Which of the following is an example of foreign portfolio investment ?
Correct answer: B. EDF of France buys shares in Scottish & Southern Energy of the UK, and Scottish & Southern Energy uses the Proceeds to build a new hydro-electric power station in Scotland
- A. Toyota builds a new plant in the north of England
- B. EDF of France buys shares in Scottish & Southern Energy of the UK, and Scottish & Southern Energy uses the Proceeds to build a new hydro-electric power station in Scotland
- C. Deutsche Bank of Germany buys some new software from UK Supplier
- D. JCB builds a new plant near Manchester
Explanation
Foreign portfolio investment is the purchase of foreign shares or securities without directly establishing or controlling a business. EDF's purchase of shares in the UK company fits this definition, whereas building a plant would be foreign direct investment.
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