Advisors at your service 24/7

WhizzAcademics.com

Calculate Price

Get a 10 % discount on an order above $ 100
Use the following coupon code :
Whizz15

International Investing Project

1
FIN723 International Finance Fall 2015
International Investing Project (weight 30%)
This 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 over the semester 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 on what is driving the valuations of the U.S.-based MNCs and the foreign stocks over time.
Select two stocks 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 website Yahoo Business , which lists stocks by sectors or industries. Make sure that your firms conduct a substantial amount of international business.
Next, select two foreign stocks 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. 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 J.P Morgan and click on DRs Search at the lower part of the page. This will take you to page titled ‘DR Market Activity’; click on DR search: select country or industry to see a list of foreign companies within that industry that offer DRs and the country where each foreign company is based. You should select DRs of firms that are based in any of the countries shown on the website Yahoo Finance. 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
List your portfolio in the following format:
U.S.-BASED MNCs
NAME OF
FIRM
TICKER
SYMBOL
AMOUNT OF YOUR
INVESTMENT
PRICE PER SHARE AT
WHICH YOU
PURCHASED THE
STOCK
$10,000
$10,000
FOREIGN STOCKS (ADRs)
NAME OF
FIRM
TICKER
SYMBOL
COUNTRY
WHERE FIRM
IS BASED
AMOUNT OF YOUR
INVESTMENT
PRICE PER SHARE AT
WHICH YOU
PURCHASED THE
STOCK
$10,000
$10,000
2
You can easily monitor your portfolio using various Internet tools. If you do not already use a specific website for this purpose, go to Yahoo Finance 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 and recent news and other information on the stocks in your portfolio.
Evaluation
At the end of each week during the semester, you should evaluate the performance and behavior of your stocks.
1. Determine the percentage increase or decrease in each of your stocks over the period of your investment and provide 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 http://finance.yahoo.com/?u and insert the ticker symbol for each firm. Recent news is provided at the bottom of the screen.
NAME OF FIRM
PERCENTAGE CHANGE IN
STOCK PRICE
PRIMARY REASON
1
2
3
4
Portfolio (average)
2. Determine whether the performance of each of your U.S.-based MNCs is driven by the U.S. market. Go to the site http://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
http://finance.yahoo.com/intlindices?u and look up the symbol for the country index of concern. Next, go to the site Yahoo Finance 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 the 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 described above, 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.
3
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 OANDA and click on Currency Converter then click on Historical Exchange Rate. You can convert the foreign currency to which the MNC is highly exposed 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 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 (or from www.xe.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.
Schedule
September 21
Selection of stocks (release of assignment September 16, 2015)
September 27
Submit the list of stocks selected and get approval
September 28 – Oct. 2
Buy stocks
October 17
Evaluate the performance and behavior of your stocks.
October 31
Evaluate the performance and behavior of your stocks.
November 14
Evaluate the performance and behavior of your stocks.
November 28
Evaluate the performance and behavior of your stocks.
November 29
Submit the Report
Grading of the Project:
The focus in grading this project will be on the explanations provided by the students, not on the movements in the stock prices or exchange rates.

Get a 10 % discount on an order above $ 100
Use the following coupon code :
Whizz15

Category: Sample Questions