International Investments

The following evaluation will determine whether national interest rates are a good

indicator of how well a countries stock will perform. We will be using data from the years 2005 and 2006. By running statistical calculations that will show a countries expected performance, and macroeconomic variables we should be able to better inform our clients of worthwhile international investments.

Statistical Analysis

The data collected from all eighteen countries includes several factors such as market index, interest rates, per capita GNI, inflation rate and unemployment rate. For this analysis the focus will be on interest rates and market indices for these countries. By using the data collected we can calculate the standard deviation and the mean for both market indices and interest rates. By first calculating the percent change of both market indices and interest rate mean came out to 30.48 and 97.19 respectively (see Appendices). This mean indicates the average percentage change in Market Indices and the percentage change in interest between the year 2005 and 2006 of all the given countries. It also can measure the average change in percentage of market index for the global economy in those 2 years. The standard deviation came out to 14.15 and 251.75 respectively (see Appendices). This standard deviation indicates the spread of the percentage changes of the market indices and the interest rate. There is a big difference between the mean and the standard deviation of the percentage change in interest rate because the standard deviation had effected by the percentage change in the interest rate of Japan. With these numbers now established, we can continue in doing our hypothesis testing in figuring out whether the mean percent change in stock market indices between 2005 and 2006 is significantly different from zero.

In hypothesis testing, data is tested to come up with a decision. For this hypothesis testing, a t-test will be used because the standard deviation of...