Write a report that will show your management that you:
a. Fully understand the situation
b. Can identify the "solutions" open to the company
c. Can make solid, well justified recommendations from the available solutions.
It's really as simple of that - but it's the apparently simple things that can sometimes be the most challenging.
This weeks' Assignment:
The objective of this weeks case "Innocents Abroad" is to learn:
1. How to use large data sets to explore international diversification (from your Business Modeling class)
2. Identify the costs and benefits of international investing through Portfolio formation (from Applied Finance I class)
3. Evaluate the impact of currencies on investment portfolios ( unique to international investments - from your applied Finance I Class)
4. Consider the puzzle of home bias (new study material)
In this case you should put your self in the position of Sandra Meyer who must prepare a presentation that will convince Henry Bosse (played by me) that he should have international stocks in this portfolio.
Following the same logic as we talked about for the BBC case, I would expect a case presentation along the following lines:
1. A introduction showing that you understand the situation and Mr. Bosse's concerns about International investments.
2. An analysis of the performance of international investments showing how total returns ( Capital gains, dividends and foreign exchange gains and losses) compare with U.S. investments over selected time periods), making sure to distinguish between equity and currency gains or losses.-for example something similar to Table A annually from 1991 to the latest year data is available.
Based on the analysis, the presentation should:
a.Under what conditions (be specific) do you think investing abroad is a good idea? a bad idea? what factors should be taken into account?
b.Show the stock market returns in different countries in USD and the Standard Deviations of annual returns --- this analyses make it possible to compare the performance of the stock markets in different countries and over different periods.
c.Show the correlations between different stock markets - this shows what markets move in phase with or independently of the U.S. market
d.Show the performance of foreign investments (separate currency gains and losses from stock gains and losses) relative to U.S. stocks (You can use many indices - suggest you use the EM and S&P).
e.Show sample portfolios with different mixes of Foreign and U.S. investments to identify efficient portfolios.
These Questions are suggestions to help you focus your analysis of the case, they have to be considered and will form part of your written case presentation. Your written presentation should follow the guidelines posted in course documents. Please read this document carefully before starting this weeks' case write up.
Requirements for your paper:
- APA style (Do not forget the abstract, situation of analysis,conclusions and references)
- You should follow the case study guidelines and address your answers for the questions through this guideline. (Do not forget to make your own recommendations and show how this recommendations will be fix this situations ) Please read the instruction attached carefully.