Simulation time! Today we tested our skill at picking out investments which were perfectly modeled by a single die. This helped us learn about the trade off between risk and return. Students came up with the idea that being riskier in the early rounds of the simulation was better than taking risks later…they could already give retirement fund advice with those kind of ideas. We also talked about how their selections became less risky when they chose to have a wider range of investments. They worked again on their presentation and constructive peer review skills as they told their classmates about their strategies after the simulation.

Finally we talked about how to find the expected return of an investment. This was easy when working with investments modeled by a single die since all the probabilities were the same. See if the students can explain to you the basic strategy for analyzing the “expected value” or “expected return.”

We started our class market today as well. The goal of this experience is to teach them how markets have evolved from barter markets to the financial markets of today. They started today in a completely barter system and trading was SLOW. They have learned throughout all activities that decision making becomes easier when you are provided with more information. They had limited information in today’s class market so it was tough to gauge whether or not a trade was beneficial.

If you want to test your own skills at today’s brain teaser try this one out or see if your student wants to teach you the solution. “Mike and Molly attend a party with four other pairs of friends. (10 people in total each pair knows each other). At this party everyone shakes hands with each person they have never met before. At the end of the night Molly realizes that each of the other nine people shook hands with a different number of people. How many hands did Mike shake?”

See you tomorrow!

Blake