Grades 9–12 · Lesson 6 · 60 minutes
Risk management and scenario analysis
Students quantify downside scenarios and apply position-sizing rules.
StockSt uses fictional currency and simulated shares for education only. This is not investment advice.
Warm-up
Ask, “If a share you own falls 50%, what percentage gain do you need to get back to even?” Let students work it out (a 100% gain) and discuss why losses are harder to recover from than they first appear.
Mini-lesson
- Cover maximum drawdown, stop-loss rules, position sizing, concentration limits, and scenario analysis.
- Emphasize that stop-losses do not guarantee protection and can lock in losses, for example when a price dips briefly and then recovers.
StockSt activity
- Students stress-test their portfolio against three events: a negative celebrity-news shock, a category-wide decline, and a broad market downturn.
- Students calculate the portfolio impact of each event.
- Students revise their allocations so that they meet a maximum single-position loss tolerance and write a short rationale for each change.
Discussion
Ask, “What risk can diversification reduce, and what risk can it not reduce?” Make sure students distinguish company-specific risk from market-wide risk.
Exit ticket
Students calculate the portfolio impact if one 20% position falls 40%.
Assessment
Scenario-analysis worksheet with revised allocation and rationale.
Student Learn links
Assign these before or after class so students practice the same ideas.