Study two companies in one industry, based in two countries, of your choice $($e$.$g$.,$ Tesla and BMW in the US$/$German car industry$).$ Examine the extent to which these stocks are exposed to the same risk$/$return factors in their common, or

differing, national markets. So$,$ the theme of the assignment is market segmentation$/$integration within national markets, for a common industry and across national markets within one industry.

Which is bigger, intra$-$industry or transnational variation? Are two companies in the same nation more like each

other in regard to their risk and return pricing factors. Or is a competitor abroad a closer fit? To this end, answer

the below related questions : Section A Why did you choose to examine these $2$ companies located in these two countries? What common$/$unique

challenges, opportunities have these companies faced over the years you examine them.

Section B

Estimate the Capital Assets Pricing Model $($CAPM$)$ for the companies you study in your chosen industry $($You will be

provided with further details needed to measure the systematic and unsystematic risk for your chosen

companies under CAPM following the relevant lecture$).$ Are the systematic$/$unsystematic risks comparable? Are these measures more volatile in some countries

than in others? Why is this? Use regression and regression residual$/$errors analysis to answer this question.

Section C

What factors explain changes in unsystematic risk for your chosen companies? How do these factors differ across

companies and nations? What explains this difference? How is systematic risk related to:

$$ exchange rate risk,

$$ interest rate risk

$$ political$/$social$/$regulatory risks.

How integrated do you find the market for equity capital for these companies across nations and within your

chosen industry? Use correlation, regression and variance ratio tests