Three friends, three ways. Coins after three years in the story.
The big ideaCash stays put, a bond is a promised loan, a stock is a slice.
How it works
Cash stays put: coins in a jar are the same later, and grow nothing.
A bond is a loan with a promise. Maya lent the town 100 coins for a promise of five extra coins a year and the hundred back after three years.
A stock is a slice of a company. Ben bought ten slices of Lemon Co. and shared its good and quiet years.
The more a thing swings, the more it might give or take. Cash swings least, then bonds, then stocks.
Bond and stock.Ben's ten slices, worth by year.
Example 1: Ben buys slices
A slice costs 10 coins and Ben has 100.
100 ÷ 10 = 10 slices.
He owns a little of Lemon Co.
Example 2: Maya's bond
Maya lends 100 coins and gets 5 extra a year for 3 years.
5 × 3 = 15 extra coins.
She gets the hundred back too: 100 + 15 = 115.
Example 3: Ben's slices move
In year one each slice is worth 13 coins: 10 × 13 = 130.
After the rain each slice is worth 9 coins: 10 × 9 = 90.
In year three each slice is worth 14: 10 × 14 = 140.
Example 4: Nico's jar
Nico keeps 100 coins in a jar.
A year passes, then another.
The jar still holds 100.
Words to know
cash
Coins kept in a jar. They stay the same.
bond
A loan with a promise to pay it back and a bit extra.
stock
A slice of a company, also called a share.
swing
How much a worth goes up and down.
Watch out
A bond is a promise, and a promise can still break if the borrower cannot pay.
A stock has no promised extra. Its worth moves with its company and could end lower.
Cash feels safe but grows nothing.
In the story the stock ended highest, but that was this time only. Nobody knew what next year would bring.
Try it
Maya lends 100 and gets 5 extra a year for 3 years. How much extra?
What is a slice of a company called?
Which swings the least: cash, a bond or a stock?
Ben's 10 slices are worth 13 coins each. How much in all?
Answers: 1. 15 · 2. A stock · 3. Cash · 4. 130
Try at homeAsk a grown-up what they keep close at hand, what they leave to grow, and how they decide.
For grown-upsAsk your grown-up what they keep close at hand and what they leave to grow, and how they decide. All of this is a made-up town: it is not advice about any real money.
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