Unit II Cumulative Investing Project

Unit Ii Project Cummulative Investing Projectmultinatio

This assignment involves analyzing a diversified portfolio of investments in multinational corporations. The goal is to evaluate the performance and potential of each investment by examining specific data points, including the amount invested, stock prices at the closing of a specified date, exchange rates, and the percentage change in stock prices. This analysis will help understand the impact of currency fluctuations, stock price movements, and overall investment performance to make informed decisions about the multinational investment portfolio.

Paper For Above instruction

The strategic evaluation of multinational corporate investments necessitates a comprehensive understanding of various financial metrics and how they interplay within the context of international investing. The portfolio under consideration comprises investments in Tesla, Amazon, Ford Motors, NIO, and Alibaba, with each holding an equal initial investment of $10,000. Analyzing these investments requires scrutinizing their stock price movements as of September 7, 2022, alongside relevant currency exchange rates and percentage changes, to assess overall performance and potential risks.

Introduction

Investing in multinational corporations offers significant opportunities and challenges due to the dynamic nature of international markets and currency fluctuations. This paper will analyze the specified investments, considering the initial amounts invested, stock prices at the close of September 7, 2022, exchange rate impacts, and stock price changes. The goal is to understand how exchange rate fluctuations influence investment returns and to evaluate the performance trajectories of these multinational investments.

Analysis of Investments

The first investment in Tesla (TSLA) was made with $10,000 when the stock price was $283.70 per share. The exchange rate specified was 9.28 (assuming USD to another currency), resulting in a certain local currency equivalent. The stock experienced a 3.38% increase, highlighting positive momentum. This percentage translates into an appreciation of Tesla’s stock, leading to an improved investment value concerning both stock performance and currency exchange.

Similarly, Amazon (AMZN) was purchased at $129.48 per share, also with an initial investment of $10,000. The exchange rate was 3.37, and the stock saw a 2.67% increase over the period. Despite a smaller percentage gain compared to Tesla, Amazon’s robust market position often offsets slight fluctuations, providing a stable growth prospect.

Ford Motors (F), a traditionally American automaker with a $15.43 stock price at the reference date, experienced a 2.66% increase. The initial investment was equivalent in local currency terms based on the exchange rate, and Ford’s performance reflects its recovery and strategic restructuring efforts in the evolving automotive landscape.

NIO, a Chinese electric vehicle manufacturer, had a stock price of $17.48 as of the close date and an investment of $10,000. Notably, the change in stock price for NIO was listed as 0.00%, possibly implying no change or missing data, which requires further investigation to evaluate its performance accurately.

Alibaba’s shares at $90.96 per share also demonstrated a 2.43% increase. As a dominant player in e-commerce and cloud computing, Alibaba’s performance insights are crucial for understanding the broader Alibaba ecosystem’s resilience and growth, despite market volatility.

Impact of Currency Exchange Rates

Currency exchange rates play a pivotal role in multinational investments. The exchange rates noted (e.g., 9.28 for Tesla, 3.37 for Amazon) directly influence the local currency value of the investments. Fluctuations in these rates can amplify or diminish returns, which is particularly relevant for investors seeking to hedge against currency risk. For example, if the local currency depreciates relative to the USD, the local currency value of dollar-denominated stocks diminishes, affecting total returns negatively.

In this specific analysis, the exchange rate variations must be accounted for to gauge real investment performance. For instance, a declining exchange rate would suggest that even if stock prices increase in USD terms, the total value in local currency might not reflect the same appreciation, thus underscoring the importance of foreign exchange risk management.

Performance Evaluation and Risk Considerations

The percentage changes in stock prices are indicative of overall market sentiment and corporate health. Tesla and Amazon’s increases are reflective of their strong market positions, innovative capacities, and investor confidence. Conversely, companies like Ford and NIO, operating in competitive and volatile sectors, exhibit relatively modest gains, highlighting risks associated with traditional automaking versus electric and tech-driven enterprises.

Investors should also consider geopolitical factors, regulatory changes, and macroeconomic trends influencing these stocks. For instance, China's regulatory environment significantly impacts NIO and Alibaba, adding layers of risk and opportunity. Moreover, currency fluctuation risks necessitate strategic hedging to stabilize returns.

Conclusion

Analyzing multinational investments involves evaluating both stock performance and currency effects. While Tesla and Amazon have shown promising growth, other stocks like Ford, NIO, and Alibaba present mixed signals influenced by sector-specific dynamics and geopolitical considerations. For a holistic assessment, investors should integrate currency risk management strategies with ongoing market analysis, ensuring balanced exposure and optimized returns in an interconnected global economy.

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