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Unit IV Project – Cumulative Investing Project
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. In this unit, you will continue to work with the stock portfolio you created in Unit II, consisting of at least three U.S.-based MNCs and two foreign stocks. You will monitor the performance of the portfolio during the course. In Unit VIII, 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 in Unit II to track your investment. As a reminder, the Unit II spreadsheet consists of the following data points:
- firm name;
- ticker symbol;
- amount of investment in each stock ($10,000 per stock for a total of $50,000);
- price per share at which you purchased the stock;
- exchange rate;
- percentage change in stock price, which will be updated again in Units VI and VIII; and
- change analysis, which will identify the primary reason for the change in stock price. (This column will be updated again in Units VI and VIII.)
Update the spreadsheet columns with the percentage change in the stock price since your last assignment 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.
- Assess government influence on the exchange rate behavior of each company.
- Do you see any opportunity for international arbitrage with any of the companies’ exchange rates? Why, or why not?
- Discuss interest rate and purchasing power parity as it pertains to each company.
- What forecasting technique would you use to forecast the exchange rate, and how would you assess forecast performance?
- 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?
You can monitor the portfolio using various apps, such as Robinhood or Yahoo! Finance. These types of apps provide charts, recent news, and other information on the stocks.Submit your spreadsheet and summary. Your summary should be at least two pages in length. Adhere to APA Style when constructing this assignment, and include in-text citations and references for all sources that are used. Please note that no abstract is needed. For the summary, use a minimum of two sources, one of which may be the textbook. Your summary should include a title page, introduction, body, conclusion, and references page.