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.

Understanding the concept of the Jensen Portfolio Evaluation Measure and its application.

Comprehending the role of asset allocation and selection within markets in contributing to total excess return.

Learning how the geometric average rate of return is calculated and its basis.

Recognizing the importance of observation periods and variance in evaluating portfolio performance.

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Definitions:

Trade

The exchange of goods and services between parties, which can occur within an economy (domestic trade) or between economies (international trade).

Opportunity Cost

The financial sacrifice involved in overlooking the closest alternative when a choice is made or one option is favored over another.

San Francisco

A major city in California, USA, known for its iconic Golden Gate Bridge, steep streets, and vibrant cultural history.

City Manager

An official appointed as the administrative manager of a city, in a council-manager form of city government.