Are there any similarities between the S&L crisis and the latest financial crisis?
- Data suggests that stock returns between the US and Australia have a .304 correlation, between the US and France a .225 correlation, Germany, .170, Japan, .137, The Netherlands, .271, Switzerland, .272, and the United Kingdom, .279. The exhibit also suggests that returns between individual stocks within the US have an average correlation of .439. Why returns are less correlated between countries than they are within the US? What are the implications of this for portfolio creation?
- Please describe some of the potential benefits to a multinational corporation of foreign direct investment? Nike has expanded its footwear production to Latin America. What do you think motivated them to do so? What are the potential non-financial benefits to the company that is being invested in? Do you think that multinational corporations should invest in countries with poor child labor laws? Why or why not?
- Regarding the valuation of a commercial bank. Factors concerning Required Rate of Return, the Risk Free Rate, and the Risk Premium. Who determines the Required Rate of Return, the Risk Free rate and the Risk Premium? Is this one of the things determined by the Federal Reserve? How would I look them up?
- Regarding the Savings and Loan crisis of the late 1980s. The Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) and the Garn-St. Germaine Depository Institutions Act of 1982 (GSGDIA) contributed to the crisis. How? The Financial Institutions Reform, Recovery, & Enforcement Act of 1989 (FIRREA) was passed in response to the crisis. What effect did FIRREA have on the prior regulations? Are there any similarities between the S&L crisis and the latest financial crisis?
