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Learn about macroeconomics, statistics, Excel analysis, and foreign investments. Understand market variables, regression analysis, and inflation's impact on foreign returns. Explore leading economic indicators and national interest rates consideration.
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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
Concepts Covered • Statistics - Descriptive statistics - Hypothesis testing - Regression analysis - Variation & uncertainty
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 Global Investments, Inc. is also on the course web site.
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.
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 ?
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.
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?
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.
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.