Which of the following is not an example of foreign direct investment ?
Correct answer: C. the purchase of bonds or stock issued by a textile company overseas
- A. the construction of a new auto assembly plant overseas
- B. the acquisition of an existing steel mill overseas
- C. the purchase of bonds or stock issued by a textile company overseas
- D. the creation of a wholly owned business firm overseas
Explanation
Buying overseas bonds or shares is generally foreign portfolio investment, because it does not necessarily give the investor managerial control. Building, acquiring, or wholly owning an overseas business involves direct investment.
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