All of the Following Are True About Foreign Direct Investment

question 53

Multiple Choice

All of the following are true about foreign direct investment (FDI) and portfolio investment except

• A)increases in the flow of portfolio investments increase the likelihood of financial crisis.
• B)both portfolio investments and FDI are the same in that they both give their holders a claim on the future output of the foreign economy.
• C)FDI is relatively illiquid compared to portfolio investment.
• D)portfolio investments have been on the decline in recent years (or decades).
• E)FDI investors must be willing to go through many ups and downs in order to benefit from their long-term investments.

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Definitions:

Ordinary Income

Income earned from providing services or the sale of goods, as opposed to capital gains or investment income, taxed at standard rates.

Section 179 Expense

A tax deduction that allows businesses to deduct the full purchase price of qualifying equipment and/or software within a tax year.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, decay, or decline in value.

Distribution

The payment of assets from a fund or account to its beneficiaries or shareholders, such as dividends or withdrawals.