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Fractions as Decimals

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Credit: Katrina Tuliao
Source: http://commons.wikimedia.org/wiki/File:Philippine-stock-market-board.jpg
License: CC BY-NC 3.0

Did you know that the stock market originally relied on fractions instead of decimals? Read on to find out how.

Happening History

During the beginnings of the American stock market in the 18th century, the United States wanted people to be able to invest in businesses by purchasing or trading stocks, or stakes in a company. The U.S. dollar had been based on Spanish currency at the time, the real, which was also known as peso de ocho, or “piece of eight.” The real was actually a silver coin that could be physically cut into eighths, quarters, or halves. Here come the fractions! Different fractions of the silver coin were worth different values—hence the name “piece of eight.”

Credit: Tina Shaw/U.S. Fish and Wildlife Service
Source: http://www.flickr.com/photos/usfwsmidwest/7264793792/
License: CC BY-NC 3.0

Since the U.S. had based its own currency on the Spanish system, American stocks were assigned values in one-eighths of a dollar. Up until 2001, stock exchanges, such as the New York Stock Exchange, still reported prices and stock values in fractions. Because our monetary system came to revolve around decimals, each fraction of stock value had to be converted into decimals before funds could be awarded. Finally, in 2001, all of the fractions of the stock market were converted to decimals in order to make the arithmetic and money easier to manage!

Take a look at the origins of the stock market: http://www.youtube.com/watch?v=5iyvvhipL68

Explore More

Watch the video at the link below to see how young entrepreneurs are using a stock market game to understand business.


Image Attributions

  1. [1]^ Credit: Katrina Tuliao; Source: http://commons.wikimedia.org/wiki/File:Philippine-stock-market-board.jpg; License: CC BY-NC 3.0
  2. [2]^ Credit: Tina Shaw/U.S. Fish and Wildlife Service; Source: http://www.flickr.com/photos/usfwsmidwest/7264793792/; License: CC BY-NC 3.0


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