Level 2 of 5 in the Capital Valley game

The financial markets: funds, stocks, and interest rates, and what makes the value of an investment move

A level is a run of 12 turns, about 30 minutes of play, that represents one year in an investor's life. This lesson plan covers level 2, which closes the Foundation course and ends with a recap.

Where it fits in the curriculum

Curriculum fit: how a competitive market works and how economic agents finance themselves (stocks and interest rates; Grade 11 (US) / Year 12 (UK), ages 16-17). Also the foundations of international trade and the globalization of production (Grade 12 (US) / Year 13 (UK), ages 17-18).

Concepts covered: geographic diversification, specific risk and market risk, globalization and value chains, interest rates and asset prices, macroeconomic indicators.

Learning objectives

By the end of the session, students can:

1. Distinguish a fund (a basket of companies) from a stock (a single company), and explain why the stock swings further in both directions.
2. Explain how a single event affects a company, its sector, and its region to different degrees.
3. Explain why a rise in interest rates pushes down the price of every listed investment, even though no company has changed.
4. Justify an investment decision spread across several regions of the world.

How the game works

Each student manages a virtual portfolio. Every turn brings one or two news items (official announcements, rumors, and so on) and an investment decision. The consequences arrive on the next turn, explained by a "Here's why" card. A virtual advisor, a character in the game, introduces each new element and comments on the results. Nothing in the game is left to chance. The world is the same for every student in a game, and only their decisions differ, which is what makes a rigorous debrief possible.

What students experience in level 2

These moments are guaranteed in every game, but this lesson plan does not say when they come or how they turn out. The teacher can build the debrief on them, and a student who reads it gains nothing. The companies and the storylines drawn depend on the game; their mechanism does not.

• Arrival in New York. Three regional funds open (the US Fund, the Europe Fund, and the Asia Fund), followed by the World Fund, a weighted average of the three regions that moves less than any one of them. News about a region's economy: globalization, trade, indicators, currency.
• On the third turn of the level, the previous level's accounts are published. This is earnings season: one news item and one market card for everything listed, good, mixed, or disappointing depending on the game.
• The stock market opens during the level, and the first stocks (real companies, about six of them) join the funds. The virtual advisor explains what a stock is: more potential, more risk. A stock's move ripples out to its sector, its region, and the World Fund, with decreasing amplitude.
• Storylines now run over several turns: a news item, a first move, a follow-up item, an outcome. Most keep their promise. At least one turns around: a fall, a hope, then the rebound or the disappointment.
• Students live through a rise and then a fall in interest rates and see the effect on every investment. When rates rise, the savings account pays twice as much and every listed asset falls that same turn, even though no company has changed. When rates come back down, listed assets recover. The virtual advisor explains the cost of money. At level 5, the full cycle (inflation, hikes, a cut) revisits the lesson with bonds and real estate.
• A rumor about a stock swells, then is confirmed or proves unfounded.
• The level recap, followed by a word from the virtual advisor: at level 3, storylines will not always say who they are about.

Minute-by-minute plan (computer lab)

1. Picking up (5 min). Each student reopens their game. A one-sentence reminder of the level 1 recap: who beat the savings account, and thanks to what.

2. Guided opening turn (5 min). On the projector: the virtual advisor's briefing and the three regional funds. A quick question before everyone confirms their decision: "Spread across the three regions, or pick the one that appeals to you? Why?"

3. Independent play through the recap (25 min). Students move at their own pace. Two one-sentence freeze-frames, without interrupting the game: when the stock market opens ("A stock is not a fund. Who is buying one, and on what grounds?") and on the turn when everything listed moves at once ("Everything moved on the same turn. Write down why; we'll come back to it.").

4. Class debrief (12 min). Working from the recaps on the students' screens, guide the discussion with the questions below. Show of hands: who spread across the three regions, who took the World Fund, who bought a stock as soon as the market opened, who sold at the first dip of the storyline that turned around.

5. Wrap-up (8 min). Four lines to write down: a stock moves harder than a basket; an event spreads from the company to its sector, its region, and the World Fund; the interest rate is the yardstick for every investment; a storyline has a beginning and an end.

Flipped classroom

The assignment at the end of the previous session: "Play level 2 for next time, about 30 minutes. Write down the turn when everything moved at once and why, along with your result at the recap and your best decision." The next session opens with a 20-minute debrief using the same questions, then the wrap-up.

Debrief questions

• On one turn, every fund and every stock moved the same way, with no company news at all. What had changed? Why does the savings account's rate weigh on the price of everything else?
• One event hit a company, its sector, its region, and the World Fund with four decreasing percentages. Why does the stock move more than the fund? What do you buy in addition with a stock, and what do you give up?
• Who bought a stock as soon as the market opened? On what grounds: the name, the news, the sector? Was that an investor's criterion or a consumer's?
• Who spread their money across the three regions? Who took the World Fund? Did it move less than the regional funds? Why does an average swing less than each of its parts?
• A storyline turned around: a fall, a rescue rumor, then the rebound or the disappointment. Who sold at the first dip? Who bought at the bottom? At the time, was the rescue rumor worth as much as an announcement?
• The rumor about a stock: who acted before the outcome? Is a rumor about a single company more or less risky than a rumor about a whole sector?

Going further

• Next session: level 3, stocks and bonds. Previous session: level 1.
• Research activity: pick a real company from the game and find, in this week's news, a story that would have moved its price. Then say whether it affects the company alone, its sector, or its region.
• Taking part in Global Money Week (March) with a tournament between classes.

Practical details

• Access: https://capitalvalley.app/education
• The student version needs no account, no email address, and no personal data. Suitable for use at school, in the computer lab or on a smartphone.
• Teacher contact: [email protected]