An Example of a Foreign Direct Investment (FDI)would Include

question 1

Multiple Choice

An example of a foreign direct investment (FDI) would include

• A)a U.S.couple buying land for their dream retirement home in Costa Rica.
• B)a U.S.mutual fund manager buying shares of stock in a Brazilian oil company.
• C)a U.S.firm expanding its U.S.operations.
• D)a Chinese consumer buying an imported Japanese car.
• E)a wealthy Mexican buying U.S.Treasury bills.

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Definitions:

Jointly Controlled Enterprises

A business arrangement between two or more parties who share control over the business operations and decision-making process.

Proportionate Consolidation

An accounting method where an investor entity combines its share of each of the assets, liabilities, income, and expenses of a jointly controlled entity with similar items, line by line, in its financial statements.

Cost Method

An accounting method used to value investments, where the investment is recorded at its acquisition cost without adjusting for market changes.

Commercial Substance

A situation where the risk, timing, and amount of an entity's future cash flows are expected to change as a result of an economic transaction.