.com

• Write down the word that you used to find the paycheck within the web page or adobe file (#3 above).

### Tax Return

You may have heard about Bush's tax cuts and the possible effects on the economy. Your taxable income determines the percentage that you are taxed at. The first part of everyone's taxable income is taxed at the lowest rate, and portions above a cutoff amount are taxed at higher rates. For tax years beginning in 2001, the 28%, 31%, 36%, and 39.6% graduated income tax rates have been reduced to 27.5%, 30.5%, 35.5%, and 39.1%, respectively. A portion of your income that would be subject to the 15% tax rate is reduced to 10%. We are going to fill out a tax return for Homer.

The government estimates the average amount of deductions (income that is not taxable) for each class below and calls this average the standard deduction. We want the highest possible deduction since this gets subtracted off of our pay before we pay taxes (and we want to pay the least possible taxes). For 2001, the standard deductions are
 Single: \$4550.00 Married filing jointly: \$7600.00 Head of Household: \$6650.00 Married filing separately: \$3800.00
• Notice that Married filling joint return is the largest deduction that applies to Homer, so we choose that one. I have filled in the first part of the tax return for you and have checked the "Married filing joint return" box. The amount the taxpayer takes as their deduction is the larger of the largest applicable standard deduction (above) OR the exact amount of tax deductible purchases made over the year (itemized deduction - for example, state and local taxes, interest paid on a house, gifts to charity, ...) in order to pay the least amount in taxes. We will itemize Homer's deductions and see whether he should itemize or take a standard deduction. Then we will fill out his taxes. Some definitions:
Wages, tips, and other compensation
:Total gross earnings after pretax deductions (i.e. pretax retirement contributions, pretax health insurance, etc...), but BEFORE federal tax, FICA, local taxes...
Social Security Wages
: Wages used to compute social security withholdings. Total gross earnings before pretax deductions.
FICA
: Federal mandated social security and Medicare deductions. These may or may not be broken down separately on a paycheck.
Note that you have Homer's Weekly Paycheck, so you must figure out the YEARLY info (52 weeks in a year) in order to get necessary info to do Homer's taxes.
• Compute Homer's YEARLY (52 weeks) Itemized Deductions: Below is an abbreviated version of Schedule A-Itemized Deductions. Fill in the yearly state and local taxes and SHOW WORK.
 Taxes Homer Paid Enter state and all local taxes Interest Homer Paid Enter home mortgage interest (if any) 0 - I can't find this info for Homer, so we must enter 0. Gifts to Charity Enter gifts by cash or check (if any) 0 TOTAL DEDUCTIONS ADD ALL ENTRIES
• Recall that we use the largest deduction in order to pay the least amount in taxes. Should we use the standard deduction or itemized deduction for Homer? What is this amount?

• Do this for exploration and deep understanding (but do not use it for Homer's taxes): We don't have the home mortgage interest that Homer paid, so we must enter in 0 in the above for that amount. But, for deep exploration, let's see what would have happened if the year's mortgage interest was - around \$6500 (similar to Dr. Sarah's condo first year total interest, but larger since Homer has a larger house). In this case would the standard deduction or itemized deduction be larger? Show work.

• Start filling out Homer's tax return on the tax return sheet I handed out by following the directions below:
Enter Homer's YEARLY GROSS Pay on line 7, 22, 33 and 34 (there are 52 weeks in a year). The rest of the lines don't apply to Homer, so you can leave them blank.
Check to see that row 34 has 24949.60
Enter Homer's standard or itemized deduction from our work above on line 36. Fill in lines 37, 38 (read the instructions carefully!), and 39.

• COMPUTE Homer's TAX: Enter Homer's taxable income from line 39 here:____________
We can see that this is very small! This puts him into the lowest tax bracket. The lowest tax bracket used to be 15%, but now it is taxed at 10%. Hence, Homer's total tax is 10% of his taxable income.
• Homer's total tax is: ___________________________
Enter Homer's total tax on line 40, line 52, and also on line 58.
Write the YEARLY Federal tax (52 weeks) (do not include FICA, which is not tax deductible) withheld from Homer's paycheck on lines 59 and 66, then determine lines 67 and 67a. Sign the tax return.
• Does Homer pay additional tax money or get a refund? How much?

• The following is worth much more than the other questions: Given that Homer was audited in the episode that we watched, what advice do you have for Homer now that you have filled out his tax return? Relate your advice to the episode. First summarize what you saw in the episode relevant to his tax return, then explain how you obtained data about him, explain how you filled out the tax return (you may refer to these sheets) and then give him advice:

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