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Title: International Investments, Inc. Student Coaching Slides


1
International Investments, Inc.Student Coaching
Slides
2
Concepts Covered
  • Global nature of business and economics
  • Macroeconomics
  • - Introduction to macroeconomic variables
  • - Interest rates market of loanable funds
  • - Money inflation

3
Concepts Covered
  • Statistics
  • - Descriptive statistics
  • - Hypothesis testing
  • - Regression analysis
  • - Variation uncertainty

4
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.

5
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.

6
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 ?

7
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.

8
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?

9
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.

10
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.
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