Inside Multimedia 1995 December/IMM1295.ISO/demos/capdemo/tutorial/t_stock.tut

Text File | 1995-08-21 | 11KB | 298 lines

Most people agree that stock is an indispensable part of
capitalism. In the game, the stock market lets you do most things
that are allowed in a real stock market. Apart from common stock
buying and selling, you can tender offers, issue new shares,
pay dividends, and set up takeovers and mergers.

In this tutorial, the following hot keys are available:

[Esc]              - Quit the tutorial.
[Back Space] - Go back one tutorial step.

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openmenu : 3, 5
First, you need a basic understanding of stock. Let's begin with
the corporate detail report.

runmenu : 3, 5

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mouse : left single
The corporate detail report has more than a dozen sections, each
with a different topic. Click here to open the "Stock"
section.

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The stock report has two sections. The first section lists the
shareholders of the corporation and shows their shares in a
pie chart.

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The second section of the stock report displays the stocks that
the current corporation owns. Note that a corporation can own the
stocks of other corporations.

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mouse : left single
While this report is useful, it doesn't show the most basic
information about a stock, such as the stock price. This
information is shown in the "Overview" section. Click here.

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The stock overview section contains information about the
corporation's stock. The terms are explained one by one.

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This is the current stock price of the corporation, which is
determined by the market.

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The equity per share is calculated by dividing the amount of the
shareholders' equity in the corporation by the total number of
outstanding shares of the corporation.

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The earnings per share is determined by dividing the amount of
the corporation's annual operating profit by the total number of
outstanding shares of the corporation.

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The Price/Earning ratio is calculated by dividing the stock
price by the earnings per share.

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The dividend yield is a percentage calculated by dividing the
dividend by the stock price. Dividends are the distribution of a
company's earnings to stockholders.

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The total return to shareholders is a percentage calculated by
dividing the total amount of return on one share over the past
365 days by the stock price. The return includes the dividend
received and profit gained from the rise of the stock price.

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This graph shows the stock price of a corporation over the past
30 months.

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mouse : left single
As its name "report" implies, it only shows information. To
invest in stocks, go to the "Stock Market" either by selecting
"Stock Market" in the "Action" column of the game menu or, more
conveniently, by clicking here.

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mouse : left single
In the game, you can buy stocks in person or via a corporation
that is under your control. Now click here to enable your
corporation to invest in stocks.

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Move your focus to the upper left section of the window,
which has a stock browser showing all stocks available in the
market.

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You can see the percentage of stock that your corporation owns by
looking at the "Owned%" column.

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The "Stock Value" column lists the total value of stock owned by
your corporation.

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mouse : left single
Click here to highlight a stock.

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Once a stock is selected, the shareholders of the stock are
listed here.

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In addition, you find the details about the highlighted stock in
this area. The terms used here were introduced in the corporate
detail report.

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Below the area is a graph showing the stock price over a specific
period which can be past 30 days, past 30 months, or past 30
years. Select the period by clicking any of the three buttons
below the graph.

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Now it's time to buy some stocks. This formula shows the amount
of cash your corporation need to pay for the stock, which is
calculated by multiplying the total no. of outstanding by the
percentage of stock to buy and finally multiplying the result by
the stock price.

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You can set the percentage of stock you want to buy. When a stock
is highlighted, this percentage is automatically set to the
maximum percentage you can buy. Note that the maximum percentage
of stock you can buy from or sell to the public shareholders each
time is 5%, a limit that the public shareholders can accept each
time.

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mouse : left single
Click here to buy the stock from the public shareholders.

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Once the transaction is complete, the data here is updated,
showing the percentage of stock your corporation owns now.

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Your corporation is also included as one of the shareholders in
the shareholder list.

Besides buying stocks of other corporation, your corporation can
also buy back its own stock. The shares bought are taken out of
circulation, therefore shrinking the number of outstanding
shares. This can have a positive effect on earnings per share,
which in turn can have a positive effect on the stock price.

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mouse : left single
To have your corporation buy back its own stock, first click here
to select your corporation's stock.

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mouse : left single
Now, click here to buy back 5% of the stock.

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Note that the total number of outstanding shares of your
corporation is reduced.

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Due to reduction of the total number of shares, the onwership
percentage of the non-public shareholders increases. This action
can strengthen the ownership of existing shareholders in the
corporation and reduce the risk of a hostile takeover.

Note that when you buy or sell stocks, the transactions are
always made with the public shareholders. If all shares of the
stock that you want are in the hands of non-public shareholders,
you may have to make a tender offer to the shareholders.

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A tender offer is an offer to buy shares of a corporation, usually
at a price in excess of market. You may find a button labeled
"Offer" here if a tender offer is necessary.

Besides tender offers, takeovers and mergers are also possible in
Capitalism. You can take over a corporation if you own more
than 50% of its stock. A merger is allowed if you own more
than 75% of a corporation's stock. However, we are not going to
describe these actions in details here as we don't want to
overwhelm you with too many details. Read the manual if you want
to know more about them.

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mouse : left single
Next, we'll introduce you to some other common stock actions.
Click the "Ok" button to close the window.

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openmenu : 4, 2
Call up the financial action window in the game menu.

runmenu : 4, 2

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mouse : left single
One of the actions you can take here is issuing new shares of
your corporation. Click here.

A corporation can raise fund by issuing new shares. When new
shares are issued, they are offered to public shareholders
and the cash received from the buyers contributes to the
operating capital of the corporation.

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When your corporation issues new shares, you must make two
decisions. First, you must decide the issuing price, which cannot
be higher than the current stock price. Nobody will be interested
in the new shares if they're priced higher than the market price.

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Secondly, decide the number of new shares to be issued.

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There is a limit on the number of new shares you can issue. You
can expect a higher limit if your corporation showed promising
results in the past year. You can often have a higher limit if
you decrease the issuing price to make it more attractive to
buyers. Another factor which affects the limit is the frequency
that new shares are issued. You cannot issue new shares too
frequently, otherwise the market won't have enough time to digest
the new shares.

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After you decide the number of new shares and the issuing price,
the expected amount of money your corporation will receive after
issuing new shares is shown here.

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mouse : left single
If you are satisfied with the gross receipts, click the "Issue
Now" button.

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That's right. The receipt have been added to your
corporation's cash account.

When an investor buys shares of a corporation, the investor
probably expects a reasonable return in the future. That
return usually includes the dividend paid by corporation and the
profit gained from the rise of the stock price.

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mouse : left single
Because of this, you must consider the dividend-paying policy
of your corporation seriously. Click here to go to the dividend
menu.

Some corporation try to pay a reasonable dividend each year
to please the shareholders. However, it is not uncommon to
find corporations that pay only modest dividends or even none to
maintain an upward trend on its stock price. These corporations
actually reinvest their earnings back into the business, which
promises better returns in the future.

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In the game, you can set a dividend payout ratio and let your
corporation pay dividends based on this ratio each year
automatically. Under this policy, the dividend per share is
calculated by multiplying the earnings per share by the dividend
payout ratio.

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If you want to pay dividends this way, you must press this
button, which authorizes dividends to be paid each year without
your approval.

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If you want to change the dividend payout ratio, you should first
set the new ratio here.

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Then click this button to confirm the change.

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If you want to approve the dividend, you can select the "Ask
Dividend Payout" option. After that, at the end of each year, you
see a window which lets you decide the exact amount of dividend
to be paid for the year.

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mouse : left single
Now it's time to leave here, click on the "Ok" button to close
the window.

This lesson has told what it should tell and you have learned
what you should learn. If there is still anything that you lack,
it is your own experience. Good luck!