If an American-Based Firm Opens and Operates a New Clothing

question 163

Multiple Choice

If an American-based firm opens and operates a new clothing factory in Honduras, then it is engaging in

• A)foreign portfolio investment.
• B)foreign financial investment.
• C)foreign direct investment.
• D)indirect foreign investment.

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Definitions:

Equipment Sale

The process of selling off business-owned equipment, either to upgrade to newer assets or to liquidate assets for cash.

Cash Dividend

A payment made by a company out of its earnings to its shareholders in cash.

Financing Activities

Transactions that involve raising funds to finance the company's operations and repaying debt; part of a firm's financial operations detailed on the statement of cash flows.

Principal Repayment

The portion of a loan payment that goes toward reducing the original amount borrowed, not including interest.