International investing project
Volume of 5 pages (1375 words)
Assignment type : Math Assignment
THE GROUP PROJECT ASSIGNMENT
This project will allow you to learn more about international investing and about firms that compete in the global arena. You will write a project paper as a group of four students. You have to submit only one report for the entire group, being careful to note all the names of group members.
The report will be graded based on quality of content, quality of exposition, and the extent to which it feels professionally executed. The report should be no less than three and no more than eight pages long.
At the last week of classes (November 28th and November 30th), all groups will do a PowerPoint presentation of their reports to the entire class. Approximately each group will have 15-20 minutes to present, and additional 5 minutes for Q&A. Each student will present own part of the project.
You will fill a peer evaluation form at the end of the project and will submit it to me at your presentation week. Peer evaluation forms will be shared for your evaluation after the project paper submission.
Grading of the project:
Each student will get an individual grade for presentations and peer evaluation. You will get same grade for the project paper with your group friends.
The project will count 15% of your course grade.
The details of the project are follows:
INTERNATIONAL INVESTING PROJECT
This group project allows you to learn more about international investing and about firms that compete in the global arena. You will be asked to create a stock portfolio of at least two U.S.-based multinational corporations (MNCs) and two foreign stocks. You will monitor the performance of your portfolio for about 3 months and ultimately will attempt to explain why your portfolio performed well or poorly relative to the portfolios created by other students in your class. The explanations will offer insight into what is driving the valuations of the U.S.-based MNCs and the foreign stocks over time.
Each of you, Select one stock of U.S.-based MNCs that you want to include in your portfolio. If you want to review a list of possible stocks or do not know the ticker symbol of the stocks you want to invest in, go to the Web site https://finance.yahoo.com. Make sure that your firms conduct a substantial amount of international business.
Next, select one foreign stock that are traded on U.S. stock exchanges and are not from the same foreign country. Many foreign stocks are traded on U.S. stock exchanges as American depository receipts (ADRs), which are certificates that represent ownership of foreign stock. The ADRs are denominated in dollars but reflect the value of a foreign stock, so an increase in the value of the foreign currency can have a favorable effect on the ADR’s value.
To review a list of ADRs in which you may invest, go to www.adr.com and click on “DR Search”; then select any industry in the menu to see a list of foreign companies within that industry that offer ADRs and the country where each foreign company is based. You should select ADRs of firms that are based in any of the countries shown on the Web site finance.yahoo.com/intlindices. Click on any company listed to review background information, including a description of its business and its stock price trend over the last year. It is assumed that you will invest $10,000 in each stock that you purchase. Totally each student is investing $ 20,000.
As a group you will have 8 national and international stocks analyzed totally.
You can easily monitor your portfolio using various Internet tools. If you do not already use a specific Web site for this purpose, go to finance.yahoo.com/?u and register for free. Follow the instructions, and in a few minutes you can create your own portfolio tracking system. This system not only updates the values of your stocks but also provides charts, recent news, and other information on the stocks in your portfolio.
At the end of the semester, you should evaluate the performance and behavior of your stocks.
1. Give a brief introduction about the stock markets, and how do they work?
2. a. Determine the percentage increase or decrease in each of your stocks over the period of your investment and report that percentage in a table like the one below. In addition, offer the primary reason for this change in the stock price based on news about that stock or your own intuition. To review the recent news about each of your stocks, click on finance.yahoo.com/?u and insert the ticker symbol for each firm. Recent news is provided at the bottom of the screen.
b. How does your portfolio’s performance compare to the portfolios of some other groups?
Why do you think your performance was relatively high or low compared to other groups’ performances? Was it because of the markets where your firms do their business or because of firm-specific conditions?
2. Determine whether the performance of each of your U.S.-based MNCs is driven by the U.S. market. Go to the site finance.yahoo.com/?u and insert the symbol for your stock. Once the quote is provided, click on Chart. Click on the box marked S&P (which represents the S&P 500 Index). Then, click on Compare and assess the relationship between the U.S. market index movements and the stock’s price movements.
Explain whether the stock’s price movements appear to be driven by U.S. market conditions.
Repeat this task for each U.S.-based MNC in which you invested.
3. a. Determine whether the performance of each of your foreign stocks is driven by the corresponding market where the firm is based. First, go to the site finance.yahoo.com/intlindices?u and look up the symbol for the country index of concern. For example, Brazil’s index is ^BVSP. Next, go to finance.yahoo.com/?u and insert the symbol for your stock. Click on Chart; at the bottom of the chart, insert the corresponding market index symbol (make sure you include the “^” if it is part of the index symbol) in the box.
Then, click on Compare and assess the relationship between the market index movements and the stock’s price movements. Explain whether the stock’s price movements appear to be driven by local market conditions. Repeat this exercise for each foreign stock in which you invested.
b. Determine whether your foreign stock prices are highly correlated. Repeat the process just described, except insert the symbol representing one of the foreign stocks you own in the box below the chart.
c. Determine whether your foreign stock’s performance is driven by the U.S. market (using the S&P 500 as a market proxy). Erase the symbol you typed into the box below the chart, and click on S&P just to the right.
4. a. Review annual reports and news about each of your U.S.-based MNCs to determine where it does most of its business and the foreign currency to which it is most exposed. Determine whether your U.S.-based MNC’s stock performance is influenced by the exchange rate movements of the foreign currency (against the U.S. dollar) to which it is most exposed. Go to www.oanda.com and click on Historical Exchange Rates.
You can convert the foreign currency to which the MNC is most exposed into U.S. dollars and determine the exchange rate movements over the period in which you invested in the stock. Provide your assessment of the relationship between the currency’s exchange rate movements and the performance of the stock over the investment period. Attempt to explain the relationship that you just found.
b. Repeat the steps in 4a for each U.S.-based MNC in which you invested.
5. a. Determine whether the stock performance of each of your foreign firms is influenced by the exchange rate movements of the firm’s local currency against the U.S. dollar (you can obtain this information from www.oanda.com). You can convert the foreign currency of concern to U.S. dollars and determine the exchange rate movements over the period in which you invested in the stock. Provide your assessment of the relationship between the currency’s exchange rate movements and the performance of the stock over the investment period. Attempt to explain the relationship that you just found.
b. Repeat the steps in 5a for each of the foreign stocks in which you invested.