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Transnational 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 3:
Doing 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 Transnational Investments, Inc. is also on the course web site.

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Question 1:
Hypothesis 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 2:
Scatter 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 2:
Regression 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.