Time To Sell?: An Experiential Learning Approach To Stock Market Decisions Through Interactive Gaming

Abstract

" The primary goal of every rational investor is to optimize operating decisions, within the constraints of information and financial resources. The stock market investor strives to achieve the maximum annually compounded return on investment over time. In addition to those elements of complexity which confront the investor under conditions of uncertainty, the stock investor faces decisions which are further complicated by the nature of the stock market itself. Since stock price appreciation is possible, and expected, determinations of the price per share necessary to achieve the maximum rate of return is a basic factor which must be dealt with in a systematic and timely manner. Further complexity arises from the fact that the investor’s rate of return must be adjusted for annual dividend income and annual interest charges, especially if part of the purchase is financed on margin. Selection of a point of sale of the stock may be considered critical to attainment of the investor’s target rate of return. This program is designed to provide prices at which the investor must sell, at anytime during ownership, in order to achieve the specified rate of return objective. Since many business students, and especially those in finance, accounting, and economics, have strong interests in stock market decisions, this program provides additional incentive for learning the complexities of the hold or sell decision. This experiential approach assists the students in becoming both technically proficient in the use of interactive terminals, and at the same time it builds a sound theoretical base in a complex area, but one which should prove of enduring value as they apply and generalize their learning to the practice of management. This program is the basic building block for several possible growth applications and as such, is designed to provide the student with a learning unit which can be mastered without engendering the aversion which a more complex program may have on the student. "