Question

Prob Set 9 E

1. For each of the following countries, find and report the major stock market index values for March 2017 and March 2018 (in this exact order, please do not change): Switzerland (^SSMI), Mexico (^MXX), India (^BSESN), Japan (^N225), France (^FCHI). You can find these data at: http://finance.yahoo.com by entering the symbols above in parentheses for each country in the search box at the top of the page. Click on “Historical Data” and then select “Monthly” for “Frequency” and click on “Apply.” Get the “Adjusted Close” price (local currency) on the right side for March (01) 2017 and March (01) 2018. For the same countries, go to the St. Louis Fed at http://research.stlouisfed.org/fred2/categories/95 and find and report monthly ex-rates for March 2017 and March 2018 for each of the five countries above. Once you select and click on a currency, you can click on “+ more” and then “View All” (upper left corner of screen next to the March 2018 ex-rate) to view the monthly exchange rates. You can also select the “Download” option (upper right corner of screen). Quote ex-rates with both currencies to four decimal places. Note: France uses the Euro as its currency.

a. For each country, report the stock index values and ex-rates for March 2017 and March 2018.

Country	Index	Value as on 31st march 2017	Value as on 31st march 2018	Currency	Value as on 31st march 2017	Value as on 31st march 2018
Switzerland	(^SSMI)	8,658.89	8,740.97	CHF	1.0031	0.9541
Mexico	(^MXX)	48,541.56	46,124.85	MXN	18.725	18.6
India	(^BSESN)	29,620.50	32,968.68	INR	64.86	65.115
Japan	(^N225)	18,909.26	21,454.30	JPY	111.39	106.28
France	(^FCHI)	5,122.51	5,167.30	EUR	0.9387	0.8115

b. Calculate the annual percentage return (%) for each stock market from March 2017 - March 2018, measured in local currency. Use the standard percentage change formula: [(P₂ – P₁) / P₁] x 100), or the %CHG function on your HP calculator and express the answers as a percent to two decimal places, e.g. 3.25%.

c. For each currency, calculate the annual percentage change (to two decimal places, e.g. 3.25%) from March 2017 to March 2018 using the ex-rate exactly as quoted (do not reverse the quote), and for each currency separately, clearly explain in a full sentence or two whether (and why) each of the foreign currencies appreciated or depreciated versus the dollar (use the standard percentage change formula or the %CHG function on your calculator, expressed as a percent).

d. Calculate the effective, annual US dollar return (% to two decimal places) for a U.S. investor who had invested money in the stock markets of each of the five countries during the last year (March 2017 – March 2018), using the formula: Effective Dollar Return (%) = % Foreign Stock Market Return +/- % CHG (Appreciation/Depreciation) in the Foreign Currency

ANswer for B + C + D

Annual % change for stock market
Country	% Change
Switzerland	0.95%
Mexico	-4.98%
India	11.30%
Japan	13.46%
France	0.87%

Annual % Change for Currency
Country
Switzerland	-4.88%
Mexico	-0.67%
India	0.39%
Japan	-4.59%
France	-13.55%

Dollar Return
Country	Investment	Investment in local currency	Number of Units of index purchased		Value in USD	% USD Return
Switzerland	1000	1003.1	0.12	1012.61	1061.32	6.13%
Mexico	1000	18725	0.39	17792.75	956.6	-4.34%
India	1000	64860	2.19	72191.51	1108.68	10.87%
Japan	1000	111390	5.89	126382.23	1189.14	18.91%
France	1000	938.7	0.18	946.91	1166.86	16.69%

Please assist on question below ( 4 total)

e. Explain your answers from part d for each country, in five separate, short essays of a few sentences per country where you report and explain the effective dollar return for an American investor in each country. Specifically mention both the return on the foreign stock market and the percentage change in the foreign currency over the last year, which together determine the one-year Effective Dollar Return to a U.S. investor.Now do a five-year analysis using the same countries by getting the stock market and ex-rate data for the months March 2013 and March 2018.

Answer 1

Part (A)
Country	Index	Value as on 31st march 2017	Value as on 31st march 2018	Currency	Value as on 31st march 2017	Value as on 31st march 2018
Switzerland	(^SSMI)	8,658.89	8,740.97	CHF	1.0031	0.9541
Mexico	(^MXX)	48,541.56	46,124.85	MXN	18.7250	18.6000
India	(^BSESN)	29,620.50	32,968.68	INR	64.8600	65.1150
Japan	(^N225)	18,909.26	21,454.30	JPY	111.3900	106.2800
France	(^FCHI)	5,122.51	5,167.30	EUR	0.9387	0.8115

Part (B)
Return in Local Currency
Country	Index	Value as on 31st march 2017 (P1)	Value as on 31st march 2018 (p2)	Return in Stock Exchanges local Currency R1 = ((P2-P1)/P1) X 100
Switzerland	(^SSMI)	8,658.89	8,740.97	0.95%
Mexico	(^MXX)	48,541.56	46,124.85	-4.98%
India	(^BSESN)	29,620.50	32,968.68	11.30%
Japan	(^N225)	18,909.26	21,454.30	13.46%
France	(^FCHI)	5,122.51	5,167.30	0.87%

Part (C)
Return in considering exchange rate
Country	Index	Value as on 31st march 2017 (P1)	Value as on 31st march 2018 (p2)	Return in local Currency = ((P2-P1)/P1) X 100	Value as on 31st march 2017 (V1)	Value as on 31st march 2018 (V2)	Return in Currency R2 = ((V2-V1)/V1) X 100	Return considering Exchange Rates R3 = ((1+R1) X (1+R2)) -1
Switzerland	(^SSMI)	8,658.89	8,740.97	0.95%	1.0031	0.9541	-4.88%	-3.98%
Mexico	(^MXX)	48,541.56	46,124.85	-4.98%	18.7250	18.6000	-0.67%	-5.61%
India	(^BSESN)	29,620.50	32,968.68	11.30%	64.8600	65.1150	0.39%	11.74%
Japan	(^N225)	18,909.26	21,454.30	13.46%	111.3900	106.2800	-4.59%	8.25%
France	(^FCHI)	5,122.51	5,167.30	0.87%	0.9387	0.8115	-13.55%	-12.79%