Tory Lopez recently inherited $48,000. Terry is considering investing her inheritance in a 10-year U.S. Treasury bond that promises to pay her $1, 200 interest every 6 months for 10 years and the principal back at maturity.

Tory attended a social event at work, however, where she overheard an executive of an automobile company describing his companys newest operation in China with the support of the Chinese government. His company would grant exclusive rights to Universal Autos (UA), a Chinese auto manufacturer, to build U.S. automobiles for the Chinese and American markets.

This would be a win-win, according to the executive. The American manufacturer would produce autos for the Chinese and American markets at a much lower cost than in the United States and UA stood to increase its profits significantly during the next 10 years, which should translate into significant increases in the UAs stock price.

Intrigued, Tory, researched UA as a potential investment. Tory, however, relied more on friends and relatives for investment advice.

Some of her friends did not think investing in UAs stock was a good idea since UA does not follow the same labor practices as firms in the U.S. and because Chinese workers do not have the union representation than workers in the U.S. do.

She also learned from her uncle who works in the U.S. State Department that he had heard that UA made a huge payment, which he called a bribe, to the Chinese government before they signed the deal with the American manufacturer. Her uncle thought that the payment UA made to the Chinese government could be illegal in the United States.

Finally, Torys boyfriend, who happens to be Chinese, thinks that she should invest her money in UA. According to information provided by his family and friends in China, the agreement between UA and china represents a historic business deal that the Chinese government intends to support fully, so there is little risk associated with the investment. In fact, according to her boyfriend, Torys $48,000 could at least double in 10 years if she invests it in UA.

If you were Tory, what would you do? Should you invest in a company that you heard might have questionable labor and union practices or pay bribes to their government?

Please frame your discussion around the following dimensions:

3. Which investment would you recommend Tory to pursue, risk-return wise and ethically wise?