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Teacher guide · Unit 7 of 13

Markets

Where trades actually happen, who takes the other side, and why prices move the way they do.

Lessons
5
Reading
37 minutes
Unit quiz
5 questions
Class time
2 periods

Class time is a guide: 45-minute periods, with the lessons, the unit quiz and a discussion. Students can read lessons at home and take the quiz in class, or the other way round.

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By the end of the unit, students can

  • describe how stock exchanges work today, including trading hours, indexes and circuit breakers
  • explain what market makers do, the bid-ask spread, and payment for order flow
  • explain liquidity, and why it disappears exactly when it’s needed
  • describe bull and bear markets, and why the best days tend to come close to the worst
  • outline how a company goes public, and who the first-day “pop” really benefits

The lessons

Each ends with a one-question check, and students who pass the unit quiz can go on to three optional stages of harder lessons, for bronze, silver and gold medals.

  1. 7.1The NYSE7 min

    The floor is mostly theater now. The real exchange is a set of data centers in New Jersey.

  2. 7.2Market makers7 min

    You are not trading with another investor. You are trading with a firm whose business is being available.

  3. 7.3Liquidity7 min

    Liquidity disappears exactly when you need it.

  4. 7.4Bull and bear markets8 min

    The market’s best days cluster tightly around its worst ones.

  5. 7.5IPOs8 min

    Companies go public when conditions favor sellers. That is not a conspiracy, it is rational.

New Jersey Standard 9.1

This unit goes beyond Standard 9.1: none of the state’s grade 12 expectations is mapped to it. See the full alignment for the units that teach them.

Questions for discussion

  1. Most trading apps charge no commission. Who is paying for your trade, and does it matter to you?
  2. The market’s best days tend to come right around its worst ones. What does that suggest about selling to wait out a crash?
  3. A company you love is going public next week. Why might buying on its first day be a worse deal than it looks?

Unit quiz answer key

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