Homework: International Finance- Cumulative Investing Project
Instructions
This cumulative investing project will help you to understand the factors, decisions, and ethics that influence the performance of multinational corporations (MNCs) and foreign stocks in the international financial environment.
You will continue to work with the stock portfolio you created, consisting of at least three U.S.-based MNCs and two foreign stocks. You will monitor the performance of the portfolio during the course. You will attempt to explain why each stock increased or decreased in price and why your portfolio performed well or poorly. Your explanations should offer insight into what is driving the valuations of the companies.
For this unit, continue to use the spreadsheet you created to track your investment. As a reminder, the spreadsheet consists of the following data points:
1. firm name;
2. ticker symbol;
3. amount of investment in each stock ($10,000 per stock for a total of $50,000);
4. price per share at which you purchased the stock;
5. exchange rate;
6. percentage change in stock price, which will be updated again; and
7. change analysis, which will identify the primary reason for the change in stock price.
Update the spreadsheet columns with the percentage change in the stock price since your last homework submission (you may use an interval of your choosing, such as a single update or daily, weekly, or other) and the primary reason for the change in the stock price up to the current date.
In a separate Word document, respond to the prompts below.
1. Assess government influence on the exchange rate behavior of each company.
2. Do you see any opportunity for international arbitrage with any of the companies' exchange rates? Why, or why not?
3. Discuss interest rate and purchasing power parity as it pertains to each company.
4. What forecasting technique would you use to forecast the exchange rate, and how would you assess forecast performance?
5. What is the degree of each company's transaction, economic, and translation exposure? What factors affect exposure in each currency? What desirable characteristics might limit exposure?
Format your homework according to the give formatting requirements:
1. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the homework, the course title, the student's name, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.