Bottcher and Margin have characterized the stock markets of world by real GDP growth rate and economic flexibility. Bottcher argues that Brazilian marker is a very attractive investment because its growth rate in GDP has averaged 9% a year over the past 5 years. Martin argues that France is an attractive investment. Traditionally, French labor has thwarted increases in productive efficiency through reductions in the work week and a resistance to changes in work tules. Through his contacts in the French govt, Martin learns that labor laws will become less rigid in the coming year. With respect to the statements made about the Brazilian and French markets: A) Bottcher is correct; Martin is correct. B) Bottcher is incorrect; Martin is correct. C) Bottcher is correct; Martin is incorrect.
A
weird q but if u held a gun to my head i would say A…real gdp growth is nice but what about currency risk…cheaper/more productive labout will offer better returns so C is def out… so whats the answer?
Bannisja - Sent you an email earlier. Will post the answer of this question in few minutes…
I’d guess A as well.
B) Bottcher is incorrect; Martin is correct. Bottcher is incorrect. For the Brazilian market to be an attractive investment, Bottcher would have had to anticipate future growth in the economy before others did. Martin is correct. Both real GDP growth and economic flexibility are drivers of country stock returns, but the investor must foresee changes in these before others do. Kinda stupid
I said B too…I just thought about China…even though China has 9% GDP rates (or other BRIC countries) doesn’t necessarily mean its attractive. I just took the statement as given and ruled it incorrect with just the info given.
B, high consistent GDP growth can be a concern as the economy maybe growing too fast (potentially creating a bubble)