Go to finance.yahoo.com and enter the ticker symbol IBM (or use a different MNC if you wish) in the stock quotations box. Then scroll down and click on Historical Data. Set the date range so that you can access data for least the last 20 quarters. Obtain the stock price of IBM at the beginning of the last 20 quarters and enter the data on your spreadsheet. Compute the percentage change in the stock price of IBM from one quarter to the next. Then go to www.x-rates.com, click on Historic Lookup, and obtain direct exchange rates of the Canadian dollar and the euro that match up with the stock price data. Run a regression analysis with the quarterly percentage change in IBM’s stock price as the dependent variable and the quarterly change in the Canadian dollar’s value as the independent variable. (Appendix C explains how you can use Excel to apply regression analysis.) Does it appear that IBM’s stock price is affected by changes in the value of the Canadian dollar? If so, what is the direction of the relationship? Is the relationship strong? (Check the R-squared statistic.) Based on this relationship, do you think IBM should attempt to hedge its economic exposure to movements in the Canadian dollar?

FindFind

International Financial Management

14th Edition
Madura
Publisher: Cengage
ISBN: 9780357130698
FindFind

International Financial Management

14th Edition
Madura
Publisher: Cengage
ISBN: 9780357130698

Solutions

Chapter 12, Problem 2IEE
Textbook Problem

Go to finance.yahoo.com and enter the ticker symbol IBM (or use a different MNC if you wish) in the stock quotations box. Then scroll down and click on Historical Data. Set the date range so that you can access data for least the last 20 quarters. Obtain the stock price of IBM at the beginning of the last 20 quarters and enter the data on your spreadsheet. Compute the percentage change in the stock price of IBM from one quarter to the next. Then go to www.x-rates.com, click on Historic Lookup, and obtain direct exchange rates of the Canadian dollar and the euro that match up with the stock price data. Run a regression analysis with the quarterly percentage change in IBM’s stock price as the dependent variable and the quarterly change in the Canadian dollar’s value as the independent variable. (Appendix C explains how you can use Excel to apply regression analysis.) Does it appear that IBM’s stock price is affected by changes in the value of the Canadian dollar? If so, what is the direction of the relationship? Is the relationship strong? (Check the R-squared statistic.) Based on this relationship, do you think IBM should attempt to hedge its economic exposure to movements in the Canadian dollar?

This textbook solution is under construction.

Expert Solution

Want to see the full answer?

Check out a sample textbook solution.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.