1. Bath and Body Works established locations in Italy, Spain France and Greece in the early 1990s. Every ten years the corporate office reassesses its decisions. You have been assigned to the Greek Committee and are to write a memo to CEO, Nick Coe, which either supports continued investment or makes a case for withdrawal from Greece.
2. Collective Brands, the parent company of Payless shoes, is in the research stage to determine whether to engage in direct foreign investment in South Africa or Ireland. What reason(s) could Payless have for engaging in direct foreign investment?
3. Of the projects on the efficient frontier, no single portfolio can be singled out. Why?
4. What is the efficient frontier of projects?
5. Rottweiler, Inc. plans to invest in a new endeavor either in Canada or Mexico. After the project is complete it will make up 35 percent of the firm’s total invested funds. The remainder of their investment funds is in the United States. Rottweiler will establish the viability of either project based upon the proposed project’s expected risk and return characteristics. Rottweiler’s return on existing investments is 23 percent, variability of returns, as measured by standard deviation, is 15 percent. If they establish their brand in Canada, the expected, after-tax return is 28 percent with a standard deviation of 20 percent and a correlation coefficient of 0.6. If they establish their brand in Mexico the expected after-tax return is 32 percent with a standard deviation of 30 percent and a correlation coefficient of 0.04. Which project do you recommend and why. Be sure to show and label your work
6. Ceilliron, Inc. is a U.S. based producer of wireless ceiling lights. The company is interested in diversifying in an effort to maximize their expected return in relation to risk. Explain to Ceilliron’s CEO what they would have to do to achieve the most efficient project portfolio.
7. The government of Spain is trying to attract more industry to their county to reduce unemployment. They have hired your consultant firm to advise them. What is your recommendation(s)?
8. France’s business owners are lobbying the government to protect them from overseas competition. It is an election year and many government officials are listening to their constituents. What actions could the government take to reduce DFI investment?