International Investments, Inc. Student Coaching Slides

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International Investments, Inc.Student Coaching
Slides
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Concepts Covered

• Global nature of business and economics
• Macroeconomics
• - Introduction to macroeconomic variables
• - Interest rates market of loanable funds
• - Money inflation

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Concepts Covered

• Statistics
• - Descriptive statistics
• - Hypothesis testing
• - Regression analysis
• - Variation uncertainty

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Questions 1,2, and 3Doing Statistics on Excel

• If you wish to review doing statistics on Excel,
  read the Using Excel for Statistics PowerPoint on
  the course web site. Use version appropriate for
  Excel 2003 or Excel 2007.
• The Excel data file for International
  Investments, Inc. is also on the course web site.

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Question 1Hypothesis Tests

• Should you use a z, t, or p test? Look at the
  data and the sample size.
  
• Hint No change is the null hypothesis.

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Question 2Scatter Plot

• From scatter plot, is there a relationship
  between changes in market indices and interest
  rates?
• As changes in interest rates increases, do
  changes in stock market indices appear to
  increase or decrease?
• What country, if any, is an outlier ?

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Question 2Regression Analysis

• R Square Coefficient of Determination percent
  variation in change in market indices (Y)
  accounted for by variation in change in interest
  rates (X) small value does not mean
  relationship is weak.
• Regression Coefficients - coefficient on
  X-variable measures the slope of the trend Line.
  (positive sign - positive relationship, negative
  sign negative relationship)
• p-Value is used to indicate the level of
  significance.

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Question 3 Foreign Inflation Return for U.S.
Investor

• How will inflation in one country affect the
  value of that currency relative to other
  countries? (E. g. Will it take more or less yen
  to buy a dollar?)
• How would the adjusting exchange rate affect the
  apparent return to a U.S. investor?

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Question 4 Macroeconomic Variables and Foreign
Investments?

• All economies go through business cycles, periods
  of more and less rapid expansion or contraction
  in productivity.
• Some macroeconomic variables tend to increase
  earlier in the business cycle and are called
  leading indicators.
• Be sure to consider foreign government policies
  and stability.

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Question 5 Should National Interest Rates be
Considered?

• This is an open-ended question. Lots of good
  answers are possible.
• Be sure to consider statistical results and
  macroeconomic factors.