FIN4634 Course Project
International Investing Project
This project helps you to understand the factors that influence the performance of
MNCs and foreign stocks. The focus in grading this project will be on the explanations
provided by you, not on the movements in the stock prices or exchange rates.
This is a project to be completed by the end of the semester (see due dates in Class
Schedule). To ensure you are working on this project during the term you will be asked
to provide weekly updates. These updates are part of your grade.
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 school term. The explanations will offer
insight into 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 http:
iz.yahoo.com/i/, which lists
stocks alphabetically, or to http:
iz.yahoo.com/p/, which lists stocks by sectors or
industries. Make sure that your firms conduct a substantial amount of international
usiness.
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 cu
ency 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.
Click on any industry listed 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 website
http:
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.
http:
iz.yahoo.com/i
http:
iz.yahoo.com/p
http:
www.adr.com
http:
finance.yahoo.com/intlindices
List your portfolio in the following format:
You can easily monitor your portfolio using various Internet tools. If you do not
already use a specific website for this purpose, go to http:
finance.yahoo.com/?u and
egister 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
For the Course Research paper 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. Was it because of the markets where your firms
do their business or because of firm-specific conditions? 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.
http:
finance.yahoo.com/?u
http:
finance.yahoo.com/?u
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
epresents the S&P 500 Index). Then, click on Compare and assess the relationship
etween 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
co
esponding 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. For example, Brazil’s index is ^BVSP. Next, go to the site
http:
finance.yahoo.com/?u and insert the symbol for your stock. Click on Chart; at the
ottom of the chart, insert the co
esponding 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.
. Determine whether your foreign stock prices are highly co
elated. 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.
http:
finance.yahoo.com/?u
http:
finance.yahoo.com/intlindices?u
http:
finance.yahoo.com/?u
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 cu
ency 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 cu
ency (against the U.S.
dollar) to which it is most exposed. Go to www.oanda.com and click on FXHistory. You
can convert the foreign cu
ency 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 cu
ency’s exchange
ate movements and the performance of the stock over the investment period. Attempt
to explain the relationship that you just found.
. 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 cu
ency against the U.S.
dollar. You can obtain this information from www.oanda.com. You can convert the
foreign cu
ency 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
elationship between the cu
ency’s exchange rate movements and the performance of
the stock over the investment period. Attempt to explain the relationship that you just
found.
. Repeat the steps in 5a for each of the foreign stocks in which you invested.
Write the research paper in APA format. This format includes: title page, identifying the
subject, the authors, the course, professor, term and date. Following are the
introduction, statement of objectives, na
ative body, conclusion and finally the
ibliography. If you need help with APA style there are excellent resources in
the Florida National University Li
ary. In addition, the following is a very good online
esource: http:
owl.english.purdue.edu/owl
esource/664/1 . For help with citations
visit http:
www.citationmachine.net/. Many students lose grade points because they
do not take the trouble to structure, footnote or provide the paper and bibliography
co
ectly in APA format; don’t let this be you! Excluding the title page and bibliography,
your paper should be four to six pages in length double-spaced. Times New Roman, font
size 12.
http:
www.oanda.com
http:
www.oanda.com/